Becoming a landlord puts you in a legally-binding relationship with your tenants, where you’re bound by local, state, and federal laws. One mistake – even unknowingly – could lead to expensive lawsuits, a damaged reputation, and possibly even the right to rent your property.
Understanding landlord-tenant laws is critical, whether you’re only renting one property or a handful. In this article, we’ll cover five of the most common legal pitfalls landlords face and how to navigate them to avoid harsh consequences.
1. Screening tenants with discriminatory qualifications
The federal Fair Housing Act [FHA] prohibits landlords from discriminating against tenants based on certain qualities, like race, color, religion, sex, familial status, national origin, and disability. Violating this law can be disastrous. However, there are some exceptions to the FHA.
For example, the law doesn’t typically apply to owner-occupied buildings with four or fewer units, single-family homes rented without an agent, religious organizations, private clubs, or senior housing.
Unfortunately, it’s easy to violate the FHA without knowing. For example, stating in your rental ad that a unit is “perfect for singles” or “great for couples” is all it takes to be subject to a lawsuit. And that’s why smart investors hire a property manager.
The pros know exactly how to create compliant listings and navigate Fair Housing laws at the state and federal level. For example, Spring property managers from Green Residential have decades of experience filling vacancies for Texas investors while maintaining legal compliance. If legalities are something you’d rather leave to the experts, the best solution is to hire a property manager.
2. Including invalid lease terms
Your lease is the first line of defense against lawsuits, and it’s critical for your lease agreements to be completely valid. If you end up in a lawsuit with a tenant, you won’t typically be able to hold tenants to invalid terms. For example, if your lease outlines security deposit terms that violate state law, it won’t be enforceable.
It’s not good enough to download a blank lease template from the internet and fill in the blanks. Lease templates are not usually created by attorneys, and even if they are, the terms may not apply to you. Always hire your own attorney to draft your lease agreements based on current federal and state landlord-tenant laws.
3. Not allowing emotional support animals [ESAs]
All landlords who are subject to the FHA are required to allow service animals and emotional support animals [ESAs]. There is a misconception that ESA approvals are completely at the discretion of the landlord, but not under the FHA. Both ESAs and service animals must be accepted if they are legitimate. However, the landlord can enforce removal under some circumstances.
While it’s illegal to inquire about the nature of a tenant’s disability, landlords can request a doctor’s note to verify the necessity of either a service animal or ESA. Failure to accept a legitimate service animal or ESA is grounds for a lawsuit.
4. Mishandling security deposits
Each state has specific laws governing how security deposits must be handled, from where the money must be housed to how it’s returned and what deductions can be taken. Any deviation from state law puts you at risk for a lawsuit. For example, most states require you to provide an itemized list of deductions from a tenant’s deposit if those deductions reach a certain amount.
There are also strict timelines for returning a deposit, and some services can’t be deducted as a routine task [like painting or carpet cleaning] in some states. If you’re going to charge a tenant for painting or carpet cleaning in certain states, it needs to be based on the condition of the unit and not your routine move-out procedures.
If you’ve never spoken to a lawyer about security deposits, it’s advised to get up to speed before you make a costly mistake.
5. Ignoring habitability laws
Tenants have the right to live in a safe, habitable home, and you’re legally obligated to provide that environment. Essential services include heat, water, hot water, and electricity. These are non-negotiable. Failing to provide these services can result in tenants withholding rent in some states, making repairs and deducting the cost from the rent, and legal action.
Handle all repairs promptly, even if it’s not a serious emergency. Don’t leave your tenants hanging for more than 24-72 hours for urgent issues or a couple of weeks for less urgent situations.
Be smart, stay compliant
As a landlord, it’s crucial to stay legally compliant. One lawsuit could wipe you out if you’re not careful. However, understanding and respecting landlord-tenant laws will keep you on the right side of the law.
