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10 Laws All Landlords Need to Know

Dozens of federal, state, and local laws govern the residential rental industry and the landlord-resident relationship. All of these laws are important. The following calls to your attention ten important laws for you to know and follow when you’re a landlord.

The Fair Housing Act
The Fair Housing Act prohibits you from discriminating against applicants or residents based on any of the seven protected classes:

  • Race
  • Color
  • Sex
  • National origin
  • Religion
  • Handicap
  • Family status

The Fair Housing Act establishes only the minimum protections. States and localities may set additional protected classes, such as source of income — whether a person’s income is from a job, alimony, child support, unemployment, welfare, disability payments, and so on.

The Fair Credit Reporting Act
According to the Fair Credit Reporting Act (FCRA), you may use credit reports to evaluate rental applications. However, if you deny housing to an applicant based on information contained in the credit report, you must provide the applicant with an adverse action notice that includes the following information:

  • The name, address, and telephone number of the credit-reporting agency (CRA) that supplied the credit report, including a toll-free telephone number for CRAs that maintain files nationwide
  • A statement that the CRA that supplied the report didn’t make the decision to take the adverse action and can’t give the specific reasons for it
  • A notice of the applicant’s right to dispute the accuracy or completeness of any information provided in the credit report, and the applicant’s right to a free report from the CRA upon request within 60 days

The FCRA also comes into play if you want to report the nonpayment of rent to one or more CRAs. If you report a resident for nonpayment of rent and the resident cures the debt, you’re legally obligated to update the resident’s credit report to indicate that the debt has been cured.

The implied warranty of habitability
The implied warranty of habitability requires that landlords provide residents with living space that’s fit for human occupancy. To be habitable, living space must have heat when it’s cold, running water, a sufficient amount of hot water, plumbing and electricity that function properly, and so on. Landlords must also maintain clean and sanitary buildings and grounds — free of debris, filth, rubbish, garbage, rodents, and vermin.

If a rental unit is uninhabitable, residents have the right to withhold rent until the necessary repairs are made or, in more serious situations, terminate the lease.

Although your residents are responsible for repairing anything they or their guests break, you’re required to perform any repairs required to maintain fit and habitable living conditions, and you must complete the repairs in a reasonable period of time.

The mutual covenant of quiet enjoyment
Implied in every lease and rental agreement is the mutual covenant of quiet enjoyment, which grants all residents the right to the undisturbed use and enjoyment of the rental property. This covenant applies to you, as landlord, in two ways:

  • You’re not allowed to enter a resident’s unit whenever you want. You can enter in an emergency that threatens life or property, when you ask and the resident gives you permission, and to perform necessary inspections or repairs or show the unit to prospective renters or buyers (only after giving the resident sufficient notice).
  • You need to reasonably investigate complaints and potentially take action against any resident who’s disturbing his neighbors.

Your state’s security deposit rules
Every state has a security deposit statute that typically specifies the following:

  • How the security deposit is to be held — usually in an interest-bearing account in an in-state bank
  • What the security deposit may be used for — usually to cover unpaid rent, damage beyond ordinary wear and tear, and cleaning to make the unit as clean as it was when the resident moved in and sometimes to repair or replace the landlord’s personal property in the unit if that use is mentioned in the lease
  • When the unused portion of the security deposit must be returned to the resident
  • That the landlord provide an itemized invoice of any money deducted from the security deposit

Disputes over security deposits are common and frequently lead to the resident taking legal action against the landlord. To protect yourself, comply with your state statute, and take the following precautions as good business practices, even if it isn’t required under the applicable statute:

  • Have a separate interest-bearing account for holding security deposits.
  • Complete a move-in/move-out checklist to document the condition of the property at the beginning and end of a resident’s stay.
  • Take photos or video of the property to create a visual record of the property’s condition at the beginning and end of a resident’s stay.
  • Keep receipts for all repairs and cleaning required to prepare the unit for the next resident, even though you’re permitted to charge the resident only for damage beyond ordinary wear and tear, and cleaning to make the unit as clean as it was when the resident moved in.
  • Return the unused portion of the security deposit to the resident as soon as possible as required by state law.
  • Along with the unused portion of the security deposit, include an itemized list of all costs deducted from the security deposit.

The Residential Lead-Based Paint Hazard Reduction Act
The Residential Lead-Based Paint Hazard Reduction Act, in part, requires that landlords inform residents of the hazards posed by lead-based paint. If your rental property was built prior to 1978 (the year the EPA banned lead paint) you’re required by law to do the following:

  • Disclose all known lead-based paint and lead-based paint hazards and any available reports on lead in the property.
  • Give renters the EPA pamphlets “Protect Your Family From Lead in Your Home” and “The Lead-Safe Certified Guide to Renovate Right.”
  • Include certain warning language in the lease as well as signed statements from all parties verifying that all requirements were completed.
  • Retain signed acknowledgments for three years, as proof of compliance.
  • Housing that is exempt from this rule include the following:

