Tag Archives: Dear Piggy

Dear Piggy: Should My Condo Association Raise Assessments Every Year?

I’m involved with a local support group for board members of self-managed condo associations, since I am one myself. I generally try to participate from a civilian perspective and only put on the Realtor hat when it’s absolutely necessary. However, one of the members specifically asked me to provide some objective information about best practices for raising assessments on an annual basis. I think she was hoping that I’d dig up an article written by someone else, but I figured I could do a blog about it myself.

What Does an Assessment Pay For?

In Chicago, monthly assessments can cover any number of expenses for the publicly shared parts of a condo development. According to the Illinois Condominium Property Act, they must pay the repair and replacement cost for at least the following items:

  • Structural components
  • Mechanical components
  • Surfaces of the building
  • Common areas
  • Energy systems

… In other words, pretty much all of the areas of the property outside of the individual condos and the other sections of the building assigned to specific owner, such as parking spaces and storage lockers.

Additionally, Chicago assessments tend to cover water and sewer costs, building insurance, maintenance costs for the grounds, and electricity for the common areas. We’ll call these the “basic condo package.”

Other common add-ons for a “deluxe condo package” could include heat, doormen, cable, wifi, trash collection, elevator maintenance, and community benefits like business centers, pools and health clubs. Co-ops will also often include property taxes in the monthly dues. But for today we’ll just look at the “basic” package, since it will apply pretty much citywide.

Why should we increase our assessments?

Costs are rising.

Looking at the “basic condo package,” the cost of every item has increase substantially over the past ten years.

A recent article on NPR stated that homeowner’s insurance premiums were projected to increase by 10% in 2012 due to increased severe weather nationwide.[1] The price of water in Chicago has increased from $9.02 per 1000 ft3 in 2002 to $18.75 per 1000 ft3 in 2012, and costs have been approved to increase further to be $28.52 per 1000 ft3 by 2015. Sewer costs are increasing to match.[2] The cost of electricity increased from $0.1026 per kW/h in 2001 to $0.1599 per kW/h in 2011, an increase that would have been far greater had rates not been frozen from 1995 to 2009.[3]

The cost of something like landscaping or repair services is tougher to determine, but for most services of that nature the primary cost to a company is labor. The Department of Labor can give us the income history for most professions. For landscapers and groundskeepers in Chicago, the average hourly wage has gone from $10.68 in 2001 to $12.73 in 2011.[4] The cost for highly skilled and/or licensed labor, such as electrical work or tuckpointing, is certainly higher. The cost of the materials they use has not lowered, nor is it likely to. One can only presume due to the wailing and gnashing of teeth seen from the small business owners due to rising employee costs that these numbers will only go up in the foreseeable future. There is no doubt that maintenance costs will increase across the board.

While savvy condo associations can negotiate lower costs for bulk electricity, cable or trash pickup, they won’t be able to stem the tide of rising costs forever. Like it or not, you will need more money in 5 years to do the same things you’re doing now.

The IRS says you should.

You have to go to the doctor more as you get older. Your building will need more frequent "checkups" too.

You have to go to the doctor more as you get older. Your building will need more frequent “checkups” too.

It’s commonly accepted that the value of a property decreases as it gets older. The costs required to maintain an old building are far higher than those required in a new one. In fact, when it comes to commercial property, the IRS gives you a number you can use to calculate how much more you’re going to have to spend on your property as it ages. It’s called depreciation.

According to the IRS, a multi-unit apartment building will fully depreciate over 27.5 years. Most condo buildings in Chicago started their lives as apartment buildings, so we can go on the same scale. This means that just to cover the increased demands of aging, you should be increasing your reserves by at least 3.6% each year.

Cutting amenities may lower property values.

Of course, an association can remove services in order to keep assessments at a consistent rate. Many condo residents have voted to scale back on things like doormen and pools in order to keep their monthly bills low. However, the IL Condo Property Act specifically states that assessment costs should take into account both the impact on owners and the impact on market value.

Downgrading your association from a deluxe condo package to a basic one does have an effect on the value of the home. The cost per square foot difference between a full-amenity condo vs a basic one is not just due to location. Besides, these are the common areas we’re talking about. Cutting costs too far can reduce curb appeal and increase the chances that a home inspector will find major structural issues that prevent a new buyer from purchasing in your development.

