Being a landlord can be tough, but at the same time very rewarding. There are numerous things to keep in mind, but not all are self-explanatory. To help direct you along the way, we’ve compiled a list of our top legal mistakes steer clear of, because a liability issue is probably the last thing you need on top of everything else.
Do not be discriminatory.
There is a difference between asking meaningful and discriminatory questions. The Fair Housing Act of 1968 protects individuals from discrimination, particularly of race, color, religion, national origin, sex, disability, or presence of children, while renting, purchasing, or financing a home. Therefore, we advise landlords to use unbiased tenant screening methods, such as questions about criminal record and credit score, in order to find the best tenants to fill your property.
You must disclose all information about your property, whether you like it or not.
Some common examples of disclosures include information on the installation and maintenance process of smoke detectors and alarms and the presence of environmental or health hazards on the property. If you do not disclose important information, it will come up sooner or later, and tenants may be able to file a lawsuit against you.
Landlords are legally responsible to keep tenants safe from harm.
This can be anywhere from installing full-fledged alarm systems to the removal of carbon monoxide. If any tenant suffers from property or physical loss, he or she may be able to sue the landlord and recover compensation. This can turn into a very expensive situation, and can also lead to complications in the (potential) eviction process.
When creating the rental agreement, it is wise to specify whether the tenant or the landlord must make each type of repair.
Each landlord has the responsibility to furnish a rental unit that is sufficient to live in, meaning that each rental unit must have heating, plumbing, and clean water, amongst other commodities. If repairs are never made or if the landlord does not provide an acceptable place to live, this may result in a lawsuit against the landlord.
While the landlord does have responsibility to make frequent inspections of their property, this includes certain restrictions.
The landlord must provide verbal or written 24-hour notice before entering a tenant’s rental unit, or else the tenant can sue the landlord for breaking and entering. After providing notice, a landlord may enter the rental unit to inspect the property or make a repair.
Eviction is the removal of a tenant from a rental property by the landlord.
A tenant may be evicted for a number of reasons, like if the tenant fails to pay rent by the due date specified, or if the rental property is being used for something other than its intended purpose. The eviction process differs between states, but usually follows the same steps. If the landlord tries to evict the tenant without a court order or notice (the first step of the eviction process), then the tenant may recover damages.
A tenant must pay a security deposit to cover damage that they have contributed to, which is specified in the rental agreement.
The security deposit should only be used to cover damage that is on a list provided by the landlord and the landlord must pay the balance of the security deposit to the tenant once the process is completed. Unfortunately, some landlords use the security deposit for unnecessary refurbishing for the property, or keep it for their own personal use. This can result in the tenant pursuing legal action against the landlord to reclaim the deposit.
Do not use generic lease forms.
If you were to use a “standard” form to create a lease, it could be considered unenforceable, and it might even include greater obligations and restrictions than your own state’s laws. Also make sure to include everything necessary in your written lease so later on if there is an issue, it is clearly stated in writing. Some important articles to include in a rental agreement would be the length of the tenancy, the amount of the security deposit, and the amount of the rent and when it is due each month.
Landlords should consider purchasing a landlord insurance policy in order to protect themselves from financial loss.
This particular policy includes coverage against household accidents or disasters such as fire and water damage. Additionally, this policy covers all other important structures listed on the property, like swimming pools and garages. This coverage also includes a landlord’s personal belongings that could be used by tenants, such as appliances and furniture. Without this policy, the landlords could be unable to be fully compensated in the event of a loss.
Don’t make a promise that you can’t keep, because it will come back to hurt you.
For example, if you agree to replace your tenant’s broken refrigerator within two weeks, the tenant will most likely hold you to your word. Thus, make sure that your promises aren’t unrealistic, and keep all of your promises in writing. An unsatisfied tenant is able to legally break the lease and potentially sue the landlord for the difference between the value of what the tenant was promised and what was actually delivered.