  • Units that have no bedrooms, such as lofts, efficiencies, and studio apartments
  • Short-term rentals of fewer than 100 days
  • Housing designated for the elderly or the handicapped unless children live or are expected to live there
  • Property that’s been inspected by a certified inspector and found to be free of lead-based paint

State-required disclosures
In addition to the federal lead-based paint disclosure, many states require that landlords disclose one or more of the following:

  • Environmental hazards, including periodic pest control and herbicide treatments, toxic mold, asbestos, radon gas, bedbug infestation, and methamphetamine contamination
  • Recent flooding or location in a flood zone
  • Security deposit policies and procedures
  • Nonrefundable fees, such as a pet fee, where such fees are allowed
  • Smoke detector location and maintenance requirements
  • Nearby military ordinance, such as a US Army base
  • Smoking policy
  • Landlord’s or property manager’s name and contact information
  • Any shared utility arrangement

Your state’s Landlord Tenant Act
Nearly every state has a version of the Landlord Tenant Act, which defines the rights and obligations of the landlord and the tenant (also known as the resident), legal remedies for breach of contract, possible defenses to legal actions, and much more. To find your state’s landlord tenant act, search the web for your state’s name followed by “landlord tenant act” and click one of the links that looks promising. If that doesn’t work, track down your state’s official website, and search that site specifically for something like “landlord tenant” or “residential rental laws.”

Eviction rules and procedures
If you need to evict a resident, turning off electricity, gas, and water to the unit to compel the resident to leave is illegal. You must follow your state’s eviction rules and procedures, which typically require that you perform the following steps:

1) Check your state’s landlord tenant act to find out whether you have legal grounds to evict the resident.

2) Give the resident reasonable notice of your intent to file for eviction, including the reason you intend to do so and, if required by state law, the time the resident has to address the issues.

3) Wait until the morning after the deadline specified in your notice, and then file for an eviction hearing at your county’s courthouse.

4) Assuming you prevail in court, wait until the day after the court’s deadline for the resident to move out, and if the resident hasn’t moved out yet, call the sheriff to evict the resident.

Failure to follow your state’s eviction process could result in your losing your case. The resident may end up living in the property for some time, perhaps without paying rent. In addition, the resident may be able to file a legal claim against you in civil court and force you to pay damages, legal fees, and penalties.

Mitigation of damages
When a resident breaches a lease, for example by moving out three months into a one-year lease, the resident is obligated by the contract to continue to pay rent. However, you can’t just let the unit remain vacant for nine months. You’re legally obligated to take steps to mitigate (lessen) the resident’s losses. In this example, ways to mitigate the damages include:

  • Accepting a replacement the resident recommended to rent the unit for the months remaining on the lease, assuming the recommended replacement qualifies
  • Advertising the unit to find a new resident, screening applicants, showing the unit to qualified applicants, and so on

Gather evidence of your attempts to re-rent the property, such as advertisements, records of applicants you screened, and dates on which you showed the property to qualified applicants.

4 Common Eviction Mistakes Landlords Make

When renting out a property you own, it is only natural to want to make the most money and incur the least expense. Unfortunately, for some landlords, this leads to cutting corners in the legal department; a potentially very costly mistake. The following are a few common mistakes landlords make during the eviction process and what you can do to avoid them:

Self-Help Eviction
The single biggest mistake landlords make (particularly those who have never rented property before) is engaging in what is known as a “self-help eviction.” The logic goes something like this: “I own the property, so I should be able to change the locks/move the tenant’s things out/turn off the utilities/harass the tenant into paying or moving/etc.” Unfortunately, this is not the case. By allowing someone to take possession of the property under a lease agreement, you have given them certain rights in the property. The only way to legally extinguish those rights is by a court order. Attempting to coerce a tenant to move out or pay rent by changing locks or switching off utilities, or simply putting the tenant’s possessions outside is likely to lead to a confrontation with the police and a very unpleasant loss in court.

If you are trying to remove a tenant from the property, the only legal way to do that is by filing an action for eviction in the courts and obtaining a proper court order. Even then, the order requiring the tenant to leave the property is usually delivered by law enforcement and, if the tenant refuses to leave, is also enforced by the police. The landlord should not be involved.

Aside from the fact that self-help eviction is illegal and could expose you to civil liability to the tenant, even if the tenant is behind on rent), this conduct can actually be very dangerous. After all, you are messing with someone’s home, and that can cause a violent, instinctive reaction. Showing up unexpectedly and telling someone they have to get out could easily result in violence, which is another reason why law enforcement is typically responsible for delivering the bad news after a lawful eviction.

Inadequate Notice
The second biggest mistake in tenant evictions is failing to give proper notice. Most states have landlord-tenant laws that contain an actual form that should be used to notify a tenant that they must either pay or leave or you will file a lawsuit to evict them. This is sometimes called a “Notice to Quit” or in other states it may simply be called by the number of days the tenant has to pay or leave the property, like a “Three Day Notice.” Generally, before you can file for an eviction, you have to provide the tenant with such a notice to give them an opportunity to cure the problem or leave the property and, should they fail to comply, only then can you file your action to evict.

