Being a landlord is a complicated job. There are common legal mistakes that landlords make that can have serious repercussions under state laws or landlord-tenant laws. Here are 10 common mistakes landlords make with tips on how to avoid falling into these traps yourself.
1. Asking Prospective Renters Discriminating Questions
The federal Fair Housing Act prohibits a landlord or property manager from refusing to rent property to a tenant for discriminatory reasons such as:
It would be best if you avoided all questions or conversations that may appear discriminatory or suggest discriminatory intent. Tenant screening are allowed for non-discriminatory things like background checks, income, job history, and past evictions.
2. Failing to Make Disclosures to Prospective Tenants
Every state has different requirements before a new tenant moves in. Standard disclosures you need to discuss include the following:
Notice of mold when the landlord knows or has reason to believe that it exists
Information about a state's sexual offender registry
Notification of sex offenders that live in the area if the landlord knows of them
Disclosure of recent deaths that have occurred in the rental unit
Whether the rental unit contains lead-based paint if the property was built before 1978
3. Using Illegal Provisions in a Rental Agreement
A residential lease agreement shouldn't include provisions that violate state and/or federal laws. A landlord should avoid the common mistakes of:
Placing discriminatory conditions in a rental agreement
Requiring the tenant to waive the right to a refund of a security deposit
Forcing a renter to waive their right to sue the landlord
Any illegal provisions may result in a lawsuit for money damages (a landlord liability case).
4. Failing to Provide a Safe Environment
In many states, landlords are legally responsible for keeping renters safe from dangerous conditions. This includes keeping the property safe from criminal activity. As a landlord, you have a legal duty to:
Inform tenants (and anyone legally entering the property) of hazards that exist on the premises
Take reasonable measures to ensure the safety of tenants from other tenants and from criminals that enter the property
Take action right away when you learn a property is unsafe. Otherwise, a tenant that sustains physical or property damage may be able to sue you. They can win, make you pay for their attorney, and recover compensation from you.
5. Refusing to Make Repairs
A rental agreement should specify who has to make repairs. Sometimes a landlord must legally make some repairs even if a rental agreement doesn't define these duties.
Every state imposes an "implied warranty of habitability" on all rental premises. A habitable rental unit will provide:
A structurally safe roof
If a property remains in disrepair, a tenant may choose to:
Fix the problem and deduct the cost from the rent
Report the violation to a state building inspector
Failing to make these significant repairs when requested can result in a lawsuit against the landlord.
6. Disregard of a Tenant's Right to Privacy
A tenant always has a right to privacy. A landlord shouldn't enter a tenant's rental unit without first giving a 24-hour written or verbal notice. A landlord can enter (after giving notice) when they:
Show the unit to a prospective tenant
Make a repair
Inspect the property
It is unnecessary to provide notice when an emergency occurs, such as a fire, burst pipe, medical emergency, or domestic violence situation.
7. Ignoring Eviction Rules
A landlord can evict a tenant for:
Nonpayment of rent
Failure to vacate the premises after a lease agreement has expired
Violation of a provision in the rental contract
Causing damage to the property when it results in a substantial decrease in the value of the property.
Before throwing out a tenant, a landlord must use the eviction process. Every state has different guidelines, but most require giving the tenant a termination notice before filing an eviction lawsuit. If the landlord attempts to remove the tenant without a court order, the tenant may recover damages for the landlord's actions.
8. Keeping Security Deposits
Most lease agreements require a tenant to pay a security deposit to cover damage caused by the tenant. This money can also cover missing rent if a renter does not pay. After a tenant moves out, a landlord can use the security deposit to fix the damage caused by the tenant. A landlord, however, must:
Provide the tenant with an itemized list of deductions
Pay the balance of the deposit to the tenant
The landlord may owe the tenant for monetary damages if the landlord fails to:
Provide an itemized statement
Return the unused portion of the security deposit
9. Getting Rid of Abandoned Property Inappropriately
When a tenant leaves items behind after vacating the property, the landlord must treat it as abandoned property. The landlord must notify the tenant of:
How to claim the property
The cost of storage
Where to claim the property
How long the tenant has to claim the items
If the property remains unclaimed, two different processes may happen:
If the items are worth more than a certain amount, the landlord may sell the property at a public sale after publishing a notice of sale in a local newspaper.
If the property is worth less than the state-specified amount, the landlord can either keep the property or throw it away.
10. Having Inadequate Insurance on a Rental Property
Every landlord should insure a property for any destruction caused by natural disasters. It is also a good idea to insure a property against lawsuits brought by a renter.
Insurance will cover the cost of litigation and will pay the damage award if a landlord:
Illegally evicts a tenant
Makes an illegal entry
Does not fix dangerous conditions
Loses a case when someone legally on the premises is injured
Learn How to Avoid Legal Mistakes That Landlords Make
A rental property is usually intended to earn money with only a minor investment of time and energy in property management. But mistakes concerning your obligations to tenants can result in the loss of profits and consume an enormous amount of attention. That's why it's a good idea to consult with a local landlord-tenant attorney to discuss your situation. They can help you learn how to manage rental properties in an efficient and legal fashion.