Update on Senate Bill 91 | Important Information
The proposed Amendment to Bill 91, which was covered in the June Newsletter was signed by the Governor on June 4th and will go into effect on January 1, 2014. Some of the items included in the bill are renters insurance, tenant screening requirements, and fees for tenancy violations.
Effective January 1, 2014 Landlords may require tenants to obtain renters insurance, which allows a landlord to make a claim against a tenant’s rental policy for damages or costs that exceed the tenant’s security deposit. The claim must only include costs for items for which the tenant is legally liable for.
Also new on January 1st of 2014 is the applicant screening criteria that may be used in the evaluation of a prospective tenant’s eligibility. Among items that landlords will not be permitted to consider are evictions that occurred more than five years earlier and arrests that did not result in conviction. If the case is still open at the time the applicant applies and the offense involves drugs, sex offenses, or “person crimes”, a landlord may take that into consideration. However, traffic offenses, including driving under the influence or reckless driving cannot be included in the decision for eligibility.
Lastly, the amendment allows landlords to charge tenants a fee for repeated violations. Repeat offenders could be assessed a fee up to $50 for a second offense or $50 plus 5% of the monthly rent for subsequent offenses, following a written warning.
CPM Real Estate Services prides itself on keeping abreast of the ever-changing laws and real state trends that affect you and your rental properties. We constantly monitor change in laws, marketing trends, maintenance and repair techniques and virtually all items related to real estate. It is always our goal to provide the most professional and effective management services so that our clients will maintain the best overall return on their investments.
Key Points about Renters Insurance
Many renters may think renters insurance is not necessary because they think the property owner’s insurance protects their personal items if damaged or destroyed.
This is a common misconception and could result in a total loss if there was a tragic event that resulted in the renter’s personal property being completely destroyed. Ultimately the renter would have to replace all of the necessary items at their own expense, which may result in mountains of debt.
The majority of renters who don’t carry renter’s insurance often just don’t think it’s important. They don’t think a catastrophic even will happen to them. Unfortunately, that’s often not the case. In the United States, a house fire happens every 90 seconds and a break-in occurs every 15 seconds. If all of the personal items in a basic residence have to be replaced, those expenses can really add up. And if it’s determined that the renter is to blame for the fire or other catastrophic event, they may be held responsible for any damage done to neighboring units.
For the nominal cost of renters insurance, it just doesn’t make sense that 60% of renters don’t carry it, according to Rent.com. Most major insurance carriers will provide a discount for coverage if bundled with an auto policy. The average monthly cost is about $15 per month, which is less than many of the day-to-day expenditures some people pay for that they don’t truly need.
It’s actually less than the average cost of two movie tickets. Or it’s substantially less expensive than buying lunch every day as opposed to packing one from home which rings in at an estimated $148 per month on average.
At CPM we currently advise renters in the rental contract that they are not a co-insured under the Landlord’s insurance and that their personal property will not be covered if damaged or destroyed. It is recommended that they obtain renters insurance specifically covering their personal possessions from injury or damage due to fire, water, burglary, vandalism, theft, or other causes. However, as of January 1st, 2014, as a property owner you will have the option to require renters to carry renters insurance. If this is something that you are interested in learning more about, or if you would like to discuss this option with your property manager – give them a call today.