Becoming a landlord is exciting; you’ll have an opportunity to make significant income, month after month, with a minimal investment of time and effort. But remember, landlords have legal responsibilities to their tenants, and if you fail in any of those responsibilities, you could be held liable for the resulting costs or damages.
There are some obvious landlord responsibilities that even novices understand; for example, you need to make sure the property remains in livable condition. However, there are some common legal mistakes that inexperienced landlords make all too frequently—and they have the potential to compromise your entire operation.
Common Legal Mistakes
Work to understand and prevent yourself from making these critical legal mistakes:
- Asking questions that could be taken as discriminatory. The Fair Housing Act (FHA) forbids landlords from asking questions that could be taken as discriminatory, or lead to discriminatory practices. As a landlord, you aren’t allowed to refuse to rent property to someone based on their race, color, religion, national origin, disabilities, family structure, sex, or gender. Simply including a question about a person’s gender is enough to land you in hot water, so be careful not to ask those kinds of questions on your applications or in your interviews.
- Neglecting an important disclosure. Though the exact rules and specifications vary by state, there are some things you’re legally required to disclose to your tenants before they agree to rent with you. For example, in many states, if you have reason to believe your property may have mold, you’re required to inform your tenants about it. You’re also typically required to disclose knowledge of any sex offenders that live in the area, or knowledge of any recent deaths at the property. Other requirements vary, so make sure you cover all your bases.
- Including illegal provisions. It’s common for landlords to include at least a handful of provisions to prospective tenants, requiring them to take certain actions while they live in the property, or giving yourself the ability to evict the tenant or cancel the contract under certain conditions. However, you don’t have a blank slate here; there are some provisions that are unambiguously illegal. For example, if you place any discriminatory conditions, such as those that forbid having children or certain types of people at the property, you’ll be in violation of the law. Refusing to refund security deposits is another illegal provision.
- Inappropriately deeming a property to be “safe.” Your definitions of “safe” and “livable” may vary slightly from others’ definitions. It’s your responsibility to make sure your property is securely habitable based on anyone’s interpretation, so make sure you go out of your way to ensure your property is in top working order at all times. If your property is found to be unsafe, or otherwise inhabitable, you could be held responsible for repairs and monetary damages.
- Refusing to make necessary repairs. It’s your job to step in and make repairs when necessary. If a tenant reaches out to you about a necessary repair, such as a leaking roof, and you refuse to take care of it in a timely manner, they could hold you legally responsible. There’s only one exception here; if the tenant was the one who caused the damage, they can be held responsible for ensuring the damage is fixed. Otherwise, make sure you respond to your tenants’ requests for fixes in a timely manner.
- Neglecting tenants’ privacy rights. Even if you’re trying to fix something at the property as quickly as possible, you still need to respect your tenants’ rights to privacy. Again, these laws vary by state, but you need to be firmly aware of what you can and can’t do as a landlord. For example, most states forbid landlords from entering the property without advance notice, with the possible exception of emergency conditions. If you aren’t aware of these stipulations, you could end up making a serious legal mistake.
- Improperly evicting a tenant. In extreme cases, you’ll have the right to evict a tenant; consistently late or missed payments, deliberate violation of the terms of your lease agreement, and other egregious offenses give you grounds to kick the tenant out of your property—but there’s still a firm legal process that you have to follow, or else you could be sued by the tenant. Usually, this means providing ample written notices and giving the tenant plenty of time to move out.
- Unjustly withholding a security deposit. Tenant security deposits exist to protect you from significant financial losses, such as if a tenant refuses to pay their last month’s rent or if they cause significant damage to your property. If you can prove these costs, you can keep the security deposit without issue, but if you keep it without justification, you could be held liable. If you keep the security deposit, make sure you have a good reason, and document it.
- Keeping or mismanaging abandoned property. When a tenant leaves your property, whether on their own or through an eviction, they may leave things behind in the apartment. Any property here needs to be treated as “abandoned property,” and you’re responsible for ensuring its storage and telling the tenant how to retrieve it in the future. If you don’t follow this process, and you instead throw away or sell the property, you could be held liable for damages.
- Not having a good insurance policy. Finally, too many new entrepreneurs get a good insurance policy to protect their property from damage, but neglect the importance of protecting themselves from legal action. Get a good liability insurance policy to protect yourself—just in case.
If you’re concerned about the legal risks you face as a landlord, if you’re inexperienced and looking for an expert partner, or if you just want to spend less time and effort managing your own property, consider investing in a property management service. Contact Green Residential today to learn what we can do for you and your property!