Should my friend risk a verbal lease in Chicago in an owner occupied 3-flat?
July 20, 2012 1:35 PM   Subscribe

My friend is moving from out of state, and she had us go look at an apartment for her. We didn't like it very much, but the neighborhood is not bad and we walked around the block looking for 'for rent' signs. While out walking, we saw a mailman, so went up to ask him if he knew of any good places to rent. He immediately told us about this couple in a flat who have a floor to rent by word of mouth. He said they are nice people and have been living there for a long time. The mailman introduced us, and we checked the place out and recommended it to our friend. The friend called and the owners don't do written leases. While she'd really likes the sound of the place, she's uncomfortable about living in a place with a verbal lease and is worried she could lose her deposit (they want one month's rent). Is this normal? Do people often ask for verbal leases? Should she run away?
posted by bleary to Home & Garden (25 answers total)
Yes. Outside of maybe family members and close friends, you should get the terms of any rental agreement in writing. It protects you, it protects the owner--it's just a good idea. If the owner insists on doing a verbal lease only, your friend should look elsewhere.
posted by Cash4Lead at 1:41 PM on July 20, 2012 [1 favorite]

My own policy is that I will not give a deposit unless I get a piece of signed piece of paper stating that the deposit was received and that it will be returned if/when I move out of the space leaving it in the condition in which I found it. If the owners won't even sign something like that, I would run.
posted by needs more cowbell at 1:41 PM on July 20, 2012 [7 favorites]

I grew up living in apartment after apartment, sans lease, in NYC, both with my family and on my own. When I was a kid, our landlady kicked us out to move her nephew in, and my mother managed to not only get the deposit back, but also got her to pay the deposit in the next apartment (as recent immigrants, taking her to court wasn't feasible.) The last place I lived in, with no lease, was with a 80-something year old landlady who hardly spoke English and demanded the rent in cash. She also reimbursed me for a plumber's visit without asking for the receipt.

So, living without a lease carries some significant risks, not many benefits, and really, really depends on the owners disposition and the interpersonal skills of the people renting. If your friend is bad at confrontation, then she probably shouldn't go in on a no-lease apartment because there may come a point where being steadfast is the difference between getting really screwed and getting only kinda screwed. Also, bear in mind that there are laws that apply to tenants (to defend them) regardless of whether there's a formally-signed lease or not.
posted by griphus at 1:42 PM on July 20, 2012

If she's not prepared to move at the whim of the landlord, she should not rent this apartment.
You might want to be careful about getting in the middle of this.
posted by HuronBob at 1:42 PM on July 20, 2012 [2 favorites]

Did she ask them, or did they tell her, why they don't do written leases? It protects them as well as the renters. Are they wanting to be paid under-the-table?
posted by Houstonian at 1:42 PM on July 20, 2012

If there's no written lease, it's a month-to-month agreement. Most places require 30 days notice if terminating the agreement.

As for the deposit, get a reciept in writing. Is the one month's rent a security deposit or is it a depost to hold the apartment? Also, every time she pays rent, she should get a receipt.

If she's not comfortable with the arrangement, then she should keep looking.
posted by Ruthless Bunny at 1:44 PM on July 20, 2012 [1 favorite]

Response by poster: She's worried about losing her deposit. She's been looking at Chicago law and under Chicago law, landlord-occupied buildings of less than 6 units, landlords aren't held to the same laws regarding security deposit laws unless there is an explicit contract. She said the only real law she found was that "Landlords can't lock you out without first taking legal action".

If it were me, I'd take the place because I've lived in an owner occupied flat in Chicago and it was great. Much better than an apartment complex. I had a written lease, on the other hand. On the gripping hand, I met these people because the mailman stopped what he was doing to introduce us to them when we asked him if he could recommend any places for renting in the area.

Thanks for some very good answers here.
posted by bleary at 1:49 PM on July 20, 2012 [1 favorite]

You really need to go with your gut feeling about the people in this case. My first apartment was a very successful rental without any kind of signed lease. There were no problems, the family I rented from was very nice, they fixed everything I needed fixed, they returned my security deposit without a question, and they collected my mail for me to pick it up after I moved out. I know people who have had similar experiences. This was all in NYC, where this kind of thing is common, and where there are no cookie-cutter huge apartment complexes that are owned by one owner, like in the suburbs.

If this is truly a friendly, honest family just trying to make some extra cash from their un-used apartment/finished basement, then it should be fine, and it should be easier to rent from them than from a rental company that has no interest in keeping you satisfied.
posted by at 1:52 PM on July 20, 2012

This type of arrangement with a total stranger just smells bad.

As others have said above, no protections for her, lots of risk for her. (Having to move out with less than desirable notice, not having a lease document to prove residency at that particular address, which is needed in some circumstances, particularly if the landlords also insist on maintaining the utilities in their names, possible insurability of property problems, code inspection/habitability problems, the landlord obligation dodging you report in your followup, etc etc etc)

You have no real idea how the mailman knows these people. If he's just their mailman, he doesn't know if he's shady. If he's their cousin or something he may have something to gain by getting the apartment rented.

