Being a landlord in Texas carries the responsibility of maintaining accurate records pertaining to tenants including maintenance, repairs, damages, and of course the rental agreement or lease. These paper documents pile up quickly, and if you’re not organized they can get lost or thrown away.
One way to cut down on an overwhelming amount of paper storage is to periodically recycle whatever you don’t need. The challenge is figuring out what you don’t need. You can’t afford to throw away the wrong documents too early.
What documents should you keep, and how long should you keep them?
The short answer is you should save tenant documents for as long as you might need to reference them. For instance, you should never throw away documents related to a current tenant. You might have a dispute over late fees or house rules you need to work out.
It’s also smart to hang on to a former tenant’s documents until the statute of limitations for a lawsuit is up. You might not personally need to reference their documents, but you’ll need a copy of everything if you get sued. In Texas, the statute of limitations to sue for contracts is 4 years.
Here’s a more detailed explanation:
How long will you need to access a tenant’s documents?
It’s hard to say how long you’ll need to access a tenant’s documents for your own sake. For example, once a tenant moves out, you probably won’t need to reference their lease agreement unless you’re returning their deposit or filing a lawsuit. However, several years down the road that tenant might sue you and you’ll need their documents for court.
When it comes to documenting maintenance and repairs, you’ll probably want to save those documents as long as you own your property. These documents will come in handy when you need to assess your property’s value or see how much you’ve spent on repairs as a landlord.
Were you generous with time periods in your lease?
If you have any special clauses in your rental agreement with a time period more generous than the laws you’re bound by, make sure you save tenant documents through that time period. For example, say your lease allows a month-to-month tenant to pay their deposit over a period of three months, but they move out after one month and never finish paying their deposit. You may not want to file a lawsuit at first, but a year later you might change your mind. If you don’t hang on to their documents, you’ll have a hard time proving they never paid their deposit.
Another source of potential issues is broken promises. If you were generous with a tenant and promised to return their security deposit sooner than the law requires, you could be held liable for breach of contract even if you returned their deposit according to state law.
For example, in Texas, landlords must return a security deposit within 30 days after a tenant moves out. If you agreed to return a security deposit within 14 days and waited 20 days, you could be sued. If you don’t have a copy of your lease agreement, an angry former tenant might claim you agreed to return their deposit even sooner than 30 days and you could be held liable for penalties you don’t deserve.
The consequences of recycling documents too early
If you dispose of a tenant’s documents too early, you could find yourself struggling to defend yourself in a lawsuit. Without documentation, you’ll have a hard time supporting your arguments in court, especially if you don’t have a good memory of what your tenant was like.
For instance, if you’re sued by a former tenant and don’t have original lease agreement, you’ll have a hard time proving you never intended to include utilities as part of the tenant’s rent. If your former tenant isn’t honest, they might get away with claiming they paid utilities only because they thought they’d be reimbursed.
Thankfully, most judges can see through dishonest claims, but sometimes people can be extremely convincing.
Another consequence that might pop up in court is a tenant claiming you had someone acting on your behalf illegally. For example, Texas landlords must disclose the identity of anyone authorized to act on the landlord’s behalf and it must be written into the lease. If you don’t have a copy of the lease and your former tenant doesn’t provide their copy to the court, it’s their word against yours. You might be able to supply the court with a copy of other tenant leases that list your authorized representative, but since it’s not that person’s lease it could be a long shot.
Having a copy of your lease agreement gives you a fair fight in court
Another way a former tenant might try to game the system is to claim you charged late fees they never agreed to. While not every tenant who sues their former landlord is dishonest, some are, and you need to be on guard.
Late fees are a point of contention for tenants even when they’ve agreed to pay them in the lease. Hopefully, you’ve written your late fees into your lease instead of creating an oral agreement.
It’s easy to create a modified version of a lease and make it look real. If you don’t have a copy to compare it to, a dishonest, disgruntled tenant could be awarded a judgment they don’t deserve.
What about tenants that never were?
It’s a good idea to save documents relating to potential tenants whose applications you’ve rejected for at least two years from the date of denial. It’s even better to save those documents as long as you would a former tenant. You don’t want to be hit with a surprise lawsuit for discrimination. It’s an unfortunate fact that some people file discrimination lawsuits under the Fair Housing Act when there was no legitimate discrimination at all.
Hire a property management company to handle your documents
Hiring a property management company is one way to relieve the burden of having to keep track of tenant documents. While it’s not the only benefit, it’s definitely a bonus.
At Green Residential, we’ve got decades of experience managing properties for landlords like you who don’t have time to stay involved in the tedium of paperwork and other organizational challenges. We handle everything from tenant screening and rent collection to maintenance, repairs, and even bookkeeping. Contact us today to find out how we can help you manage your rental properties.