By David Nakamura
Washington Post Staff Writer
Thursday, November 20, 2008
When Barack Obama clinched the Democratic presidential nomination in June, Margaret Knox Baum, a supporter from Boulder, Colo., logged on to Craigslist and booked three rooms in a Capitol Hill townhouse for inauguration week.
Friends thought she was jumping the gun, but Baum wanted to beat the rush. She signed a five-page contract, sent in a $940 deposit and rounded up 14 others to go with her to Washington.
Five days after Obama won the general election, Baum received an e-mail from Reid Management, the Washington company that owns the townhouse. To her dismay, it said her contract would be canceled "due to circumstances beyond our control."
"This puts us in a spot," said Baum, a freelance journalist. "We've already booked airfare. And we can't pay $3,000 a night for an apartment."
Baum, 54, got caught up in an inauguration-driven property frenzy in which thousands of people in the Washington area have come out of the woodwork to make a quick buck by offering their houses for rent in January.
But the arrangements -- with deals being brokered largely between amateurs, often online and with little personal contact -- are fraught with peril on both sides, including fights over money and property damage in addition to issues regarding insurance, liability and fraud, experts said.
Baum got her deposit back, but she has not received an explanation about why her contract was canceled. She said she suspects that the management company realized it could make more money.
"There's potentially all kinds of problems here," said Kevin McParland, a lawyer who specializes in landlord-tenant cases in the District and Maryland. "The owner could have problems with people trashing the place. The renter could have problems if they come and the place is not available when they get here."
Similar markets have developed in other places that have been home to major events, including Park City, Utah, which hosted events during the 2002 Winter Olympics. Myles Rademan, a Park City spokesman, said that some reservations were canceled after the 2001 terrorist attacks, leaving some property owners scrambling. But, he said, the complaints were not widespread, perhaps because planners had spent years preparing residents.
"We warned people, saying, 'Don't price gouge. The world is coming here. We're welcoming the world,' " Rademan said. "We hope that places like the Chamber of Commerce in D.C. are going through a campaign to just ask people to be nice."
The D.C. Chamber is developing housing advice that will be posted on its Web site. Deposits are recommended, officials said, as is a review of what is covered by insurance.
The District and its suburban jurisdictions have regulations that govern property rentals, including licensing, certification of occupancy and inspections. But the laws are difficult to broadly enforce for an event such as the inauguration, D.C. officials said, and they are considering relaxing the restrictions on a one-time basis. They have declared that property owners will not be taxed on their earnings for that week.
As for monitoring for fraud, the D.C. Department of Consumer and Regulatory Affairs will handle complaints "on a case-by-case basis if the issues are covered under the Consumer Protection regulations," agency spokesman Michael Rupert said.
Otherwise, the best recourse for people who think they have been defrauded might be the judicial system, Rupert said.
About Baum's case, Rupert said, it "does not appear to be a tenant issue but a contract issue. Depending on the terms of the contract, this may be well within the property owner's rights to cancel the contract."
City officials and real estate lawyers recommend that tenants and landlords take precautions, including signing contracts that are as detailed as possible about price, length of stay and security deposits. Some property owners are requesting references so they can investigate out-of-towners; some tenants are asking for pictures of the properties.
The demand is so great for housing that several for-profit Web sites have been created to act as brokers. Deana Bass, 35, an Alexandria public affairs consultant who started a site, said some property owners have offered to cook tenants breakfast and drive them to the Metro.
"I want them, when they are communicating with each other, to be clear what the room looks like, what space they are actually going to get," Bass said. "When they say their place is 'Metro accessible' but it doesn't really seem Metro accessible, I question them."
Amani Council, who lives in a four-bedroom house in Temple Hills, posted an advertisement on Bass's site offering her basement unit for $800 a night. Council said she has had two offers but rejected both.
"They were a little sketchy, based on my own intuition," Council said. "I asked them questions. There's no smoking in my house. I do have a dog. . . . I said, 'Look, I'm interviewing people and I'll get back to you.' "
In Baum's case, her contract with Reid Management detailed prices, dates, the number of tenants, damage liability, utilities, parking spaces and other items for the stay in a two-story townhouse on Kentucky Avenue SE. The building is a few blocks from the Capitol, where Obama will be sworn in, and Baum seemingly scored a great deal: $2,350 for all three rooms for five nights. That's a fraction of what houses are going for now, many advertised on Craigslist for about $20,000 for the week.
"In the event possession cannot be delivered within that time, through no fault of renter or renter's agents, then renter also has the option of substituting the rental with a similar or upgraded unit if said unit for whatever reason is unavailable," the contract said. "If substitution of this rental is not an option, this rental and all rights under this rental agreement shall be at an end, and no damages can be awarded to either party."
In a series of e-mails, Ian Reid, who operates Reid Management and owns the townhouse, said that a reporter had incomplete information, but he was not specific about why he canceled the contract. Asked what he planned to do with the building from Jan. 16 to 21, the dates Baum had reserved, Reid said, "Regarding those dates, I am waiting to see if DC relaxes the renting guidelines." He did not elaborate.
Reid Management is registered with the District government as a corporation in good standing, and the city has no record of any infractions, city officials said. Property records show that Reid owns another rental building on A Street SE.
As for Baum and her friends, who worked as volunteers on the Obama campaign, they're frantically searching for accommodations.
"Our superstitious friends disliked the idea of booking so early," Baum said with a sigh. "But we thought we were way cool to have had the foresight and guts to book early and were appropriately smug about it."