Everybody Else is Doing It.

The most popular condos have no fear of raising assessments. How do we know they’re popular? Because people bought them. No article of this nature on StrawStickStone would be complete without a trip to the MLS for some sales stats. True to form, I went and checked on the monthly assessments for 2 and 3 bedroom condos in smaller associations that sold successfully in the past 10 years. Since the question in this case came from a Lincoln Square property owner, I based my search in Lincoln Square.

The chart below shows the median monthly condo assessments.

The chart shows the median, which went from $133 at its lowest to $203.5 in 2012. The maximum went from $300 to $470 in the same timeframe.

They went up! In fact, they went up by quite a bit. And I should note, the sample size for each year was anywhere from 175 to 430 units, so this is not a small bit of fluky data.

Increases are built into the Illinois Condo Property Act

While the ILCPA doesn’t give a condo board totally free rein over the monthly costs, annual increases up to 14.99% are permitted without allowing the owners at large any means of fighting it. If you increase more than 15% the owners can petition the board for a vote on the hike, but anything below that and you’ve got clear sailing as far as the state law is concerned.

Other sources of income have gotten scarce.

The ILCPA also suggests that associations consider bank account interest and the ability to borrow money as considerations when setting monthly costs. Both of these alternate source of income have seen decreasing yields over the past 10 years.

It used to be that an association could reliably make a decent buck from interest payments on their reserves. Back in 2000 an association could get over 6% interest by stowing their funds in a 6 month CD. However, with rates currently at 0.32% on that same 6 month CD, this source of alternate income is not an option that will keep pace with rising costs.

As for obtaining loans, any home buyer or developer will tell you that the money for large scale property matters is not plentiful these days. While the interest rates for payback are as low as they’ll ever be right now, the hurdles required to get a lender to work with you have multiplied since the housing crash.

If you were living anywhere else, your costs would increase too.

The monthly payment on a 30 year fixed rate mortgage doesn’t increase over the life of the loan. That’s a real nice, but it’s the only part of your monthly expenses that stays consistent. If you were living in a single family home your costs would increase regularly. If you were renting an apartment, your rent would most likely increase every year. There is no reason why you should be exempt just because you’re living in a condo association.

Is there a limit to how high we can go?

Yes. There is a limit. Not a firm one set by law, but a limit of credibility and viability for the owners of the property. Of course the ILCPA has that 15% break point after which the owners can officially challenge an increase, but even below that there’s issues to consider.

A board who raises assessments too high will risk more than dirty looks from their neighbors. An owner who cannot afford rising monthly payments is likely to stop paying altogether. If a condo development has over 15% delinquency on assessments, no lender will touch it with a 10 foot pole. If the association has to evict someone for non-payment, that means court costs and time spent, not to mention the risks and higher insurance premiums that come with having renters in the building. Oh, and recent eviction lawsuits may have the same effect as delinquency when it comes to how lenders look at your HOA.

When I was doing the MLS study above, I took a look at maximum assessment costs as well. None of the sold condos in the area have gone above $471 in the past 10 years. Now, this is a far cry from some of the lakefront full-amenity high rises, where the monthly dues for a 2 bed condo exceed $600 on a regular basis. The point is, you need to scale your increases to fit the income brackets in your building.

Yes, people notice high condo assessments. (via Curbed Chicago x2 plus Redfin forums)

Cutting amenities may hurt your property values, but people also notice when assessments get too high. (via Curbed Chicago x2 plus Redfin forums)

Recommendations

It’s tempting to set a consistent amount to increase assessments each year. However, associations are incorporated as not-for-profit entities. A big surplus means refunds at the end of the year, which makes it tough to turn around and ask for more money later. The better approach is to increase annually so that people get used to the idea, but for only the amount that you need.

Here’s how I do it. Two months before your annual meeting, I contact our vendors and obtain estimates for the coming year. This lets me run the actual numbers and still get the new budget into the hands of the association the requisite 30 days ahead of time. I also take into consideration how expenses have increased from year to year historically, but there’s nothing like actual estimates to prove your point. When presenting your increase to the board, make sure you can back up all of your numbers with evidence. This will make it a lot easier to swallow.