In other cases, you must provide notice when a lease is going to terminate. For example, if someone signed a one year lease, and you are near the end of that year and do not wish to renew, you usually have to provide the tenant with adequate notice of that intention. Otherwise, the tenants can “hold over” indefinitely, provided they pay their rent. It is only if you give adequate notice and then the tenant holds over that you will be entitled to seek an eviction.

No Evidence
Finally, many landlords forget that even an eviction proceeding is adversarial in nature and requires the landlord to carry the burden of proving its case. For example, you will likely need a copy of the lease agreement, evidence of a failure to pay or other breach by the tenant, evidence of providing proper notice under the law or the lease agreement, and if you are also suing for damages you will need evidence of the actual damage caused by the tenant. Failing to provide this evidence to the court could result in you having to start your case all over again and the tenant getting to spend weeks or months more in your property, possibly without paying you any rent.

Not Hiring an Attorney
Of course, the biggest mistake of all is assuming you know what you are doing if you do not. Most attorneys handling tenant evictions offer reduced rates given the usually very quick nature of these proceedings. Take advantage of this, particularly if it is your first eviction, to make sure you have acted properly as the landlord and that the eviction goes smoothly. Otherwise, you could end up not only having a non-paying tenant in your property for months while you figure out what you need to do, but you could even end up owing money to the tenant.

5 Reasons Not to Return a Tenant’s Security Deposit

When a tenant moves into a rental property, he or she will pay the landlord a security deposit in addition to first month’s rent. This deposit will typically be returned to the tenant at the end of the lease term, as long as the tenant follows all the terms of the lease agreement. Learn five reasons a tenant may not be entitled to the return of their security deposit, in whole or in part.

5 Times a Landlord Does Not Have to Return a Tenant’s Security Deposit

Each state has specific security deposit laws landlords and tenants must follow, including the reasons you can keep a tenant’s security deposit. However, here are five of the most common reasons a tenant should not expect their security deposit to be returned.

1. Breaking or Terminating a Lease Early
If a tenant breaks their lease, the landlord can keep all or part of the security deposit necessary to cover the costs associated with this breach. Again it will depend on the wording of your lease and the particular landlord-tenant laws in your state. If you have included an early termination clause in the lease the tenant signed, they will have to abide by these terms.

An early termination clause could read something like this, for example:

“If the tenant terminates the lease prior to the one year lease agreement or does not give 30 days’ notice prior to move out once the lease has gone month-to-month, the tenant is responsible for rent owed for the remainder of the lease. The landlord will deduct the amount owed from the tenant’s security deposit. If the security deposit does not include sufficient funds to cover the amount owed, the tenant is responsible for paying the additional money owed to the landlord for the remainder of the lease.”
You may also be able to charge the tenant the court costs or attorney fees necessary if you have taken legal action against them.

2. Nonpayment of Rent
Most states will allow you to keep all or a portion of the security deposit when the tenant does not pay their rent.

Nonpayment of rent is considered a breach of lease.

When a tenant does not fulfill their contractual obligation to pay their monthly rent, you are usually allowed to keep the portion of this security deposit necessary to cover the lost rent.

3. Damage to the Property
Another reason you may be able to keep a tenant’s security deposit is because they have caused damage to your property. Damage is different than normal wear and tear on the property. Here are some examples of each:

Normal Wear and Tear:

A few small nail holes in the walls from hanging pictures
A few small stains on the carpet
A small amount of mildew forming in grout lines in the shower tiles
Dirty grout
Tarnish on bathroom fixtures
Loose handles or doors on kitchen or bathroom cabinets
Reasonable amounts of dirt, dust or grime on the floors, walls, or appliances

Damage:

Multiple/large holes in the walls
Huge stains or holes in ​the carpet
Extensive water damage to hardwood floors
Missing outlet covers
Missing or damaged smoke or carbon monoxide detectors
Cracked kitchen or bathroom countertop
Broken bathroom vanity
Broken windows
Broken doors
Keys not returned at end of tenancy

4. Cleaning Costs
Under normal circumstances, you cannot make deductions from a tenant’s security deposit to cover normal cleaning costs.

If the cleaning necessary is excessive, and not the result of normal wear and tear, you may be able to keep a portion of the tenant’s deposit.

For example, if a tenant leaves one bag of garbage in the apartment, it is unreasonable to try and charge the tenant a portion of their security deposit to cover your labor. However, if the tenant has left trash all over the apartment, food in the refrigerator, and numerous personal belongings throughout the property, then yes, you may be able to keep a portion of the security deposit to cover your expenses, as the tenant has not left the property broom-swept clean.

Another example would be if a tenant had an animal that used the carpet as a toilet. You would be able to charge the tenant for the cost of cleaning or, if necessary, of replacing the carpet.

5. Unpaid Utilities
A tenant may not be entitled to the return of their deposit if they have not paid their utility bills. You may be able to keep a tenant’s security deposit to cover any utilities they have neglected to pay and were required to pay as part of their lease.

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