Have you heard of a repair deductible on home lease?

fade · May 27, 2012

I have lived all over this country, rented houses, rented apartments, and owned houses. I have never until today heard of a repair deductible in a lease. I found a house in the neighborhood my wife wants, and after negotiating with the landlord, I finally got a satisfactory lease. Today I got the paperwork and at the very end of the lease under additional provisions, it says "The tenant is responsible for the first $60 of all repairs." I immediately called the agent who said that the landlord refuses to negotiate it.

I did a web search, and I saw no references to this type of clause dated any older than about a year. What's more, it seems to be associated with homes owned by property management groups like this one. Most of the links I find seem to localize it to Houston, too. It pops up on "tips to save money as a property investor" site.

Have you heard of this? Does it seem like double dipping to you too? You already pay more than an equivalent mortgage payment monthly partly as a means to cover repairs. It's clear what it is. It's usually done in conjunction with a home warranty. So basically the landowner basically pays nothing for repairs, because the owner pays the warranty deductible.

Tress · May 27, 2012

Sounds like bullshit to me.

fade · May 27, 2012

I see it around the web, though. I called a real estate agent I know and they actually t0ld me this is becoming a thing lately for rental houses. It just seems odd to pay for someone else's house.

This house is unfortunately in a very difficult to get into neighborhood. It's no skin off the company's nose if I say no. They'll just tell me not to let the door hit me on the way out and go to the next one in the queue.

Neon Pirate · May 27, 2012

Seems to be a recent thing, though I never leased had rentals then bought. The current house was purchased 17 years ago so I'm not current on real estate trends but even lease-to-own deals that friends have done had no deductible. When you look at the place test all of the appliances, sockets, ceiling fans, sounds like they are trying to cut down on the expense that goes with the unnecessary calls that plague many property managers. Good luck!

Bowielee · May 27, 2012

That bullcrap. Your rent IS your deductible.

strawman · May 27, 2012

Do an obsessive inspection beforehand and just suck it up if that's the place you want.

Note that they said that's one thing they won't negotiate on. See if they'll drop the rent or cover water or something to make up for it.

fade · May 28, 2012

The catch is that this neighborhood is really difficult to get into because of the very thing my wife wants: a very good elementary school. Supposedly one of the best programs for profoundly gifted kids in the country. These leasing agents know it, and they know they have you over the barrel. This house lease is already quite expensive for its size and location. My agent tells me she called around and it's very common in Houston for single family home leases. We got them to move the lease start date from July 1 to August 1, so my agent tells me I'm in a very weak negotiating position, since the landlord already gave me a discount of one month's rent.

My research showed that this is supposedly a way to keep the minor repairs out of the landlord's hair. It's also supposed to make the tenant take better care of the place by giving the tenant a vested interest, but other landlords are countering that it just makes the tenants refuse to report breakages. Most of the hits I found on the web are indeed localized to Houston, so it must be a Houston thing.

I told my agent that I'm concerned that I will be fixing this guy's house at my expense. I have no idea what this house is like until I get there. I've asked my agent that if the LL won't negotiate, can we at least get a cap on our liability? I've also expressed to my agent that I'm concerned that if this guy is so strict up front, he might be a tyrant to live under. So far he has done a more thorough background search than the defense companies I've worked for. He asked for a ton of personal info, called my work, etc. My agent assures me she's talked to the listing agent and she says that he is quite nice, he just got really badly burned by a recent tenant, and doesn't want it to happen again.

papachronos · May 28, 2012

fade said:
I have lived all over this country, rented houses, rented apartments, and owned houses. I have never until today heard of a repair deductible in a lease. I found a house in the neighborhood my wife wants, and after negotiating with the landlord, I finally got a satisfactory lease. Today I got the paperwork and at the very end of the lease under additional provisions, it says "The tenant is responsible for the first $60 of all repairs." I immediately called the agent who said that the landlord refuses to negotiate it.

I did a web search, and I saw no references to this type of clause dated any older than about a year. What's more, it seems to be associated with homes owned by property management groups like this one. Most of the links I find seem to localize it to Houston, too. It pops up on "tips to save money as a property investor" site.

Have you heard of this? Does it seem like double dipping to you too? You already pay more than an equivalent mortgage payment monthly partly as a means to cover repairs. It's clear what it is. It's usually done in conjunction with a home warranty. So basically the landowner basically pays nothing for repairs, because the owner pays the warranty deductible.

I lived in a home for two years in Virginia that had a clause like this in the lease, except mine was a $30 deductible with a $300/year cap. The owner told me that it was standard for all his properties because he had a lot of Section 8 tenants who would call him for ridiculous things like burned out light bulbs and dirty air filters. I ended up negotiating a $40 deductable with a $400/year cap, except in cases where the repair was for something necessary to make the place livable (HVAC/electricity/plumbing etc) AND was due to no fault of our own. So if the plumbing clogged because my son flushed his underwear, we were responsible for paying the plumber. If the AC failed to work because the heat pump ran out of freon, he would pay the bill.

Adam · May 28, 2012

Wait, you negotiated your deductible and cap upwards??

PatrThom · May 28, 2012

Yes, but with broad form coverage. Pay more, but only when it is his fault.

--Patrick

Dave · May 28, 2012

They can put whatever damn fool thing they want into their contracts. It's up to you to see if you want to sign it or not. Personally I'd look into the turnaround for the house. If a lot of people have lived there one year at a time I'd tell them I pass regardless of the schools.

WasabiPoptart · May 28, 2012

papachronos said:
So if the plumbing clogged because my son flushed his underwear, we were responsible for paying the plumber. If the AC failed to work because the heat pump ran out of freon, he would pay the bill.

This was what our lease was like when we were in CA. If it was our fault, we paid. If it was something necessary to the upkeep of the house then our landlord paid. We didn't have any deductible though.