Run. Run run run. Because, yes, getting a signed note that the deposit was received does not indicate all the terms for getting the money back, and makes it more likely that the landlords will say "but you trashed the place" or "but you said you weren't paying rent in __month__ and we'd agree to take it out of the deposit.

Do not pass go, do not rent this apartment.
posted by bilabial at 1:53 PM on July 20, 2012 [3 favorites]

Maybe time to dig a little deeper?

- "This sounds like the sort of apartment I've been looking for, but I'm not familiar with a 'no written lease' arrangement. Do you mind telling me why you do it that way?"

- "I'm moving in from out of state and would like to find a place I can stay in for awhile. What can you tell me about the length of time your previous tenants have lived here?"

- "I expect you'll want some references, and I'm prepared to provide them. Would you help me get in contact with a previous tenant?"

- "How will you make the judgment about returning all or part of my deposit?"

Your friend's willingness to take these extra steps can be weighed in the context of whatever other options she has. The landlords' overall responsiveness, cooperativeness, etc. (or not) will enable her to make a more informed decision.
posted by John Borrowman at 1:53 PM on July 20, 2012 [10 favorites]

I grew up in the 70s & 80s in Chicago's Andersonville neighborhood and I know that my own family and many of my neighbors did not have leases. That's just the way it was done then with all those two-flats.

To me, it wouldn't be a big red flag in an owner occupied flat but I would have a hard time taking this leap of faith without meeting the owner prior to agreeing to it.
posted by FlamingBore at 2:06 PM on July 20, 2012

Response by poster: This is on the northside. Between Albany Park and Ravenswood Manor.

When we viewed the place I asked the owner how long they've lived there -- 20+ years iirc.
posted by bleary at 2:19 PM on July 20, 2012

It's almost impossible to know the truth without knowing the landlord involved. I've lived in a place with no written lease (me living there was based on a preexisting relationship between a friend and the landlord) and I had no problems, but that is just an anecdote.

As others have mentioned, having no written lease means less security, but possibly more flexibility. Also it's possible the no written lease thing means the owner is playing tax games or avoiding parts of the city code that apply to rentals. Again, impossible to know without knowing the people. Your friend is faced with a choice between the safety and security of a formal lease vs. insecurity but maybe a nice place to live. All she can do it talk to the landlord, as John Borrowman suggests and decide if she feels comfortable with the arrangement. She could also try Googling the address to see if anything crazy pops up.
posted by Wretch729 at 2:21 PM on July 20, 2012

Two important considerations: How does the couple feel about the arrangement (Is the couple going to be the landlord?) and How does the landlord/tenant law seem to go in the state/municipality? I'm guessing it tends to favor tenants.

I appreciate the hesitation, but I would probably take the place after interviewing the couple and getting a positive review. Keep receipts for everything, make a paper trail of emails and phone calls (consistent note-taking can become strong evidence), and figure out if the law will protect a tenant without a paper lease.
posted by Sunburnt at 2:27 PM on July 20, 2012

On the one hand, having grown up in Chicago and having lived in Andersonville, I can say that month-to-month verbal leases aren't entirely uncommon, a holdout from the days when everyone knew everyone else. There are other neighborhoods like this, too, where you'll never see a for-rent sign or a classified ad, because these people want to pick and choose their potential tenants without regard for anti-discrimination laws or just having people move in that the don't like.

On the other hand, without a lease, your friend is indeed exposed to the whim of the landlord, and it could certainly go badly if the landlord wants your friend out. But then, that's what they're trying to do, retain the ability to kick out a bad tenant easily.

At the end of the day, she should have a lawyer write up a quick piece of paper for the landlord to sign that says the deposit is being made, and that she will get the deposit back in full if she is prevented from living in the unit for at least 30 days. Beyond that, month-to-month means exactly that, and how long the arrangement lasts will depend in large part on how well everyone gets along.
posted by davejay at 2:59 PM on July 20, 2012

Just to give the opposing viewpoint, the landlords might not want to rent to someone they haven't met either. They are taking even more of a risk, as it is their property. Maybe they just want to meet her in real life first.

It would at least give her a chance to get there, try it out for a month, then decide.

A receipt for a deposit would be absolutely necessary, though.
posted by Vaike at 3:33 PM on July 20, 2012 [1 favorite]

I would insist on a signed rental agreement, even if they don't want the obligations of a lease. It's just safer and easier for everyone in the long run, even if they do all know each other, and even more if they're strangers.

If they refuse any kind of written documentation, which is a pretty standard requirement, what else will they refuse to do in the future?

