5 Key Responsibilities Every Landlord Should Know
Becoming a landlord, reimagining your role amid the COVID crisis, wondering how to deal with an issue? No matter what brought you to the article, you’ll find strategies to maximize profits, keep good tenants, and abide by the real estate law.
This guide helps you answer five key questions so that you understand your responsibilities as a landlord:
What landlord responsibilities is most important?
Your number one responsibility as a landlord is to protect your property. Wait, property before people? Yes, but not in the self-interested way it sounds.
Right after the realtor shows you the residential property, you buy it, and then you must get the property up to working order. Once someone lives in the place, of course, your primary concern is your tenant’s safety. But too many landlords, especially first-timers, forget that being a landlord is a business.
A “property-first” mindset keeps it a business so you can give your tenants the high level of service, safety, and security they deserve from a professional “business” like yours.
After locking down the right property and people, it’s on to the proper procedures. How do you follow all local, state, and federal laws so that you fulfill your duty, limit your liability, and generate worthwhile income? Just remember the three Ps. Once again, it’s property, people, and procedures.
Warranty of Habitability: Landlord’s responsibilities to the tenants
What is a warranty of habitability? It’s an implied warranty that says the landlord will guarantee the rental meets basic safety and living standards before and during tenant occupancy. Even if the lease agreement doesn’t say this in writing, it’s implied when both parties sign.
Your responsibilities to the tenant can be summed up as, keeping the property up to safety codes and maintaining “habitability.” Check out these pointers:
Install Smoke and Carbon Monoxide Detectors: Each state has laws on how many smoke and carbon monoxide detectors are required. Some localities may also require sprinkler systems in their building codes, too.
Make Repairs: You must care for the structural integrity of the home. That means you must address issues with the foundation, walls, and roofing. Also, windows and doors must be lockable. Working electrical, plumbing, and HVAC fall into this category. It’s necessary repairs, not luxuries, and tenants should handle small repairs like screwing in a light bulb.
Manage Weather-Related Regulations: Your locality may require specific shelter for natural disasters or heating and cooling for adverse weather. For example, Arizona law requires AC because of the risk of heat exhaustion.
Provide Pest Control: You must pay for pest control. Eliminate roaches, rats, and other pests. It’s also the tenant’s job to clean the house and help with the infestation problem.
Put in Window Guards: Some states require you to install window guards if the new tenant or current one asks in writing for a child ten years old or younger. For instance, New Jersey has this law.
Remove Mold: Mold remediation is a necessity because of the potential health hazards. You also must deal with the leak or water source that caused the mold.
Safeguard Common Areas: Proper lighting, fencing, and security options should be upheld for parking lots, laundry mats, and other shared spaces. For example, you might need to secure the handrails in an apartment stairwell.
What are the landlord’s responsibilities to the rental property?
Here’s a list of common-sense strategies to keep your property profitable for the long-term:
Pay the Mortgage: It’s obvious but worth mentioning. You must pay the mortgage on time, or you risk losing the property. Many lenders have a grace period, but at 60 days past due, it could ding your credit. And at 90 days late, the loan is technically in default, and the bank can start the foreclosure process.
Pay Utilities: Are utilities included, or do you pay for water, gas, or sewage? Be clear on what each owes in the lease agreement, and work with the utility to put the bills in your tenant’s name. Could the city foreclose your property for unpaid bills? Make sure those are in your name and paid in a timely manner.
Retain Landlord Insurance: Almost all lenders need proof of insurance before they provide a loan (can be in the form of an insurance binder). Landlord insurance covers the property and your liability if tenants or guests are injured, but it doesn’t cover your tenants’ stuff. To protect their belongings, they’ll need a renters policy.
Schedule Maintenance: Yes, you repair the property as problems arise, but you should also schedule routine maintenance. Before major work, check your local building laws. A well-kept rental unit shows the tenant how much you care and allows you to attract future renters too.
What are the landlord’s legal responsibilities?
You’ll always want to check federal, state, and local landlord-tenant laws, so you’re well informed on both sides of the landlord-tenant relationship. You can always have an attorney or your property management walk you through common situations or help you with a master lease agreement. Take a look at the legal side from tenant screening to ending the lease:
The Fair Housing Act
The Fair Housing Act (FHA) was signed into law by President Lyndon Johnson in 1968. It protects tenants from discrimination during the rental process. It prohibits discrimination based on:
· National Origin
· Familial Status
So, you or your property manager can’t advertise you’re looking for “a good Christian family” or “couples with no children.” An FHA first offense has a max civil penalty of $16,000.
The Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) tells you how you must manage your prospective tenants’ consumer reports. Anytime you run a background check, credit check, or look at rental history, you’re in FCRA territory. You must protect sensitive information, get written permission before running reports, and give a blanket notification of why a person was denied if part of their background was the reason.
Abide by Occupancy Standards
Occupancy standards are the laws that govern how many people can live in a property based on square footage and bedrooms. When renting to larger families, it’s a smart idea to make sure you’re following the law.
Disclose Lead Paint
If your property was built before 1978, you must give each renter a lead paint disclosure form before they start their tenancy.
Security Deposits and Move-In Costs
It’s common for landlords to collect an application fee, first and last month’s rent, and a security deposit before move-in. Some states regulate how much you can charge. Your state may also mandate how you handle the security deposit. Must it be in a separate or interest-earning bank account? Check the state laws. Most states require the prompt return of funds when the tenant leaves, typically within 14 to 60 days, and it can’t be withheld for normal wear and tear.
Pet Policy and Emotional Support Animals
What is your pet policy? Does your insurance limit certain breeds or do you say no to pets altogether? Housing and Urban Development (HUD) says you can’t discriminate against emotional support animals (ESA). Even if you have a “No-Pets Policy,” you must allow these tenants to have their pets or violate the FHA’s disability clause. Also, you can’t charge a pet fee for ESAs.
Right to Enter
How much notice does your state require before you can enter the property for maintenance, emergencies, or showings to prospective new owners or renters? It’s good to make this explicit in your lease agreement.
Responsibility to Neighbors
You have a responsibility to the people who live in neighboring properties. Criminal activity, drug-dealing, and noise can lead to fines from the city if you’re found negligible. Seasoned landlords give their contact information to the neighbors, so they can be your eyes and ears before things get out of hand. It’s best to know before you receive a formal complaint from the city.
Rent Proration and Other Reimbursement
What happens if there’s a fire, uncontrolled running water, or natural disaster that leaves home the uninhabitable? It’s best to have this explicit in the rental agreement. You must make the repairs to restore the house’s living conditions.
But that doesn’t mean you have to put tenants up in the Ritz Carlton or pay to replace their stuff. In fact, if it’s no one’s fault, their renters insurance, not your landlord insurance, would pay for their hotel stay. This protection is one reason savvy landlords require their tenants buy renters insurance.
If the issue was your fault or simply want to bolster the relationship, prorate the rent for the home’s unlivable time. Be aware that individual states may allow tenants to break the lease if the house is damaged beyond a specific period.
Ending the Lease
You might consider giving the tenant at least 60 days’ notice before ending the lease. It’s the law, and some states and others only require 30 days’ notice, but it’s a best practice to show courtesy and avoid problems that could lead to the eviction process.
How do habitable property requirements and responsibilities differ by state?
Check out this list that covers typical landlord responsibilities that vary by state that goes from A to Z:
· Emergency Entry Rules. In emergencies, most states allow the landlord to enter, but each defines “emergency” differently. Think fire, damaged pipe, or natural disaster, but it doesn’t hurt to check your local statute.
· Fee for Returned Checks. What’s the maximum price you can charge for a bounced check?
· Interest for Security Deposits. Does your state require the security deposit to sit in an account that bears interest?
· Late Fees. States may or may not have mandated grace periods.
· Maximum Security Deposit. Many states set the max at 1, 1.5, or 2 months’ rent. But most have no limit.
· Notice Before Entry. States like Arkansas allow the landlord to enter without warning, while others may require 72 hours’ notice.
· Notice of Eviction for Lease Violation. There’s often a “cure or quit” clause that gives the tenant a chance to remedy the situation.
· Notice of Eviction for Nonpayment. How many days are required for a lawful eviction?
· Notice of Move-Out Inspection. Knowing the period required to perform the inspection properly could mean the difference between keeping a security deposit for needed repairs or paying out of pocket.
· Notice of Rent Increase. Thirty or 60 days of warning is standard, but states differ, and watch out for rent control.
· Pet Deposits and Added Fees. Your state may limit what fees you may charge for pets and the amount of application. It’s important to research local ordinances.
· Security Deposit Deadline. It depends on the state, but you may have anywhere between 14 and 60 days.
· Separate Account for Security Deposits. Mixing or “comingling” funds is illegal in some states because the law might call for different accounts.
· Small Claims Court Caps. State’s set the max you can get back in small claims court, but the amount varies wildly. For example, Kentucky limits you to $2,500, while Delaware stops at $25,000.
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