Basement Rental 101: Know the Codes

Article excerpt

Byline: Michele Lerner, SPECIAL TO THE WASHINGTON TIMES

As homeowners face rising monthly expenses for utilities, insurance, property taxes and loan payments, they may look around their home and see potential revenue from an unused basement. Fantasizing about paying off

bills with rental income may lead some to leap into landlord mode, but some important considerations should be addressed first.

While regulations vary from one jurisdiction to the next, homeowners should check local rules to see if renting part of their home is legal.

Other legal concerns include how situations will be handled such as a tenant failing to pay the rent or damaging the property.

In addition, there are tax implications to becoming a landlord. Perhaps most important, homeowners need to consider the impact on their personal lives of having a tenant share their home.

Examples of pleasant landlord-tenant relationships are abundant, but there are also some frightening scenarios of disastrous situations.

"I had a client who inherited the family home after her mother passed away," says Nancy Wilson, a Realtor with Evers & Co. in the District. "My client was planning to move out of town and then decided to rent the basement to a couple to make some income for a few months while she looked for another home. The renters stopped paying the rent after three months. She told them they needed to move so that she could make home improvements and sell the home, but they kept delaying the date of their move."

Ms. Wilson explains that in the District, it can be very difficult to evict a tenant. Her client hired a lawyer and filed eviction papers, but it still took from August to April for the tenants to be removed from her home, delaying her repair work and the sale of the home. "The city laws say that you must keep the utilities on even if the rent is not being paid and (that) you cannot evict someone if the temperature is below 40 degrees or if it is raining," Ms. Wilson says.

In the District, homeowners who rent a basement apartment to tenants must obtain a Basic Business License, an inspection and approval from the Building and Land Regulation Administration and a Certificate of Occupancy before renting the space. Check regulations at the District's Department of Consumer and Regulatory Affairs Web site (www.dcra.dc.gov).

In addition, all tenants in the District, even if they are renting only a bedroom, have the first right of refusal to purchase the property if it is placed on the market.

"Everyone considering renting out a basement needs to be well aware of the rules and regulations relating to landlords and tenants," Ms. Wilson says.

Aaron Stein, an attorney with Aaron Stein Settlements in Gaithersburg, says that the first step homeowners should take is to determine whether they can rent out their basements at all.

"Different jurisdictions, such as the town of Rockville, or Montgomery County, have different rules which govern basement rentals," says Mr. Stein. "In Montgomery County, a basement apartment can be rented as long as you register the apartment with the county."

The Montgomery County Office of Landlord-Tenant Affairs (www.montgomerycountymd. gov/hca) provides consumers with general information on room rentals. This county distinguishes between room rentals, which have shared kitchen facilities, and accessory apartments, which include a private kitchen and must be licensed by the county.

In Virginia, rentals within a single-family home, town home, duplex or condominium are not covered by the Virginia Residential Landlord and Tenant Act (VRLTA) unless the landlord owns five or more rental units.

General and Fairfax-specific information about landlord and tenant rights can be found on the Fairfax County government Web site. (www.fairfaxcounty.gov)

Arlington County residents can contact the Housing Information Center at 703/228-3765 or visit the Web site (www. …