Will our rent rise when building sells?

Written by Robert Griswold, Steven Kellman

Question: My roommates and I signed a lease on a townhouse in August of 2005. Our lease stated that after 12 months, we would be on a month-to-month rental agreement at the same rental rate. We learned last week for the first time that our landlord had sold the property to another owner several months ago. Are both sides bound to the same lease terms or are we technically living here without a lease? Could we be thrown out without notice or have the rent raised?

Property manager Griswold replies:

Based on your move-in date of August 2005 and the 12-month term of your lease, clearly your lease has expired and you are now on a month-to-month rental agreement basis with the new owner.

When a property changes ownership the new owner is bound to the terms of the lease in place unless there is specific language that states otherwise. So if your rental property came under new ownership before your lease expired in August 2006, the new owner cannot change the terms of your fixed-rate lease and must honor it until it expires. However, now that the 12-month fixed rate has expired and even though you are currently on a month-to-month tenancy at the same rent, the new owner can raise your rent as long as he or she complies with state law and gives you proper written notice.

Rather than wait and worry, if you are interested in staying, I suggest you contact your new landlord and offer to sign a new lease. The new owner may want a reasonable rental-rate increase that you can handle and then you would have the peace of mind of knowing you have a fixed rent. If the landlord intends to own the property as a rental, then he or she will be glad to have a long-term tenant on a lease. This may just work out fine for both you and your new landlord.

Question: As a housing manager for a large military installation, I am involved in our military members' leasing of community rental properties. The apartment owners require credit reports for both the military member and spouse. Recently, two military members with spouses born in Japan were recently charged double the security deposit when the two couples leased their apartments. The larger security deposit was due to no credit history for the spouse. The local apartment association advises us that the larger deposit is appropriate if all applicants without credit history are treated the same. I'm troubled by the foreign-born spouses not having the same opportunity to have their credit history obtained as other American couples applying for housing. Is this disparate treatment?

Steven Kellman, an attorney for tenants, replies:

It is surprising to many people that certain examples of discrimination are perfectly legal. It may also come as a surprise to others that many things actually amount to an illegal discrimination. In summary, characteristics we have that are part of who we are make up the protections against illegal discrimination. Those would include race, religion, national origin, gender, disability, etc. These are things we have little to no control over. The things we do (i.e. our actions and behaviors) put us in classes generally not protected. These include things we do like earning an income, paying bills on time, being sued for eviction, being convicted of crimes, etc. The things we do also include building a good or bad credit history. Of course, we can have no credit history. A landlord is entitled to rely on our credit history (or lack thereof) in making renting decisions, including doubling the deposit in the case of bad or no credit. This is a legal form of discrimination as long as the decision-making rules are applied to everyone equally.

For foreign-born applicants who may not have a credit history in this country, there are things that can be done. For example, they could obtain evidence of their good credit from abroad and keep it in a file to present to a landlord. This could include letters of reference, scholastic degrees, awards or other documents that would be helpful in assessing the creditworthiness of an individual.

This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of "Property Management for Dummies" and co-author of "Real Estate Investing for Dummies," and San Diego attorneys Steven R. Kellman, director of the Tenant's Legal Center, and James McKinley, principal in a law firm representing landlords.

E-mail your questions to Rental Q&A at rgriswold.inman@retodayradio.com.

Questions should be brief and cannot be answered individually.