Oh, and no matter how much you cut corners, make sure you’re allotting at least 10% of your budget to reserves each year, and make sure it’s a line item in the budget. A reserve study performed by experienced engineers will let you know exactly how much you should be saving, but regardless of the outcome of the study, at least 10% is required so that new owners can get mortgages when they buy into your building.

So yes, increase every year, but not by an arbitrary amount. As is the case with every article here, a little research and a little math will tell you how to proceed.

  1. [1]Homeowners Insurance Rates Rising in 2012, NPR.org
  2. [2]Know My Water and Sewer Rates, CityofChicago.org
  3. [3]ComEd Historical Residential Rate Monthly Averages, Info-Trex
  4. [4]Department of Occupational Employment Statistics, US Bureau of Labor Statistics

Dear Piggy: Questions from the Readers

I’m writing this on Tuesday night at 7pm. I’m deliberately avoiding watching the election results. So you guys get an omnibus of nine questions that have come in from the readers.

I didn’t show up for eviction court in Cook County. What will happen?

Generally if one side shows up for eviction court and the other doesn’t, the present person generally “wins” the case – for now. So, if the tenant appears but the landlord does not, then the landlord has to start all over again and re-file a new case. If the tenant doesn’t show up but the landlord is present, it’s a bit more complicated. The landlord will have to prove that the tenant was served with proper notice of the court date. They will also have to prove that the tenant has committed the offense that is causing the eviction case, be it non-payment or some other behavioral problem. A landlord in this case will probably get possession of the unit but no money judgment. However, the landlord should not rest on their laurels – many tenants in this sort of situation will “lawyer up” and get the case reopened before the sheriff can actually come around to evict.

If my landlord takes a utility bill addressed to me out of mailbox is he responsible for paying it?

First of all, if the landlord takes anything addressed to you out of your mailbox, she has committed mail fraud. This is a federal offense punishable by a minimum prison sentence of five years.

As for the financial repercussions. If your bill is tied to your name and your social security number, your credit score will bear the brunt of it going unpaid. So regardless of whether or not you think the landlord has “claimed responsibility” for paying the bill by taking it, you have a responsibility to ensure that the bill gets paid on time. I would get a backup copy from the utility company’s online account system and pay it anyhow.

However, if you don’t pay your heating bill and your pipes freeze and burst, your landlord will bear the cost of repairing the damage. The repair bills will certainly exceed your security deposit. So the landlord has a vested interest in ensuring that you’re current on your heating bills, but generally not to the point of paying it themselves. A smart landlord, though, would find out the status of payment in another way or just deal with repairing the damage afterwards. In my opinion, it’s better to be able to bring an air-tight damage suit against a tenant after the fact than to incur a five year stay in a federal prison.

Is a two flat in Chicago bound by the landlord tenant ordinance?

For two-flats, if the landlord lives in the building it is exempted from the Chicago Residential Landlord Tenant Ordinance but is covered by the Illinois state ordinance (PDF) instead. If the landlord does not live in the building then it is covered by the Chicago ordinance.

My tenants’ apartment is disgusting. Can I ask them to clean for showings?

Well, technically, yes. And according to the CRLTO they have to comply.

CRLTO Section 5-12-040 Tenant responsibilities.

Every tenant must:

(a)     Comply with all obligations imposed specifically upon tenants by provisions of the municipal code applicable to dwelling units;

(b)     Keep that part of the premises that he occupies and uses as safe as the condition of the premises permits;

(c)     Dispose of all ashes, rubbish, garbage and other waste from his dwelling unit in a clean and safe manner;

(d)     Keep all plumbing fixtures in the dwelling unit or used by the tenant as clean as their condition permits;

(e)     Use in a reasonable manner all electrical, plumbing, sanitary, heating, ventilating, air conditioning and other facilities and appliances, including elevators, in the premises;

(f)     Not deliberately or negligently destroy, deface, damage, impair or remove any part of the premises or knowingly permit any person on the premises with his consent to do so; and

(g)     Conduct himself and require other persons on the premises with his consent to conduct themselves in a manner that will not disturb his neighbors’ peaceful enjoyment of the premises.

The pertinent bits here are items (b) through (e) above. As always I recommend that landlords try to negotiate a more calm & reasonable resolution to the problem before they throw the book at their tenant. However, in a worst case scenario the landlord can present the tenant with a 10-day “cure or quit” notice which mandates that they clean up their act within the next 10 days or their lease will be terminated.

