Can They Do That? Bay Area Landlord’s $200 Monthly Work-From-Home Fee

A one-bedroom rental listing in Walnut Creek’s upscale Northgate neighborhood in the San Francisco Bay Area was deleted after it caused an international flurry of online outrage. (It’s not known if the pushback led the owner to take the listing down from Rent.com, where it was published.)

People took to the message boards, expressing strong reactions about the work-from-home fee.

Responding to the landlord’s fee, one commenter quipped, “What else did you expect?”

“You’re not supposed to actually occupy the space you’re paying $3,250 a month for,” said another.

Yes, the accessory dwelling unit (square footage: 535) was listed for that much. Notably, electricity and internet were included in the rent price, as were water, heat, and air conditioning costs.

Sympathy for the Landlord Shows a Divide Between Owners and Renters

Some wondered why the landlord would impose a fee for what seems an arbitrary reason. After all, the monthly internet cost would likely be the same whether a prospective renter worked at home or not. Even though a remote worker uses the home internet connection more, in most cases, that doesn’t mean the service costs more.

But others said they could see the property owner’s point of view.

Property owners themselves have to work in an inflationary environment. Some are concerned that rent caps in their cities aren’t allowing them to cover these extra costs. And renters who plan to use their home as their workplace tend to have needs and expectations that can impose extra costs on the owners, right? That is, someone who works from home is likely to use more water, electricity, and internet bandwidth. Some commenters pointed out that a renter might not pay attention to how much their usage is costing the owner if there’s no extra charge. Moreover, some noted that having to pay the property owner $2,400 per year could be cheaper than having to commute to work every day. At least the Bay Area advertisement did follow California’s requirement that rental listings clearly state any extra fees along with the base monthly rent.

Charging extra fees is legal. That said, federal fair housing provisions must be followed. Property owners should be careful to avoid discriminating. For example, people who work from home may use utilities heavily, but so may people who stay at home to raise kids, people who use special health equipment, homebound seniors, and people with disabilities.

If a renter works from home because of a disability, they may be entitled to an accommodation under the Americans with Disabilities Act. This right to a reasonable teleworking accommodation has been in place since 1999.

All of that said, it’s not unusual for owners of apartment buildings or condominiums to bar their residents from commercial activities. Seen in this light, an extra fee for working from home is not out of line. But it does underscore the way rental costs are rising. At a time when the spread of AI applications is pushing electricity demand higher, work-from-home surcharges could catch on. As more people work from home, extra charges for remote work could become common.

If You’re an Investor-Owner, How Will Your Renter’s Work-From-Home Status Impact You?

Small landlords are concerned about how their renters’ hybrid and work-from-home arrangements affect them. Here are a few points to consider:

• If utilities are included in the rental agreement, watch for higher utility bills due to computer use. In any case, do check for renter protections under state law. For instance, a California renter can say no to bundled utility service costs. (“Bundled” means the utilities are community-based and the renter doesn’t have an individual account.) California is one state where a renter can ask for a written statement showing how costs are assigned to each unit. Typically, costs are allocated based on unit size.

• Working from home may lead to more wear and tear on the unit—although many other factors cause wear and tear, too.

• Insurers may take potential client visits to a unit into account because of the possibility of accidents. An owner can get property insurance that covers work-from-home liability; some policies include limitations on commercial activities.

• For renters with desk jobs that rely on computers, there is usually no serious liability concern for a property owner. These renters are using the unit in much the same way any renter does.

• Local ordinances that ban commercial use of residential units can come into play. This is why leases may bar traditional business activities. Typical restrictions involve parking business vehicles on the property, keeping commercial equipment in the unit, storing inventory, or attracting business visitors. Zoning requirements involving commercial activity and occupancy will vary by location.

In general, there’s a difference between working from home and running a business out of the home. While it would be unusual for a property owner to try to stop a renter from working from home for a company, a renter who operates a business from home may be subject to limitations. The latter activity is commonly restricted in lease agreements. A property owner should set forth the distinctions in the lease agreement and clarify where the boundaries are. For instance, the lease agreement might expressly state that remote electronic work is allowed. To ensure transparency, the property owner should give the renter an itemized list of all fees before accepting a rental application. State laws against “junk fees” in housing might require this.

Owners should be sure to anticipate all of the above and set expectations early. Any rent increases should come after fair notice to the renter. The terms of the rental agreement must be followed by both parties.

What’s Ahead: Nickel-and-Dime Charges Will Meet Pushback

The Walnut Creek listing debate has a fraught context. Many renters feel pushed to their limits already. In the words of Realtor.com, we’re dealing with a “suffocating housing market where tenants feel stretched to the brink.” Additional fees add up quickly, and they become one big reason people seek deeds—to get better control over their housing costs.

Important note: If you run into a dispute about working from home that can’t be easily resolved, legal counsel might be necessary to guide you through your particular situation. States vary widely on matters of landlord-tenant law. This article offers general information. It is not financial or legal advice.