What Every Massachusetts Landlord Needs to Know!
The Massachusetts Attorney General has promulgated new regulations in relation to the imposition of so-called “junk fees” in consumer transactions (hereinafter, the “Regulations”). These new Regulations apply to the sale of all goods, products and services in Massachusetts, including the sale and leasing of property. The following is a brief summary of the Regulations, as they pertain to the leasing of residential housing.
1. Offers to Lease
In any marketing or solicitation to lease property, the owner/managing agent must “Clearly and Conspicuously” disclose the following:
a. the “Total Price” of the apartment: The “Total Price” must include the maximum price the consumer will have to pay for the apartment, including all fees, charges and other expenses. The Total Price must also be “more prominently” displayed than any other pricing information (i.e. no fine print).
b. the Rent: Rent may be stated as a monthly amount, rather than an annual amount, as long as the time period covered by such payment is clear (i.e. it is clearly disclosed that the rent is per month).
c. the “nature, purpose, and amount of any fees, charges or other expenses:” The Attorney General has required that such fees and charges be specific as to what they pertain to and how they are determined. For example, a “cleaning fee” needs to not only confirm it is for cleaning, but identify the cleaning which will be performed and the purpose of same.
The term “Clear and Conspicuous” includes being readily noticeable and readily understandable by ordinary consumers and contained in the same medium as the solicitation. In other words, the “Total Price” must be contained on the same document as the advertisement, on the same webpage as the solicitation, or contained in the same form of communication through which that specific offer is being transmitted. The Total Rent must also be clearly disclosed and unavoidable (i.e. you cannot require the applicant to click to another page to see the Total Price).
2. Application
Prior to requiring an applicant to disclose any personal information, the owner/managing agent must Clearly and Conspicuously (as defined above) disclose the Total Price of the Lease. You cannot accept any personal data from an applicant until the Total Price is disclosed to the applicant.
3. Lease
In the “final presentation” of the offer, which would appear to be when offering the Lease, the owner/managing agent must Clearly and Conspicuously disclose:
a. the Total Price, including all fees and charges;
b. the “nature, purpose, and amount of any fees, charges or other expenses”; and
c. if any fees are “optional” or “waivable by the owner”, in which case clear instructions on how to avoid such fees, charges or expenses must be provided.
The regulations also prohibit the misrepresentation that the payment of any fee or charge is required by law.
4. Self-Renewal Clauses
If you have a term in your contract for an automatic renewal, such as a self-extending lease, you are now required to:
a. Disclose in writing at the time of lease signing that the rent will continue to be charged on a monthly basis, or will increase, at the end of the lease term; and
b. Include instructions on how to non-renew the lease and avoid the charges.
The owner/managing agent is also required to provide a simple mechanism to prevent the automatic renewal of the lease. This mechanism must be at least as easy and available by the same means the person leased the apartment (i.e. online if they leased online).
Also, owners/managing agents are now required to provide written reminders to residents of how they can avoid an automatic renewal. If the tenant’s failure to provide a notice of non-renewal results in the lease automatically being extended for another term, the Owner must provide the following:
a. Where the tenant is required to provide more than thirty-one (31) days’ notice of non-renewal, the owner must provide written notice no more than thirty (30) days but no less than five (5) days prior to the deadline for the tenant’s notice of non-renewal. This written notice must include: (i) the amount that the tenant will be required to pay if the lease renews (i.e. the new rent); (ii) how they can cancel; (iii) the specific date by which they have to cancel; and (iv) when the new rent would commence. The tenant must also be able to cancel the non-renewal by the same means that they signed their lease, and the tenant has to be provided with a simple way to non-renew.
b. Where the tenant is required to provide less than thirty-one (31) days’ notice of non-renewal, the owner must either: (i) provide the same notice as above; or (ii) provide written notice at least as frequently as the rent is charged containing the amount the tenant will be charged at auto-renewal and how the tenant can terminate the tenancy (i.e. – if the lease extends as a month-to-month tenancy, the notice must inform the tenant that they can terminate on one full month’s notice)¹.
Summary:
In summary, owners need to review their advertising and solicitation to confirm that they are disclosing the total amount of rent, with any applicable additional fees or charges. This would include disclosure at the outset of any parking charges, pet rent, internet access rent, etc.² The Total Rent, with all mandatory additional fees and charges included, should be fully disclosed when the apartment is being offered. If there are any required charges in addition to the “base rent”, owners should include that amount in the Total Rent and fully disclose the nature and purpose of such charges. For example, if the rent is $4,000 per month and the tenant will also be required to pay a bulk internet fee of $100 per month, the Total Rent must be disclosed as $4,100 per month. The resident must also be told in writing what specific benefit or service they receive for that bulk internet fee. Such disclosure of the Total Rent must also be provided before you can accept an application. The Lease should also contain the same disclosures both as to the Total Rent, any amounts being charged as additional rent, as well as the specifics of what is being provided for such additional amounts.
Additionally, we would recommend that if there are other optional amounts which the applicant may elect for specific additional services, those amounts be disclosed with the offer prior to the application. For example, if a tenant can elect to pay for parking, storage, etc., those options, and the cost thereof, should be disclosed as “Optional Charges” and a description of the services provided. Finally, for any optional service, the tenant must be informed of the manner in which to have such amounts waived. This should be clearly provided in the lease. For example, if a tenant can have the pet rent removed if they no longer have a pet, the means by which they would make that request must be stated. The regulations are unclear as to whether tenant paid utilities must be included in Total Rent. The Attorney General has recently issued an FAQ which has confirmed that cost of sub metered water/sewer need not be included in Total Rent as long as the owner otherwise complies with the requirements of state law. This is clearly based on the fact that the cost of this utility is based on actual usage and is therefore not known at the time of the initial disclosure or even at the time of lease execution. Based on this FAQ, it would also appear that while the initial disclosure should note if the tenant is required to pay for their own utilities, the anticipated and unknown costs of such utilities need not be included in Total Rent.
Finally, if your lease is self-extending, you need to fully disclose how that would occur in writing AND provide a simple way to non-renew. The non-renewal procedure has to be as easy and in the same manner as the tenant was able to lease the apartment. If the tenant leased online, the non-renewal should also be online. Also, if the tenant has to provide a notice of non-renewal more than 31 days before the end of the lease term, you need to send a written reminder to the tenant at least 5 days before the extension deadline but not more than 30 days in advance. This notice also needs to include the amount of the new rent (including any additional rent amounts or charges), how they can cancel, the date of the renewal deadline, and the commencement date of the new rent. If your lease requires 31 days or less for a notice of non-renewal, you can either comply with the same requirements as above OR send notice with your monthly rent reminders which confirms when the autorenewal would take effect and how they can then terminate that autorenewal. Failure to comply with the foregoing requirements and these regulations would be deemed an unfair and deceptive practice in violation of G.L. c. 93A entitling a tenant to their damages, legal fees, and potential punitive damages. It is therefore extremely important that owners and managers ensure that their leasing and rental procedures are amended to comply with these new regulations. You should consult with legal counsel to ensure that you are compliant with these requirements.
¹ This provision of the Regulation is extremely unclear and is based on our current understanding
of the provision.
² As a reminder, the charging of any fees beyond the first month’s rent, last month’s rent, and
security deposit, at or before the commencement of the tenancy (such as application fees, amenity
fees, etc.) should be avoided as they likely violate G.L. c. 185 §15B.