Owning property and renting it out is a good way to earn income for many people. As a passive stream, it requires little work and can be consistent throughout the year. However, those who want to go on this path will need to be aware of the legal pitfalls they might face. It is very easy to make a mistake as a landlord and consult with civil litigation lawyers about what to do. Here are some mistakes that potential landlords should avoid.
Ask Discriminating Questions
One of the big mistakes that new landlords make is that they are cautious about the people they want to become their tenants. It is understandable since the origin of a lot of property damage is the tenants themselves. However, there are some questions a landlord should not be asking a potential tenant. The Fair Housing Act of 1968 prohibits a landlord from preventing anyone from renting because of their race, color, nation of origin, sexual orientation, disability, gender, and even family status.
Asking about these topics can expose the landlord to a discrimination lawsuit. It would be better to restrict the questions to earnings, jobs, or something similar. Even if the potential tenant was rejected because of another reason, asking questions about race or nationality on any form can open up a landlord to a lawsuit.
Increase Rent Without Warning
Understandably, some landlords want to get the most out of their property. But raising the rent for tenants has to follow a procedure. This is dependent on the lease that the tenant signed, which determines the rent that the tenant has to pay. Rent can only be raised if terms on the lease specify it. For example, if the lease specifies that the rent goes up if a new member of the household is added, the landlord has grounds for his increase.
Security Deposit Issues
As part of the initial rent, a landlord can charge a security deposit. This money is supposed to be used for maintenance and repair reasons. But landlords have to be clear about the reasons for the deduction on the lease. They could easily face a lawsuit for illegally keeping the deposit. Additionally, a landlord has to be clear about the state’s security deposit laws. This can range from telling the tenant where the deposit is kept to notifying them of deductions. Not following these laws can spell legal trouble when the tenant finds out.
Being Careless With Lease Forms
People can be lazy, but landlords shouldn’t be. The most important document a landlord and a tenant can share is the lease agreement. It is the legal document that outlines what tenants can do and what landlords should do for them. However, “standard” lease agreements are floating around on the internet, often used by lazy landlords without checking.
This can land them in legal trouble if they do not comply with the state’s laws. It is always a good idea to have a lawyer check on any legal document before it is presented to anyone for signing. Even better would be to have a lawyer write the agreement completely.
Violating Tenant Privacy
While landlords have the right to protect their property, tenants also have the right to privacy. This may not be obvious, but landlords should be more careful about their inspections and dropping by. Depending on the state, there are landlord access rules like notifying the tenant of the landlord’s visit and more. Anyone who plans to rent out the property should check these rules before they badger their tenants.
Not Maintaining State Standards
Each state also has some rules about health and safety for a rental property. The main aim is to protect the tenants from accidents and disease. A landlord should ensure that any property they own meets these standards. If a property is not properly maintained, the tenant has every right to break the lease and withhold rent until the standards are met. They may even repair the property and ask for reimbursement from the landlord. At worst, if someone is injured, then they might sue the landlord.
Legal problems can plague a landlord who is not careful about their dealings. This can seriously cut into any profits that they make from their properties. At worst, they can lose even more than their investment as they face lawsuits. Being aware of the appropriate laws and consulting with lawyers should help ensure that their run as a landlord is a success.