Q: I was renting a townhouse when my landlord sold the property. I was paying $1,200 per month as a single parent with one kid. The new owner told me that the real estate agent said he could charge me more money for rent. So, he raised the rent on me because the agent told him he could.
I suppose the agent wanted the sale to go through to collect the commission. But the agent is hurting folks who can’t afford the rent! My job did not pay enough, so I moved out.
A: In today’s real estate market, it isn’t just housing prices that are rising; rents are rising, in some cases astronomically. That is making rental housing increasingly unaffordable for a larger number of Americans.
In 2020, a report from the Harvard Center for Joint Housing Studies found nearly 1 in 4 renters spent more than 50 percent of their income on housing in 2018. According to Stessa’s analysis of Census Bureau data, about 16 percent of renters are behind on their rent. The number is higher for those who have only a high school diploma.
In your case, the agent likely tried to excite the buyer by sharing their perspective of the rental market, and how the property might be marketed as an investment property.
But nothing she said should have impacted your lease and the rent you were paying (if you had a lease). Did you? The important thing here is to understand your rights as a tenant. And your lease agreement is the key to those.
When you decide to rent a property, the landlord should give you a lease document to sign. This document should outline what you’ll pay each month (or year) and for how long. Those are the two most important things that you should care about. Your lease should show that you had an agreement to pay $1,200 per month for one, two or three years (or whatever term you and the landlord agreed to).
Once you and the landlord sign that lease, you’re both bound by its terms. The landlord shouldn’t be able to get out of the lease, and neither should you.
Having that executed lease gives you protection and peace of mind that the rent you’ve agreed to pay will stay constant during the term of the agreement, even if the owner decides to sell the property. If the owner sells during the term of your lease, the new owner must abide by its terms. So, if you are one month into the lease and the owner sells, the new buyer must abide by the terms of the lease for the next 11 months, or until the term expires.
At the same time, you can’t sign a one-year lease agreement and move out after a month. You and your landlord have a contract that each can enforce against the other for the agreed upon length of the lease.
On the other hand, if you don’t have a lease, you might simply be a month-to-month tenant and either you or the landlord can notify the other on one month’s notice of your wish to terminate the lease. This might have been what happened to you.
Some municipalities have landlord-tenant ordinances that require landlords to give tenants more time before the landlord can terminate the lease. In other circumstances, landlords might be limited in the amount they can increase the rent each year. Your city or village hall can tell you if they have a landlord-tenant ordinance and what it says. Before you rent, you should read up on the leasing ordinances where you rent your home, as they might give you additional protection that your lease document might not.
Regarding the real estate agent sharing her opinion of the amount of rent the property could generate, well, that’s fair game. The seller is trying to justify the list price, and letting a prospective investor know what income the property could generate is part of what the agent is supposed to do. It is then up to the new owner to decide whether to raise the rent. And it’s up to you, the tenant, to negotiate as good a deal as you can, or move elsewhere.
We understand that when rents go up, lower-income people get hurt more than millionaires. And moving is expensive, especially when you have kids and packing up means finding not only a new home but a new school and perhaps new babysitters, after-school care, doctors and more.
What happened to you isn’t ideal. But that’s the way our real estate market works. We’re sorry you were impacted by the sale of your property and hope you were able to find a good place to call home.
Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (Fourth Edition). She is also the chief executive of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact them through the website, BestMoneyMoves.com.
©2022 Ilyce R. Glink and Samuel J. Tamkin. Distributed by Tribune Content Agency, LLC.