The tips that lawyers have for new landlords are to know exactly what you’re getting into. This will help prevent you from actually going to court.
That may mean knowing what the laws are so you don’t break them, consulting a lawyer when you’re unsure of the right thing to do, or having a lawyer handle a responsibility to make sure everything is copacetic.
Here are some top areas of concern.
Find the Right Lawyer
Knowing how to find the right attorney is vital.
- Check reviews
- Tour their offices
- Ask for references
- Ask lots of questions
- Check state and local resources
- Ask for a referral from another lawyer
- Get details on fees and billing procedures
- Check the Martindale-Hubbell Law Directory
- Check with a lawyer disciplinary agency in your state
- Call each attorney on your short list for an appointment
Finding the Right Lender
There are many ways to finance a rental property. You can even finance a property with bad credit. Whatever route you take, the important thing is to find a reputable lender that provides loans on terms that work for you.
Choose the Right Legal Entity
When you choose the right legal entity for your real estate investment, you get:
- Tax Benefits
- Liability Protections
- Easier Management
- And More
Know Local Laws
You need to know all your local laws.
- Zoning Laws
- Building codes
Make sure to follow all the rules carefully so that you don’t leave the door open for violations. If this requires making repairs to your property, don’t worry, repairs are a common tax deduction.
Tenant screening is key to generating a stable passive income from your rental property. So, you should know what’s required of screenings under property management by law. Knowing how to write rental listings can help you narrow down your search, but knowing how not to discriminate can help you avoid being penalized.
You should know the Fair Housing Act’s anti-discrimination law by heart. You can’t decide who to rent to based on:
- National origin or ethnicity
- Family status
- Mental or physical disability
Rejecting a tenant because of criminal history is complicated. You can't deny someone just because they've been arrested. You also can't deny a person only because they’ve been convicted of a crime. However, you can write your lease in such a way that applicants with certain convictions are barred because they would potentially place your tenants, property, or community in harm’s way.
Like Oakland, some places have Fair Chance Housing Ordinances. As a result, in Oakland, you cannot conduct a criminal background check as part of a tenant screening.
Conduct an Initial and Exit Walk Through
Both you and your tenant should go through the entire property before and after moving in and out. Do it either together or separately. The goal is to document all the damage and wear and tear so that you know how to properly use the funds in the security deposit for repairs.
Don’t be caught off guard by surprising landlord liabilities! Landlords are or can be responsible for:
- Criminal Activity
- Windows and Screens
- Secondhand Smoke
- Bed Bugs
- Slips and Falls
- Harm Caused by Employees
Common Avoidable Lease Violations
Common lease violations are avoidable if you spell them out clearly for your tenants. You may also want to review your lease with your tenant, along with fire prevention guidelines, simply because your tenant might not read over everything you give them, even if it’s something as important as a lease agreement.
Examples of common, avoidable lease violations include:
- Unpermitted Pets
- Homeowners Association (HOA) Conflicts
- Smoking Indoors
- Noise Disturbances
- Long-Term Guests
- Property Damage
- Unpaid Rent
- Landlord Lease Agreement Violations
- Privacy: Landlords must provide tenants with reasonable notice. A landlord is forbidden from entering a property whenever they want. The only exception is an emergency.
- Implied Warranty of Habitability: The landlord must provide a habitable home for their tenants.
One way to prevent avoidable landlord liabilities is by stipulating the consequences for lease violations. Go into detail about early termination and how to avoid them. You can use free lease rental templates to get as specific as you want. Although keep in mind, not all early terminations result from tenant or landlord negligence or maliciousness.
Typical examples for early lease termination include:
- Active Military Duty
- Breaking a Month-to-Month Lease
- Divorce, Illness, or Job Transfer
- Domestic Violence
- Violation of Privacy by Landlord
- Lease Agreement Violations
- Loss of Employment
- Uninhabitable Rental Property
Failing to provide tenant safety is a liability. Laws about tenant safety may vary based on geographic location, so know your specific responsibilities. At a minimum, landlords must provide:
- Secure Doors
- Safe Water
- Smoke Detectors
The landlord is also responsible for:
- Protection against criminal activity
- Maintaining a safe space
- Abandoned property
- Providing all legal paperwork and a legally sound lease agreement
- Accommodations that are compliant with the Americans with Disability Act (ADA)
- Following all security deposit laws
- Performing evictions legally
Emotional Support Animals and Service Animals
You can choose not to allow tenants to have pets, but you can’t prevent tenants from having an emotional support animal or service animal. That’s because these animals are not pets; they’re working animals.
- Landlords cannot charge additional fees for an emotional support animal or service animal.
- Landlords cannot deny service dogs based on their kind of dog.
- A landlord can veto a support animal if they believe the animal poses a health or safety risk, but most courts will side with the owner.
- A support animal doesn't need to be verified if the disability is readily apparent.
- If the disability is not readily apparent, written verification may be requested.
- Something as simple as a letter from the owner would suffice.
- If a third party provides the verification, it is illegal to contact them.
- A service animal can be any animal that's not an exotic animal or a reptile that's not a turtle.
Respecting tenant privacy isn’t just one of the gestures that show tenant appreciation to encourage lease renewals; respecting privacy is also the law.
A tenant’s space can only be entered if
- There’s proper notice (usually 24 to 48 hours)
- They need to check for repairs or make a repair
- The lease is ending, and the owners want to show the space
- It looks like a tenant hasn't been in their unit for an extended period (how long can vary, but usually seven days)
- There’s an emergency
- Serve an Eviction Notice
- File in Court for Eviction
- Rent Court Hearing
- Writ of Possession, If Granted (this document states the tenant must vacate)
- Eviction Day
It’s also important to know what you shouldn’t do during an eviction. You could end up in trouble!
- Don’t retaliate against tenants for complaining.
- Don’t lock tenants out.
- Don’t turn off any utilities.
- Don’t harass, bully, or defame tenants.
- Don't accept partial payments during an eviction. Accepting partial payments could look like discrimination if not given to all tenants, which may lead to you being charged with a fair housing violation.
- Don’t react emotionally.
Use Online Rent Collection and Tenant Portals
Documenting everything is essential to prove you’re always acting by the books. Online rent collection apps have a lot of advantages:
- They make bookkeeping easier.
- They eliminate checks getting lost in the mail.
- Payment can be set to auto-bill-pay.
- Tenants can pay rent in portions throughout the month.
- You can choose to apply late payment fees.
- You can collect and manage security deposits.
Online tenant portals make it easy to:
- Keep track of communication
- Remember Important dates
- Make announcements
- Delegate responsibility
- Be responsive
- Prioritize task
Investing in real estate means dealing with the law, so it’s good to have a lawyer in your back pocket. You can read as much as you want, and you should, but some things are just too complicated or too much of a risk to not hand off to a professional.