February 12, 1999

Free rent: 8 years and counting

By TOM KELLY
The Real Estate Advisor

Oh, the stories about landlords and tenants. Sometimes the tale involves the occupant from hell who trashed the cutest rental cottage in the world and the place you had spent every leisure moment of the past six months painting and carpeting. On the other side of the housing stage is the landlord who was tighter than Scrooge and did as little as humanly possible to repair a rundown building that was on the verge of being condemned by the city.

But have you ever heard of a landlord who did absolutely nothing -- including the collection of rent? A reader of this column and a listener of our syndicated radio show contacted me recently about his peculiar, eight-year living situation that has gradually evolved into an economic and legal wonderment.

More than eight years ago, Fred signed a one-year rental agreement with a landlord for an older, single-family home nestled on a country lane. The house needed work but was more than adequate for Fred and his wife. The first year passed with no real rental problems and the couple made sure the monthly rent was paid on time.

When the agreement had expired, Fred and his wife had found no other place more suitable to live. Yet, some repairs needed to be done to the old house before Fred would write his next monthly rent check. Doors needed planing, broken windows were taped together and both provided the cold winter wind easy access to the living room.

"I thought that if we could come to some agreement on how these things would be handled, we'd stay," Fred said. "I was happy to do most of the work myself if we could adjust the rent a bit. Well, when I approached the property management company about it, they said it would take at least a month to contact the owner because of his location and his profession. I thought that was a little ridiculous."

A month turned into a year and one year quickly became eight. Fred has yet to pay another dollar in rent and continues to wonder when and if the landlord will contact him about the status of the property and rental account.

"I just don't know if the landlord can collect any rent at all," Fred said. "As far as I'm concerned, the rental agreement expired after the first year. I fulfilled the obligations and there hasn't been any contract since then."

According to Rob Crichton, attorney and partner in the Seattle law firm of Keller Rohrback, the statute of limitations on written contracts is six years while the statute of limitations on verbal contracts is three years.

"It's important to check the language of the initial agreement," Crichton said. "If there were any reference to a renewal, it would probably change the situation considerably."

What has not changed is Fred's fondness for the house. In addition to the usual repairs, he has made several improvements to make his now-growing family more comfortable.

"I've always taken care of my things and other people's property," Fred said. "Just because I have not been the actual owner hasn't really made that much of a difference in the day-to-day maintenance and routine. When we begin to wonder is the long-term down the road. Although we'd like to have more space and major upgrades, I haven't really felt that I could take those steps."

Russ Cofano, a Bellevue attorney who specializes in real estate matters and teaches courses for the Washington Association of Realtors, agrees with Crichton about the timelines of the contract.

"If the landlord showed up tomorrow on his doorstep and said 'you owe me back rent' it's difficult to say exactly what a court would do," Cofano said. "A court could say there was an implied holdover tenancy even though the actual agreement terminated after one year. In that case he might owe six years' of rent."

Cofano said that the agreement between the owner and the property manager also should be scrutinized because the owner seemingly employed the firm to render a service.

But free rent for Fred? You know what they say about a free lunch.

Let's see... six years of payments at, what, $700 a month?

Previous columns:

• Bill would help seniors lower their property tax, 02-05-1999
• Virtual site tours go interactive, 01-22-1999
• A look at future of housing markets, 01-08-1999
• Economist warns real estate industry to prepare for Y2K, 12-24-1998
• Realtors get the sales pitch, too, 12-18-1998
• More home shoppers fall into the Net, 12-11-1998
• RV owners can get a tax break, 12-04-1998
• Who owns listing to your home?, 11-26-1998