However.

If the tenant does not comply with the notice then the landlord will have to evict them in order to enforce the notice, so obviously this is not terribly effective when it comes to an apartment that will probably be empty in a matter of weeks anyhow.

Here’s my personal thoughts on the matter. If a tenant has such poor housekeeping skills that the apartment is “disgusting,” I highly doubt that their cleaning efforts under duress will be too impressive. Chances are you will need a few days or even weeks to get the place cleaned up in between tenants, so why bother wasting your time showing a dirty apartment? It won’t rent at a top price, and you’ll have to show it many more times to find a tenant. Besides, the only tenants who will probably like a messy apartment are also messy, so you’ll wind up with a self-perpetuating cycle of filth. Here’s what I would do instead.

  • Explain to the tenant that the apartment is too messy to show in its current condition.
  • Explain that the condition of the apartment has been noted in their file.
  • If your lease doesn’t already allow for specific cleaning costs, provide the tenant with the prices for a deep clean by a professional maid service and make sure that they know you will have to deduct that cost from their security deposit.
  • Hold off on showing the apartment until it’s empty and clean.

Can I pretend that my friend was my past landlord?

This is called “fraud.” It’s a bad idea, although tenants with poor rental history (or tenants who assume that their landlord hates them for any reason) do it all the time.

Will you get caught? That depends on if your landlord verifies ownership of your current address or not. It’s very easy to do. If you get caught, I’d personally not be surprised if your landlord rejects your application.

If you don’t get caught before you sign the lease, you’re pretty much in the clear. Even if you wind up in eviction court and the landlord accuses you of falsifying the application, it’s his neck on the line for not doing enough research.

Courtesy of the Encyclopedia of Chicago History.

What’s the difference between redlining and steering?

Redlining and Steering are both practices that violate fair housing law. Redlining was originally a mortgage lending term which drew a “red line” around certain neighborhoods. Applicants that didn’t fit a particular profile would not be granted loans to purchase property within the red line. Steering occurs when members of certain demographic groups are “steered” towards neighborhoods that are known to be dominated by that same group – e.g., Asians being shown only properties in Chinatown.

So basically, Redlining keeps people out of a neighborhood. Steering pushes them into specific enclaves.

Both are illegal.

Can tenants watch TV at any time of night?

I’m guessing that this is really a noise question. Look up to where I quoted the Chicago Landlord Tenant Ordinance above. As long as the tenants aren’t disturbing their neighbors’ peaceful enjoyment of their homes and apartments then the tenants can do whatever they want. However, if neighbors are complaining that the noise from the TV is affecting their sleep, health or ability to use certain rooms of their house, then the landlord may need to step in.

Of course, the tenants should try to work out the noise issue between themselves before escalating it to involve any authority figure, be it the landlord or the police. The landlord’s only recourse will be a written reprimand or, in the worst case scenario, a 10-day “cure or quit” notice followed by an eviction case.

When can you charge a late rent fee in Chicago?

Illinois and Chicago do not have “grace periods” for rent payments. Therefore, unless a lease specifies a grace period, rent is late on the day after it is due and fees can be assessed at that time. Also, bear in mind that while the IRS may count the date of postmark, a landlord doesn’t have to. As for what time late fees should be assessed, that’s up to you. I personally recommend giving the benefit of the doubt and assessing late fees when business opens the day after rent is due. I know some landlords who assess late fees as soon as midnight passes, though. Either could technically be claimed as valid, but the former is more likely to hold up in court.

Will my cat stick to my radiator?

Not unless you physically attach him to it.

Cats are generally smart enough to move away from dangerously hot objects like stoves and radiators. A radiator heated by steam (212 degrees F) will not get hot enough to melt fur (300-400 degrees F depending on humidity). It might give him a little burn the first time he touches it, though, so use caution around kitty the first time the radiators come on.

Dear Piggy: Doesn’t my Landlord have to repaint every year?

In keeping with the spirit of normal Chicago apartments, this will be the only color in the whole article.

