Being a landlord is a learning experience. Making mistakes is normal and personal experience is often the best teacher. There are some mistakes, however, that can be avoided with a little education.
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 the common mistakes every landlord should avoid:
1. 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;
- 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
2. Refusing to Make Repairs
It can be easy to push off maintenance issues to a later date. However, it is often in your best interest to address these issues quickly because they can become larger issues very quickly.
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.
- Clean water
- A structurally safe roof
- Safe flooring
If a property remains in disrepair, a tenant may choose to:
- Fix the problem and deduct the cost from the rent
- Move out
- Report the violation to a state building inspector
Failing to make these significant repairs when requested can result in a lawsuit against the landlord.
3. 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:
- Make inspections
- 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.
4. Asking Prospective Renters Discriminating Questions
The Land Use Act of 1978 prohibits a landlord or property manager from refusing to rent property to a tenant for discriminatory reasons such as:
- National origin
- Gender identity
- Familial status
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.
5. Disregard of a Tenant’s Right to Privacy
A tenant always has 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.
6. 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
7. Ignoring Eviction Rules
- 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. Having Inadequate Insurance on a Rental Property
The first mistake that a landlord can make can occur before you even place a tenant in the property. This mistake involves failing to obtain the proper insurance coverage. This could be a twofold issue. You could fail to get the right type of insurance coverage, fail to get the proper amount of coverage, or a combination of both.
You need to make sure you have the right types of insurance on your property and on your business. You should have property insurance and liability insurance.
- Property Insurance: This insurance protects you against damage or destruction on your property. This damage or destruction could have been caused by fire, wind, vandalism or similar events. You can add the loss of income insurance to protect you in case property damage leads to loss of rental income.
- Liability: Every landlord needs to have liability insurance. This insurance will protect your property and your business in the event of a lawsuit, such as a slip and a fall, or another claim of negligence.
Not only must you get the right types of insurance, but you must also obtain the proper amount of coverage. For example, for liability insurance, you should make sure you are covered for one million dollars per occurrence.
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 to discuss your situation. They can help you learn how to manage rental properties in an efficient and legal fashion.