As someone who has dealt with and been screwed around by lots of shady landlords even when there has been explicit paperwork, I say that everything that a tenant can do to protect themselves is neccessary.
posted by windykites at 3:50 PM on July 20, 2012 [1 favorite]

You should write up a reasonable rental agreement and propose send it to them. If they refuse to do this at all, then don't rent here.
posted by grouse at 5:12 PM on July 20, 2012

People are making awfully definitive statements here. Nothing illegal is taking place. There is no definitive answer here. The sole determinate is your friend's risk aversion. She won't have the formal protection of a lease, but she also won't have to go through the formal scrutiny of a credit check and references. There are pros and cons. There are no absolutes.

If they don't want to do a lease, they are not going to do a lease. But that does not mean she has no legal protection. She is basically in a month to month tenancy. They will have to serve her with 30 days notice to evict her. She can write "Security Deposit, 331 Orchard St" on her first check, and she'll have a cashed check record of every rent payment that follows. She will be able to take them to small claims court and, if she documents the move-out condition, very likely get her deposit back even in a worse case scenario.
posted by DarlingBri at 5:31 PM on July 20, 2012

There are various rental-property review websites that might have information about the property or the landlords. It would be worth at least googling the address. Also the landlords' name(s), if you know it/them.

Don't rely too heavily on the review sites, though — several of the reviews up for the building we live in talk about how totally awesome Sam the manager is. Problem is, Sam's been gone for 7 years and the managers since them have been… distinctly sub-awesome.
posted by Lexica at 6:32 PM on July 20, 2012

Not wanting a written lease doesn't necessarily mean they won't agree to a written contract specifying the amount of the deposit, the receipt, terms for return, etc.

Also, if your friend can create a clear (electronic) paper-trail with them about the terms of the agreement and the residency, then it's quite possible that that will serve her as well in court or in case of a potential dispute, as a lease.

The question to me then is whether these owners are refusing to do a written "lease" because that's just what they're used to, what their comfort level is, and reasonably conventional for their milieu, in which case I wouldn't worry, or whether it's because they want to set themselves up to be sleazy.

I would recommend checking up a bit on Illinois/Chicago landlord tenant law, but in general for me I think I would be comfortable with a paper trail without a lease, but not willing to go forward if they needed everything to be on the phone or verbal. At the very least I would send send them a dated letter, certified mail, laying out everything that was agreed to, and keep a copy for myself.

The mailman rec could be a pro but it's no guarantee of non-sketchiness.
posted by Salamandrous at 7:06 PM on July 20, 2012 [1 favorite]

If the owners refuse to do a written lease, the dwelling might not be up to code, not legally partitionable into rental units, etc. I'd find out from the city if it knows about the apartment.

But really, I wouldn't even go that far, because I'd never rent without a written lease from anyone other than my family.

What is a "verbal lease" anyway?
posted by ImproviseOrDie at 3:00 AM on July 21, 2012

I've been a renter and a landlord. I would never be a landlord again without a lease. My guess is these people have some misguided idea about why they should avoid a lease, and haven't thought through the protections it provides because they are not experienced landlords.

Your friend should frame this as a concern for their protection, if she really wants this place, and say "I've seen some bad experiences happen to other landlords who did not get a written lease, and when the renter took advantage of them by __________ (leaving all their furniture and trash behind for the landlord to take care of, not paying the utility bills, not paying the last month's rent and moving far away), they really regretted it. I am not planning to do any of these things but I know that you do not know me, and I want you to have peace of mind that you would have a legal leg to stand on if something did go wrong. It would protect me too. What do you think?

If at that point they still say something vague about just not wanting a written lease, it's GOT to be because there is something sketchy they want to do to her. Because having a bad renter take advantage of you is miserable and stressful and can be costly, and anyone who acts like it's no big deal must have something up their sleeve.
posted by treehorn+bunny at 10:13 AM on July 21, 2012

Response by poster: It's possible that they have a lot of experience renting to people there -- they are elderly and have lived there for years (based on how they answered my questions when we viewed the place). The preference for a month-to-month verbal lease may be a norm from their generation and culture. I don't know. This one reason I posted here. I've only lived in the area for 12 years and don't have as nuanced an experience of Chicago as people who have lived here for more than one decade.

I like some of the suggestions for questions that have been posted, but I'm not sure how successful my friend would be at asking all of these questions -- the owner's English didn't seem that good over the phone.
posted by bleary at 10:41 AM on July 21, 2012

Here is a link to Chicago area tenant's resources and legal help. Perhaps your friend could speak with someone listed there regarding her rights if she does take the apartment on a verbal lease.

If the couple doesn't want to sign a full lease, a one page agreement stating receipt of deposit, terms for returning the deposit, and a termination notice provision would be good. If the document includes an addendum of the Chicago RLTO, the terms of the ordinance should apply even if the building would usually be exempt based on number of units or owner occupancy.
posted by youngergirl44 at 7:03 PM on July 21, 2012

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