Common Landlord Legal Issues to Avoid
For those who enjoy assisting others in establishing a life and becoming part of a community, property management can be a fulfilling profession. However, there are pricey legal risks that come with this line of work that must be recognized and avoided at any expense. Although some of these issues are simpler to avoid than others, it’s essential to be aware of them. In this article, we’ll examine the most frequent legal challenges in property management and provide guidance on how to steer clear of them.
Don’t retaliate for non payment of rent
It’s natural to experience frustration when a tenant fails to pay their rent on time. Nevertheless, it’s illegal to retaliate in any manner that disregards federal and state laws. No matter how many times you’ve cautioned or reminded them to pay, you can’t alter the locks on a tenant who hasn’t paid. The only way to prevent a tenant from accessing their residence is through the formal eviction procedure. However, eviction can be a lengthy process that may take weeks or even months to conclude and must result in your favor.
To ensure compliance with state and local regulations on correspondence, it’s advisable to deliver important notices through official channels, such as a professional email sent via your property management software and/or a letter delivered to the tenant’s residence. The advantage of using software is that it provides a permanent, paperless record of all communications for your records.
You might be unintentionally be discriminating
When assessing prospective tenants, it’s critical to adhere to all Fair Housing Act regulations established by HUD. The primary objective is to prevent discrimination against protected classes, which includes race, color, religion, national origin, sex, disability, and familial status. It’s crucial to keep in mind that an inadvertent or negligent violation can be penalized under the law just as severely as an intentional violation.
By automating the screening process, you can avoid legal problems related to screening in property management. Resident screening is a crucial aspect of your business, and decisions must be made based on objective criteria such as credit history, income, and criminal background. To streamline this process, property management software with resident screening integrated into the online application process is required. Yardi provides ScreeningWorks Pro, which surpasses other screening tools by including terrorist, drug trafficker, sex offender, and Social Security fraud and rental/eviction history. You’ll receive reliable, near-instant results that will aid you in making informed and legal decisions.
Don’t enter your rentals without notice
Providing reasonable notice before entering a tenant’s residence is a typical property management concern that can be easily avoided. Unless there is an emergency that warrants immediate entry, property managers must provide reasonable notice before entering. Failure to provide adequate notice can result in a violation of the covenant of quiet enjoyment, among other laws, which can result in legal action. Moreover, entering a tenant’s unit without their consent is generally unlawful, even if you have provided sufficient notice.
What is the appropriate amount of notice to give? The standard minimum is 24 hours, but state and local laws may differ. To maintain amicable relationships, try to work around the tenant’s schedule as much as feasible. If the tenant is uncooperative, contact a lawyer, keep a detailed record of everything, and follow the appropriate protocol.
Avoid illegal rent hikes
Raising rent during the current lease term is illegal. Furthermore, in most states, a minimum 30-day notice is required. Property management software can once again be extremely beneficial in this regard. It will keep track of approaching lease renewals and provide you with this information on a user-friendly dashboard. You’ll never have to worry about whose lease is nearing its conclusion or when to send out a renewal letter because all critical dates and information are safely stored in the cloud.
Possible habitability issues
As the caretaker of your property, you’ve already estimated the cost of maintenance and included it in the rent. This implies that your tenants are paying for upkeep and repairs in advance. Unless otherwise stated in the lease agreement, you must respond to maintenance requests quickly and thoroughly. Even if you’re dealing with a non-paying tenant or going through the eviction process, you must provide sufficient maintenance services. You cannot withhold service as a means of punishment or to incentivize payment (which ties back to point #1 on our list).
Tracking maintenance requests can be a challenge without software. Email systems can become cluttered, requests can get lost, and it can be difficult to retrieve vendor information manually. Additionally, tracking and managing payments in a separate system can be a hassle.
However, with secure resident portals, it’s easy for tenants to upload pictures and descriptions of the issue and send them directly to the property management office or designated maintenance crew. Your onsite staff can then address the issue or connect with a preferred vendor. Tenants appreciate the ability to log in to their portal and see real-time status updates on their requests.
Not following security deposit rules
Professional property managers understand that security deposits are not a form of income and must be refunded to the tenant in the absence of damage. It is essential to keep a detailed record of any damages incurred and the cost of repairs to justify the deductions made from the deposit. Additionally, any cleaning or unit preparation responsibilities expected of the tenant must be legally and explicitly outlined in the lease agreement.
For example, if you discover damage to the carpet that exceeds reasonable wear and tear, you may have valid reasons to retain some of the security deposit, but only to the extent necessary to cover the cost of repairs or replacements. In California, if a tenant causes significant damage to the carpet, requiring early replacement, they can only be charged for the amount of time they used the carpet before the damage occurred. You cannot withhold the entire security deposit just because the carpet did not last its expected lifespan.
Once again, the use of property management software can prove to be invaluable. With the ability to store information related to security deposits, tenant-caused damages, and work invoices, tracking data and communicating with renters becomes effortless. Furthermore, this comprehensive and easily accessible documentation can be invaluable in legal proceedings.
Not following proper privacy safety
The importance of property management security cannot be overstated. Property managers have access to sensitive information such as social security numbers and financial data, much of which is stored in the cloud as an increasing number of leases are signed electronically. It is crucial that this data is stored securely, and relying solely on local servers may not provide sufficient protection. Even if you still use paper records, you must take precautions to organize, safeguard, and dispose of physical copies properly to ensure their security. Failure to do so can result in data breaches, legal liability, and a loss of trust from your tenants.
Property management software providers who are reliable use high-level encryption and advanced protections to secure sensitive data. Anything less can jeopardize the safety of your residents, applicants, and even your business. It’s important to ensure that everyone on your team is well-informed about the appropriate ways to handle confidential information. By doing so, you can avoid any legal issues related to data breaches or mishandling of sensitive information.
Avoid verbal rental agreements
Without proper documentation, any legal disputes related to property management may be difficult to resolve. A “he said, she said” debate is unlikely to be in favor of property managers, as they are expected to maintain accurate records. This is why it is essential to keep detailed records of all interactions, agreements, maintenance requests, and other important information related to the property and its tenants. By doing so, property managers can protect themselves and their business from potential legal issues.
Storing electronically signed leases in cloud-based property management software is a convenient way to ensure accessibility and transparency for both residents and your office. By doing so, all necessary information can be readily available, making it easy to resolve any disputes that may arise. Residents can simply log in to their portal to review the agreement and clarify any confusion regarding payment due dates, cleaning and maintenance responsibilities, move-out procedures, pet policies, and other pertinent lease terms.
Filed under: Landlord Legal Issues