Paging Snopes.com

“I thought my landlord had to repaint every X number of years?” I get this question all the time. Usually from tenants who are either a) looking for a reason to move, b) looking for a reason to sue their landlord, c) looking for a fight, d) looking for permission to repaint their apartment in a different color of their choice, or e) originally from other states where such things actually are required. The short answer for Chicago apartments is NO. Your landlord is not required to repaint.

It’s an urban legend, guys. In fact, they’re not allowed to enter your apartment for any reason unless you tell them something is broken, something is obviously broken like water overflowing into another apartment, or they’re showing the apartment. However, like all urban legends it has its roots in the truth. (more…)

Dear Piggy: I lost my apartment! What do I do?

An apartment is never yours until the day you move in!

I recently received emails from a couple of beleaguered old friends who know that I work in the rental market. Names of the senders have been changed, naturally.

I’ve been away for the summer and my apartment lease is expiring at the end of the month. I warned my landlord that I would be out of town for a few weeks. While I was gone, the my lease renewal deadline came and went, and now my apartment has been rented out from under me! What can I do? — Sheila P.

And here’s the second one:

My boyfriend and I just rented our first two bedroom apartment together, but when we called the landlord to schedule key pickup we were informed that the current tenant is in jail! The apartment will not be clear in time for us to move in, and there’s no way for anyone to know how long it will take to clear the place out. We searched for weeks before we found this place. What do we do? –Marcus R.

A sad day for all. There’s nothing so frightening than having your current or future home yanked out from under you. A successful apartment move has many points of failure. Tenants tend to forget that apartment housing is a temporary arrangement, and that even a signed & fully-paid lease is subject to multiple contingencies. If you’re in a situation similar to Marcus or Sheila, read on to find out your options.

Analogy Time!

Go forth and shelve righteously, Librarian Repossession Brigade! [photo from 2011 Madison, WI protests by Madison Guy]

I got lucky today. I had a debt of just over $75 forgiven by the Chicago Public Library as part of their “Once in a Blue Moon” amnesty program. An overdue library book is a low-stakes version of Sheila’s situation. It is made very clear to us when we borrow the book (or apartment) that we will have to give it back. The date when we will have to do so is also made very plain to us. When that time passes, we can either bring the book back so that others may use it (move out), or keep it to ourselves and rack up fines. The only difference is that the library is not going to send the librarian repossession brigade to forcibly recover the books from our grubby little hands.

Even if Sheila had forgotten her precise lease expiration date over the course of the year, she probably remembered vaguely when she moved in, and probably had a pretty good idea of when her lease was going to expire. She probably assumed that the landlord would allow her to go month-to-month after the lease expired, or maybe she had an inkling of when the renewal offer would arrive and it just slipped her mind with all the travel.

Now, the landlord did the right thing by sending a paper renewal offer. A renewal, once signed, is as binding of a contract as the original lease, and a verbal renewal means a month-to-month agreement. However, in this day and age one would think that an emailed renewal as a PDF attachment would be just as effective. One would also think that the landlord would have called Sheila to warn her when her place went on the market, but this information could well be in the renewal letter itself. Under normal circumstances Sheila would have at least had a warning that the unit was being shown, as advance notice from the landlord would be required before any in-person showing. These days, though, an apartment can rent via video tour without the new tenant ever setting foot in Chicago, let alone entering the actual unit. The scenario, while obnoxious, is possible.

Sheila’s Options.

This is a situation where someone is going to get hurt and probably lose some money. The best possible option is the one that causes the least damage to the fewest people. Technically she had equal responsibility with her landlord for ensuring that she still had a place to live after her lease expired. Just like the library “due date” card, the start and end dates on her lease were clearly stated. The landlord has made it clear to her in writing that this scenario could occur.

Option 1: Move out.

If she goes, she needs to find a new apartment or a friend to crash with very quickly. This is obviously a very expensive and inconvenient option, but if the landlord is that uncommunicative it might be for the best. I wouldn’t recommend taking this route unless there’s no other recourse, though.

Who loses out? Two people: Sheila has to move, and the landlord has to incur the expense of turning over the apartment.

Option 2: Holdover.

Lack of communication only serves to narrow your options.

