My Rental Property is in another State…
We provide here a few questions that have been posted on the 1-on-1 Center or in Forums and our answers to them.
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Question 1
My rental property is in NC. Can I enter my tenant’s place without permission since NC has no statute with regards to this issue?
Answer 1
The great majority of states have recognized a landlord’s right to legally enter rental units under certain circumstances, either by statute or by judicial decisions. Circumstances usually include entering to deal with an emergency, to show the property for sale or rent, or for most other reasons when the tenant gives permission. Statutes and case law usually require a “reasonable” period or a specified period of advance notice for non-emergency entry and require that it be at reasonable times.
The fact that there is no NC statute regarding entry does not mean that there is no case law regarding the matter which a judge would follow or that a judge might be willing to make some new case law that is to the landlord’s detriment. Accordingly, when entering without permission, particularly when the tenant has specifically denied permission, the landlord should be knowledgeable regarding both any statutes and any relevant case law. You need to either investigate case law yourself or consult a competent landlord-tenant law attorney, preferably one who regularly represents landlords in the particular court of jurisdiction.
Most lease agreements contain a clause regarding entry. For example, the lease agreement provided by LandlordOnline.com for NC covers the issue in Clause 13 – Inspection of Premises. You should check the lease agreement you use. A landlord who violates his own lease agreement in this regards would be inviting trouble.
While the landlord usually has a fee simple interest in the property, the tenant has a leasehold interest which gives the tenant a number of rights including peaceful possession and protection from invasion of privacy. When entering without permission or knowledge of the tenant, one must be extremely careful. Issues include the following:
The owner of a rental unit has absolutely no right to remove anything from the premises (even property belonging to the landlord) or reduce any services (including utilities) related to the unit without agreement by the tenant. Entering without permission puts the landlord at risk for (1) violation of the specific law (including court decisions) related to entry, (2) for removal of items or reduction in services, violation of the lease agreement, as the unit was rented to include the items
being removed and the services being provided, (3) a lawsuit related to invasion of privacy and peaceful enjoyment, and (4) charges of theft of whatever the tenants wish to claim is missing following the entry.
Giving notice of entry will greatly reduce the chances of problems. If the tenant refuses entry, the landlord can file a lawsuit for entry. If the lease agreement provides for entry and the tenant refuses, the landlord may be able to evict the tenant. A landlord should never use force in gaining entry.
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Question 2
I am having trouble locating a co-signer agreement or a lease agreement that includes clauses related to a co-signer.
Answer 2
There are a number of possible formats for a co-signer (or guarantor) agreement, whether a stand-alone document or included within a lease agreement. Those commonly available that I’ve seen are usually not fully adequate and require some customizing. The following discussion regarding co-signers and guarantors should be of help to you when choosing among available forms and modifying them to fit your needs.
Usually one can use either a co-signer agreement or a guaranty agreement. There can be a difference between a co-signer and a guarantor, but pretty much the same issues relate to either. Both agreements are contracts between the guaranteeing party and the landlord, so they can pretty much be written however those parties can agree.
If the party needing a co-signer/guarantor is a co-tenant with other tenants, I would require the co-signer or guarantor to be jointly and severally liable just as is normally the case for the co-tenant who needs the co-signer or guarantor. You must remember that co-tenants are usually made jointly and severally liable for the full rent amount so that the landlord can seek payment against all or any one individual. A landlord is usually likely to collect from the one who is best
financially qualified and/or the one who is easiest to serve with a lawsuit if one or all of the co-tenants disappear. This may well be the co-signer or guarantor.
There are basically two different types of guarantees, broad and narrow. The broad form of guaranty makes the guarantor liable for all financial matters related to the tenancy including rents and damages. The narrow form limits the uarantor’s liability to a specific issue, usually this is the rent. Obviously, it is to the landlord’s benefit that the guarantee be as broad as possible, however, it may be necessary to accept a narrower guaranty if the rental market is weak.
Agreements can be written to cover only an initial lease term or to include future extensions and renewals. The agreement should include any assignee or subtenant of the lease, at least during the term of the original lease being guaranteed.
If a lease is modified in any way during the guaranty period, the co-signer/guarantor should be required to sign a new document related to the modified lease.
Landlords should perform full screening on the proposed co-signer/guarantor and utilize the same qualifying criteria as for an applicant when a co-signer is not required.
Absent some unusual situation, the agreement should make it clear that the co-signer is only providing a financial guarantee and has no rights to tenancy or other type of occupancy. This is to avoid the need to include the co-signer in any eviction complaint, requiring the ability to legally serve the co-signer with a summons-complaint before obtaining possession, an unneeded additional complication.
When possible, it is best to require a cosigner who lives in the same state as the rental property in order to avoid the extra trouble and expense of collecting a judgment in another state.
Finally, I will mention that it is important in some states to have the spouse of the co-signer/guarantor also sign the agreement in order to avoid in those states the possibility that one can’t collect from income or assets of a non-signing spouse. If only one spouse is signing in such a state, it is important to be sure that the income and assets on which financial qualification is based are truly those of the signing spouse.
It is best to have both signatures whether or not this is an issue in a particular state because it eliminates misunderstandings and potential disputes regarding liability for a lease. The same recommendation applies whether the co-signor or guarantor is guaranteeing a commercial lease for a limited liability entity or parents are guaranteeing a residential lease for a student child.
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Questrion 3
It is my understanding that the new 1099 reporting law that was part of the new health care law was rescinded and that the law is back to what it was previously. That is, the law now requires businesses to issue 1099 forms “only for payments of $600 or more to unincorporated businesses for services. Is this correct?
Answer 3
I am not aware of any law changes that would alter the fact that President Obama signed into law on 4/14/11 a bill repealing the expanded IRS Form 1099 reporting requirements that was part of the health care legislation. Considering the continuing slow economy and the feelings of small businesses and of Congress, I doubt very much that the subject will be revisited in the near future.
As before “non-corporate entity” includes individual sole proprietorship, partnership, or limited liability company (LLC).
However, the repeal did not fully return the law to previous requirements. A new requirement that was retained is that businesses must provide a Form 1099-MISC when $600 or more is paid for services by law firms regardless of their
entity type.
Finally, the repeal bill also did not repeal the significantly increased penalties for non-compliance which became effective January 1, 2011. As usual, the 1099′s mailed to the recipients must be post-marked on or before January 31st, 2012.
The due date for the 1099’s (And transmittal Form 1096) to the government is February 28th, 2012.
The new penalties for not filing are pretty severe:
- $30 per 1099 if filed within 30 days of
the due date - $60 per 1099 if filed after 30 days but
before August 1st - $100 per 1099 if filed after August 1st
- $250 per 1099 for intentional disregard
of the rules.