Legal Mistakes Landlords Should Avoid Making

Before renting out property, landlords must make it a point to understand federal and state laws to avoid legal hassles, later on.

To be a successful landlord, one requires a lot of practical, business know-how, and of course, familiarity with the rental market. As well, since federal and state laws closely regulate almost every aspect of the residential or commercial rental business, if a landlord is not aware of the rules, he / she could land himself / herself into legal trouble. A landlord should always keep in mind the following, when renting out his / her property.

1. Under no circumstances should generic or outdated lease forms be used. While, every landlord knows it is important to have a written lease or rental agreement, using the wrong form could spell trouble. Avoid the ‘standard’ forms sold everywhere, as likely as not; they do not comply with state laws. By using the wrong form, you could end up short-cutting tenant rights, which could lead to finding yourself at the losing end of a lawsuit. Then too, sometimes some standard forms will actually impose greater obligations and restrictions on a landlord than the state’s law dictates!
2. Be careful not to ask the wrong questions while screening prospective tenants. Tenant screening is the most important aspect of a rental business and poor tenant selection can result in unwanted headaches, such as, non-payment of rent, trashed or damaged property, perhaps, worse. However, questioning rental applicants, even in the most well-meaning manner about a disability, or whether a couple is married, could be termed as illegal forms of discrimination. If, the applicant is rejected, even though the rejection has nothing to do with questions asked, a disappointed tenant may use them to lodge a complaint with the fair housing watchdogs.
3. Do not set policies that discriminate against families with young children. Remember, discriminating against families and excluding them, because children cause more wear and tear, and a ‘mature, quiet’ environment is preferable is absolutely illegal. And, while a landlord is allowed to limit the number of residents in a unit i.e. two occupants per bedroom, in most situations, the same standard cannot be applied in a different manner, to prevent renting out to a family with young children. This type of discrimination could also end up with a trip to a lawyer’s office, to deal with a fair housing complaint.
4. Avoid making promises that can’t be delivered on. Don’t stretch the merits and benefits of your property. While, it may be necessary to do so in a competitive rental market, try to understand your enthusiastic promises can become binding, if an applicant’s decision to rent your property is based on them. For example, if you assured the applicant your rental property provided parking space, satellite service, or a new paint job; ensure that is exactly what they get. If, after renting a tenant does not get what has been promised, he / she is legally entitled to break the lease, or even sue for the difference between, the services promised and those delivered.
5. Avoid excessive late fee charges. While, late fee charges are powerful enough to motivate tenants to pay rent on time, don’t cross the line, by setting fees that have little bearing on actual damages suffered, when a tenant pays rent late. Far better a modest fee that reflects your true damages, while dealing with chronic late-payers by serving them with pay-or-quit notices.
6. Do not violate a tenant’s rights to privacy. Despite, detailed state rules as to when, for what reasons, and with how much notice a landlord may enter a tenant’s rental unit, many landlords still stop by unannounced and ask to check things over, or perform on-the-spot repair, or show the place to prospective tenants. Repeated tenant privacy violations excuses a tenant from being bound or obligated to your rental lease terms, and if he / she goes to court, the result could be the court asking the landlord to pay damages in currency.
7. Do not use security deposits for any other unrelated purpose. The basic rule is that security deposits are only to be used to cover damage beyond wear and tear, necessary cleaning of the rental unit, and unpaid rent. Beyond that, they cannot be used to cover appliance upgrades, cosmetic improvements and other refurbishing.
8. Do not ignore dangerous conditions in and around the rental unit. In every state, landlords are required to offer and maintain housing that meets basic health and safety standards, in compliance with state and local building codes, health ordinances, and landlord-tenant laws. Failure to take care of important repairs, deal with environmental hazards, or respond when your property has become an easy target for criminals, can result in tenants breaking the lease, or withholding the rent, or making repairs themselves, deducting the expense from the rent. Failing to make a rental property secure in the face of repeated on-site crime can result in court orders to compensate the tenant-victim, in the face of another crime.
9. If, a tenant breaks the lease, do not make the mistake of keeping the security deposit. Landlords tend to keep the entire security deposit in the event a tenant breaks his / her lease and leaves early. They reason a tenant’s bad behaviour is adequate justification for doing so, and that ultimately it is needed to cover the rent. This is illegal in most states, as a landlord is required to take reasonably prompt action to re-rent, crediting any new rent toward the tenant’s obligation for the rest of the lease.
10. Ensure the security deposit is returned as the law demands. Use security deposits properly, and return them according to state laws. Many states have deadlines for landlords to itemise their use of the deposit and to return the balance.