If you thought being a landlord only involves collecting rent from a home you own, making repairs, and renewing leases, then this article is just for you. It is typical to underestimate the job if you have never been a landlord. Becoming one can be anyone’s biggest dream, but investing in rental property while untrained can turn it into your worst nightmare.
There are laws that govern landlord/tenant relationships which if overlooked can be financially crippling. They say ignorance is not a defense thus, landlords need to familiarize themselves with the local laws. The arm of the law is long, and you can’t escape it. Protect yourself from lengthy, expensive lawsuits by avoiding the following 6 common legal mistakes that inexperienced landlords usually make.
Violating Fair Housing Laws
Don’t make the blunder of thinking that because you are the landlord, you can choose whom you want to rent your property by discriminating against potential tenants based on their race, color, religion, sex, religion, nationality origin, family status, or disability status. If you discriminate against any of these, you open a door for potential tenants to sue you.
Discrimination is illegal according to the Fair Housing Act of the Civil Rights Act 1968. The Act also makes it illegal to ask inappropriate questions during the screening interview or discriminating rental applicants based on their criminal history. Avoid a Fair Housing lawsuit by asking all your rental applicants the same questions every time you conduct a tenant screening. Do not show preferences to any tenant based on the grounds set in this Act.
Relying on handshake agreements
You don’t want to run into tenant/landlord conflicts because you had a mutual understanding with your tenants which you only sealed by a handshake. You wouldn’t want to have the judge throwing your case on the grounds that it lacks supporting documents, such as a legal agreement between you and the tenant. Make written, legally binding documentation of the contract. If necessary, have an attorney draft the agreement for you, to ensure that both of you understand the terms before executing.
Evicting Residents Improperly
According to California eviction laws, landlords are allowed to evict tenants on the grounds of breach of contract, a default in rent payment, remaining on the property after the expiry of a lease period among other reasons.
However, there is a particular procedure that entails some notices and court procedures that must be followed before evicting a tenant. If you are inexperienced in the rental property business, you might find yourself on the wrong side of the law if you think you can evict your tenants without following the due process. Avoid being left empty-handed following a suit for unlawful eviction. Research to know what are your state’s eviction laws.
Neglecting the Property
An inexperienced landlord might take regular property inspection and repairs for granted. In the lease agreement, tenants and landlords agree on repairs for which each should be responsible. Failing to meet the end of your bargain when a complaint is made can lead to residents starting suits against you.
Even when the tenant is responsible for the repair, you must ensure the house meets the minimum requirements of health and safety to avoid being reported to the state and have a lawsuit on your hands. You can avoid costly liability that might arise. For instance, injury to a tenant due to a faulty staircase which you could have repaired, or a new tenant catching the bacterial disease because of poor sanitary conditions you overlooked.
Incorrectly Collecting and Holding Security Deposits
There are specific laws in each state that govern collecting and holding a security deposit. Inexperienced landlords may find lawsuits in their hands if they knowingly or unknowingly violate those laws. For instance, in Texas, there are no limits or rules to the amount of security deposit, whereas, in Massachusetts, it is held in a joint account in the name of the landlord and tenant. It is, therefore, imperative for a landlord to research the laws of their state regarding security to avoid this costly legal mistake.
Improper Disposal of Abandoned Possessions
Sometimes tenants abandon their properties in the premises after they move. Inexperienced Landlords commonly make the mistake of throwing away the property, selling, or donating it. These actions can run them to many legal problems if the tenant decides to claim the property.
It is advisable to follow a set procedure that requires the landlord to notify the tenant of the intended cause of action, storage charges, how long you are going to hold the property. Afterward, announce the notice of sale in the newspaper, and then sell the property at a public sale if the tenant doesn’t claim it.
The above 6 legal mistakes inexperienced landlords make are just a part of the many other errors you make when you are new in the business. Before investing in rental property, make a point to train yourself about the basic landlord-tenant laws of your state, as well as property management. This knowledge will help you to avoid fines and lawsuits that can immensely affect your finances. If you aren’t sure of your expertise in your role as a landlord, hire Archer Management Group to ensure you enjoy your return on investment.