If Sheila does not get an agreement from her landlord to permit her to stay past the end of her lease, and then stays put, she’s now into what’s called a holdover situation. The landlord would have to get her evicted via the court system, a process that could well take months. However, Sheila should be aware that most Chicago leases have a holdover clause in the event of just this sort of situation. It usually reads something like this:

Tenant agrees that in the event Tenant fails to vacate and surrender the Premises upon termination of this Lease or Tenant’s right of possession of the Premises that: (1) Tenant shall pay as liquidated damages for the entire time that possession is withheld a sum equal to the greater of (i) three times the amount of rent herein reserved, pro rated per day of such withholding, or (ii) Landlord’s actual damages if same are ascertainable;

So basically, Sheila’s rent just tripled. And she’ll have an eviction on her record if she stays on without permission. As much as it would be tempting for Sheila to give back the same lack of communication that she received from her landlord, I’d also recommend that she avoid this particular option. Eviction records last a very long time.

Who loses out? All three parties: The new tenants lose the apartment, the landlord has to evict, and Sheila has to pay 3 times the rent and deal with the judgment on her record.

Option 3: Explain and Negotiate

Both parties are kind of in the wrong here. Sheila was lax in not paying attention to her lease expiration date. The Landlord was also in the wrong to not reach out to Sheila when he didn’t received a reply from her and theoretically knew she was out of town. Sheila should also know that the landlord is going to incur a considerable cost by turning the apartment over, even if the new tenant moves in on the same day that Sheila moves out. Both sides have something to gain from talking this out, as long as they can do so calmly.

My thought is that it’s in Sheila’s best interest to send a polite, non-accusatory letter to the landlord explaining the situation and offering to stay on at a rate that matches the new tenant’s rent. She should point out the potential for saving money. The letter should seek a win-win goal.

If the landlord has multiple apartments or friends with apartments, it’s possible that he may be able to shift the new tenants to another space. Yes, it’s annoying for the new tenants, but the landlord if he’s good will get two leases for the price of one and will get to retain a (probably very grateful) tenant.

If the landlord has just one unit, the new tenants are in for a shock much akin to what Marcus is going through, but there’s a very good chance that the they had several backup choices in mind. Even if a lease is fully signed by all parties and the deposit has been paid, it is still contingent on the landlord being able to deliver the apartment on the first day of the lease. Tenants, I hate to say this, but the apartment is never fully yours until the day you move in!

Who knows, it’s also possible that the landlord forced the new tenant into an earlier lease start date than they actually wanted.

Who loses out? The new tenants, and even then only in terms of time. They will get their deposit back, and there are other apartments. Unless this problem is discovered on moving day, chances are that any damage to the new tenants can be contained and the financial loss will be minor.

All told, option 3 actually causes the least harm, if it can be negotiated calmly and fairly without invoking the demons of the court system and the BBB. Of course, this puts the new tenants in a situation very similar to that of poor Marcus.

Marcus’ Options.

This is really a book. I kind of don’t want to live on this planet anymore.

At the other end of this spectrum is Marcus, who is probably thinking all kinds of mean things about his landlord and sticking little pins into the voodoo doll of the jailed, outbound tenant. After searching high and low with his partner and viewing about 15 apartments, they were so happy to finally find the one they wanted. And now it won’t be ready, there’s no ETA as to when it actually will be ready.

Option 1: Sue anyone and everyone.

The landlord had no right to advertise the apartment for rent! The landlord has a binding contract with Marcus! The landlord has to give up the apartment right now! Sue the family of the current tenant! Sue anyone involved in this whole mess!

Yes, Marcus can do this. Let’s go to the CRLTO, section 5-12-110(b) for proof.

Failure to Deliver Possession. If the landlord fails to deliver possession of the dwelling unit to the tenant in compliance with the residential rental agreement or Section 5-12-070, rent for the dwelling unit shall abate until possession is delivered, and the tenant may:

(1)     Upon written notice to the landlord, terminate the rental agreement and upon termination the landlord shall return all prepaid rent and security; or

(2)     Demand performance of the rental agreement by the landlord and, if the tenant elects, maintain an action for possession of the dwelling unit against the landlord or any person wrongfully in possession and recover the damages sustained by him.

If a person’s failure to deliver possession is wilful, an aggrieved person may recover from the person withholding possession an amount not more than two months’ rent or twice the actual damages sustained by him, whichever is greater.

