Landlord or Tenant Responsibility for HVAC Service

Up-to-date and efficient HVAC service is a huge attraction when you’re advertising rental property. The quality of your HVAC equipment is one of the main things tenants look at before renting. But just as your HVAC can help you find good tenants, it can also be the source of endless conflict with tenants. This will happen if you don’t outline your own and the tenant’s HVAC responsibilities from the get-go.

Emergencies with the HVAC system can make a rental unlivable and invalidate the implied warranty of habitability you gave to your tenants. Common HVAC problems such as refrigerant leaks, other kinds of leaks, thermostat malfunctions, blocked filters, and ignition issues all provide valid grounds for tenants to initiate legal action. This is at least one reason to take HVAC maintenance seriously.

How should you assign responsibility for HVAC service and maintenance in a rental? Should you take complete responsibility, should you let tenants handle it, or should you look for a middle ground where you and the tenants share responsibility? These are the basic methods for allocating responsibility for HVAC maintenance in a rental and each comes with its specific problems.

The following are the models for HVAC maintenance in a rental. They address both ownership of the HVAC systems and financial responsibility for their service and maintenance.

Landlord-Owned and Maintained

n this model, the landlord owns the system and takes care of its maintenance. The tenants do not have to worry about HVAC maintenance because the cost is often bundled with the monthly rental or a service charge. This is the simplest model, and usually the best in a building where more than one tenant uses the systems. But it does present some problems:

• If the issues with the HVAC exceed the payments made by tenants, landlords may be reluctant to fix the problems.
• Tenants may not act responsibly in the way they use the HVAC.
• Tenants who want more involvement in the management of the HVAC will feel frustrated.

Tenant-Owned and Maintained

In this model, the tenant owns and maintains the HVAC system without any input from the landlord. Naturally, many landlords prefer this arrangement since it puts all the responsibility in the tenant’s hands. Some tenants like it because they have full power to manage the HVAC as they please. This model is mostly used in commercial buildings, but it has its challenges:

• It places an additional financial burden on the tenants because they have to purchase the HVAC systems.
• Tenants will have difficulties when they want to leave the property. If the lease says they must leave the HVAC equipment behind, they may not want to do that. But if they are allowed to take the systems with them, they may have no place to move them.

Landlord-Owned and Tenant Maintained

From a landlord’s perspective, this is probably the most problematic model. With this method, the landlord provides the HVAC equipment, but the tenant maintains them. The landlord retains ownership of the systems, while the tenant is responsible for keeping them in good working order. The problems with this model are:

• The tenant may not maintain the systems to the landlord’s satisfaction. To forestall this, some landlords will choose the HVAC service company the tenant uses. Landlords may also require the tenant to provide proof of maintenance via invoices.
• Conversely, since a landlord is not in any way responsible for the performance and maintenance of the systems, some owners will install the lowest quality HVAC equipment in the rental. This places a major burden on the tenant.

Landlord-owned with shared maintenance

This is the most common and easily the most favorable arrangement for both landlords and tenants. There are two ways this model operates:

• The tenant may take full responsibility for maintaining the systems up to a certain limit. There will be monthly caps on how much the tenant spends on HVAC maintenance. Once this limit is reached, all additional costs are borne by the landlord.
• The second way to operate this model is to assign aspects of HVAC maintenance to tenants and landlords. For instance, a landlord may take responsibility for replacing parts, while the tenant takes care of maintenance and repairs. Or the landlord could take responsibility for major repairs/maintenance and replacements, while tenants handle small tasks like filter changes.

Choosing the right model for your rental

What is the best model for your rental property? That will depend on the specifics of the building, the kind of rental you are operating, and the types of tenants you have. But before you make a decision on which model to use, think of these:

• How many tenants does the system serve?
• Who installed the system?

Also, regardless of which model you choose, the below rules should always be considered:

• All damage to the HVAC that is the result of natural forces or natural wear and tear is the landlord’s responsibility.
• Damage caused by a tenant’s negligent behavior must be paid for by the tenant.

Just contact the team at Peak Home Performance today to get started!