We have a family business dilemma. In the 1960s our father, who owned several prominent apartment buildings, rented a large apartment to a cousin but never had her sign a lease. My father, who is now deceased, was a very generous man and never raised her rent despite increasing rises in the cost of maintenance, improvements and taxes. We have heard through the family grapevine that one of her grandchildren is planning on taking over the apartment after she dies.
How do we politely tell this elderly cousin that we have to increase her rent to make it on par with the other tenants’ rent? By the way, our cousin the tenant is a very rich woman, who can well afford to pay the fair market value of the rental.
–E.P., Geneva, Switzerland
About your family business dilemma. It makes perfect sense to increase your cousin’s rent but I understand your father’s and your hesitation to do so — seeing as he was such a really generous person. However, your father did not rent the apartment to his cousin’s grandchildren.
Assuming you have discussed this family business dilemma with your lawyer, you must be looking for a polite way to discuss the situation with your cousin the tenant.
Have yourself invited to tea and bring along a box of handcrafted chocolates and/or a bouquet of flowers, then once you are cozy into your tea or coffee and sharing family stories tell your cousin about your plans for making improvements to the building. Then ask her for suggestions. Since she has lived in the building for 55+ years she must know of any flaws.
Ask her for suggestions and then gently ask her to start paying the fair market rent for the apartment starting January 1, 2016, which would help with the cost of the improvements. That will give her time to adjust her budget or find new digs.
Should she need a couple of months longer to finalize a plan, be generous and encourage her to come up with an alternative month to start paying the increase in her rent.
If that does not work, and you’re worried about another family member moving in or possibly subletting the apartment out for the going rate, have your lawyer make up a letter agreeing that as of January first her rent will be _____ per month. Bring the month-to-month lease with the new rent to her to sign in your presence. Again, take along flowers and/or chocolates; a gentle gesture to pave the way.
Be willing to strive for a workable compromise. If, for instance, she says she cannot pay that much a month, have her sign a month-to-month lease at a slightly higher rent than she is currently paying and include an increase in rent schedule.
The particulars will have to be worked out between you and your lawyer. For instance, even though it sounds complicated, her rent could increase in increments every month until the amount of rent she pays reaches the full fair market value.
Make it clear that you are your father’s son and you will never evict her from her home, but in all fairness she needs to pay her share of the rising upkeep of the apartment building because these old buildings are becoming more and more expensive to maintain.
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Accepting A Compliment