As the inflation rate increases in the United States, real estate owners are looking forward to scaling up their rent prices to increase their revenue. Does any law govern the increase in rent in the US? Is there any limit on the increased rent amount? This general question generally strikes the mind of every property owner; In general terms, landlords are free to set their own limit for rent increases; some legal framework needs to be followed to avoid any conflict. What are they? Let’s cover it in the blog for a detailed explanation.
Rent Control Laws in the US
The landscape of the United States follows a different process for rent control depending on your preferred location. Some states, like Illinois, Texas, or Washington, DC, do not craft any laws for rent control. However, in other cities, local governments might frame the regulations if they find any demand & supply shortage. In major states of the US, there is no law or act governing the rent control measures under the real estate industry. Furthermore, there are certain legal parameters that property owners are required to follow, like no increment in rent without a notice or many others. Let’s cover the basic legal frameworks in the blog ahead.
Basic Legal Frameworks For Increase Rent
Well, there are no legal laws; still, owners can’t raise the rent whenever they find it comfortable. There are a few basic legal frameworks that every property owner should follow to avoid any legal dispute with renters. Here are the legal guidelines:
Lease Period
Lease agreements play a significant role in increasing the rent of any property. As per general legal rule, property owners cannot increase the rent during the active lease period unless the option is stated in the agreement. So, if there is no such clause added in the lease paper, the owner can only increase the rent after the end of the lease period. In the case of month-to-month rental agreements, property owners had to release a 30-day prior notice before increasing the rent. The time limit might extend to 40 to 60 days, depending on state laws and restrictions. In general cases, owners had to give at least 30 days’ notice before increasing the rents.
Prepare a Formal Notice
So, after going through laws, if property owners want to increase the rent, they should release a notice to renters; make sure it is a formal notice. Property owners can’t communicate about notice verbally or send a text to the renter through the messaging app. Instead, they are required to frame a formal notice that comprises all the details about what changes are to be made or specifying valid reasons for increasing rent. Lack of formal notice might backfire on owners if renters file any legal allegation. So, it is advisable to frame a well-structured notice that states all terms and conditions and stipulated timelines for renters to accommodate other locations if they want to. It should be clear, written, and formally sent to renters.
Misleading Terms or Invalid Reasons
Property owners can increase the rent amount as per their terms. However, it should not be interpreted as a means to discriminate or cause problems for renters. In cases where owners increase the rent on the grounds of gender or religious discrimination, legal action can prevail in favor of renters. If renters prove these terms in court as a retaliation, legal action will proceed against owners. So, keep a note that the reason for your increased rent should be genuine and under the law.
Amount Exceeding Fair Market Value
Although property owners are free to extend the rent amount, it should not exceed the industry value. For instance, owners cannot increase the rent by a high margin, like $10,000 or above, without any valid reason. Also, if the amount limit exceeds the location’s fair market value or industry standard, it will create a problematic situation and invite government authorities’ intervention. Now, the standard property pricing and value will vary for states. So, owners can enquire about the right estimates and decide to increase rent.
Security Deposit
If property owners increase their monthly rent, the amount of the security deposit will also increase based on it unless any clause is mentioned in the lease. As a rule of thumb, the security deposit should be the addition of two months of rent. So, in general, once the rent goes up, renters are liable to pay an additional amount for the deposit. However, it also depends on the choice of owner-renter understanding; if they agree on the terms of no addition to the security deposit, they can proceed with the decision. There are no legal control laws framed for the security deposit in the United States.
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