A DIY Landlord’s Guide to Landlord Licensing, Part I
That’s the business. If you don’t want to go through the Landlord Licensing process, go buy a corner store.
Due to public outcry against “slumlords”, many cities in the US have some type of program that requires a landlord to pay a rental property registration fee, have their property inspected by the city and do required repairs all to obtain permission to “legally” rent their property out. There are a variety of names used, but we’re going to refer to all of them as “Landlord Licensing”.
Before we go on, a quick disclaimer: the details below are geared for the Metro Detroit area, and while the concepts apply universally, specifics will vary. So, check with the municipality of your rental property before you assume that what’s written below is correct.
The Landlord Licensing Process
The licensing process goes through a predictable set of steps.
1. REGISTRATION: A landlord completes the city application and submits it with an application or inspection fee. Many cities have staff looking for rentals properties without landlord licenses and while they used to depend on just looking for “For Rent” yard signs, many are starting to use city taxpayer addresses to cross reference with online Google searches for rental advertisements. There can be significant fines for renting without a Landlord License.
2. INSPECTION: A landlord schedules an inspection with the city inspector, where issues are identified that don’t meet the minimum standards of the local rental code.
3. REPAIRS: The landlord receives a list of violations they must address.
a. If something is a serious enough health or safety violation, the landlord may be given only a few days to address those repairs.
b. Most other repairs are given a completion deadline of 2-4 weeks.
c. Sometimes you have to remind the city inspector you can’t do some repairs if the weather is too cold. Usually they will give a weather-related extension on specific repairs only.
d. If you can’t meet a deadline, don’t ignore it! We’ve found that you can often get an extension just by calling with a reasonable excuse.
e. Instead of an outright extension, the city may require a followup inspection and if you show enough progress on the required repairs, the city may give you more time to complete the rest.
f. Extreme repair issues may cause the city to condemn the property, requiring tenant(s) to relocate.
4. REINSPECTION: At some point the city will want to reinspect the property to confirm the violations have been acceptably addressed. Any violations not addressed are noted again and the cycle repeats.
a. Be prepared to pay reinspection fees if all the violations are not corrected.
b. Be sure to inquire how many reinspections the city will allow before they start issuing tickets. Be sure to also inquire the type of ticket that will be issued. Some cities will eventually require a landlord to appear in court for noncompliance.
c. Don’t be surprised if violations are added upon reinspection that weren’t on the original list! Often a different inspector catches issues missed by the initial inspector, or a tenant damages something in the time between the inspections or something was initially covered in snow and is now visible. We’ve even had city codes change between inspections.
5. PASS: Once all the violations have been addressed, the city will issue some type of Landlord License, Rental Certificate or Certificate of Compliance that’s good for a specific period of time.
a. Even if all the repair violations are satisfactorily addressed, many cities won’t issue a Landlord License if a property has past due property taxes, open permits or other violations.
Some general words of advice:
1. No matter how upset you become, don’t yell or threaten city employees or contracted inspectors. Nothing good will come of it. You’ll only give them a reason to dislike dealing with you and cause them to follow every code to the “nth degree”.
2. While many violations can be handled by a handyman, be sure to hire licensed contractors and pull permits as required. Most city inspectors are licensed contractors and won’t tolerate you trying to circumvent these.
3. The process can be very frustrating at times, but always be proactive and don’t ignore or procrastinate during the process.
So that’s the basics of the Landlord Licensing process — come back next week and we’ll talk about some of the big complications that can make the process suddenly get unreasonably expensive.