Marcus can terminate the lease, or he can “maintain an action for possession.” That means suing, kids. And he can sue the landlord or the person wrongfully in possession.

Suing may make Marcus feel better, but it won’t get him into the apartment any faster, and will probably take up valuable time that could be spent looking for a different apartment.

Option 2: Go in and remove all of the current tenant’s belongings yourself.

This is also known as “breaking and entering,” or “trespassing and theft.” NO. Just. NO. Unless Marcus wants to get up close and personal with the outgoing tenant in jail – as a cellmate – NO.

Option 3: Wait for the apartment to be ready.

Under some circumstances a holdover situation could be cleared up very quickly. I’d imagine that the family of the jailed tenant does not want to be liable for triple the rent. Provided they can be found quickly and are responsible sorts, the apartment could very well be ready in a week or so. If Marcus really has his heart set on that apartment and only that apartment, it may be worth the wait.

If Marcus takes this option, the landlord may be able to assist with either storage of the furniture or a hotel, and should definitely waive the rent for the time that the property was unavailable. A former client of mine with multiple units offered a spare empty apartment in the same building for a couple of weeks when a similar situation arose due to the death of an outbound tenant, and then had his own workers shift the incoming tenant’s stuff into the real apartment once it was cleared.

Option 4: Find another apartment FAST.

There’s a fifth option but it involves some wibbly wobbly timey wimey stuff that is way beyond my pay grade to explain here.

It’s no secret that there are always apartments available in Chicago, and many of them are available to move into today. In a pinch you can always find a space. It may not be the dream apartment you’ve been waiting for, but it’s at least something. On the plus side, if it’s available for immediate move in you know for certain that it’s already empty!

This exact situation is why I will always sign my renter clients to representation agreements that run for about two weeks after their lease begins. Just in case something unforeseen happens and they cannot move in, I want to make sure they know that I can and I will find them a replacement immediately. I’ve done several rentals to folks who had the U-Haul sitting out front as we signed the paperwork.

This option does come with two warnings. First, Marcus must make sure to notify the first landlord in writing that he intends to terminate the agreement. Second, in the rush to find a backup apartment do not forget to do some research on the replacement landlord.

Have you ever found yourself in either of these predicaments? What did you wind up doing? Tell us in the comments!

Dear Piggy: How long have I got to live in my house if I stop paying my mortgage?

A squirrel recently beaned me in the head with a chocolate chip cookie. He was sitting on a run of conduit that runs above my back deck. It was about a 15 foot drop from the squirrel to the deck, and my head just happened to be in the middle. I shall believe this as it’s more comfortable than believing that the little bugger was aiming for me. Regardless, he had led the way in developing a little squirrel/pigeon commune in the rafters. It was time to either invest in helmets or call pest control.

Once the pest control fellow was finished with evicting the local fauna, the conversation turned (as it often does in my line of work) to evictions of another type.

“My girlfriend just divorced from her former husband,” went the story, “and she’s currently still living in one of the four houses that the owned together. She’s on the mortgage. He has opted to file for bankruptcy, stop paying his mortgages and wait for the lenders to foreclose on the homes. I’m worried for her – how long does she have before the sheriff puts her out on the street? Her court date with the bank is this week.”

I naturally figured this question is probably in the minds of many people, so I figured I’d take it on in public.

First of all, this is called “strategic default” – deliberately choosing to lose your home through non-payment when you could actually afford to keep it – and it really pisses me off. (more…)

Dear Piggy: Does a Chicago Landlord always have to pay for water?

Hand drawn graphic of water pouring into a piggy bank

Is it wise (or even legal) to make your tenants pay for water in Chicago?

I received the following question from a reader:

Dear Piggy,

I am a Chicago landlord. The new tenants in one of my two-flats have two small children and one more on the way. I recently received my water bill and see that the water usage is much higher than it was with the prior tenants. I know that nearly every apartment in Chicago comes with water included in the rent. I’m wondering, am I allowed to bill my tenants for water and sewer usage?
– Sincerely,
My Sink Runneth Over

The short answer is yes, a landlord in Chicago can technically bill a tenant for water and sewer usage. However, they can only do so in very specific circumstances, and only if the rental unit is metered individually. It is not a good idea though, due to a combination of risk and market expectations.

The long answer is, as you would guess, far more complex. (more…)