Lawsuits and legal pitfalls can be a nightmare for rental property owners and managers, leading to costly settlements and unnecessary stress. However, proper knowledge and proactive steps can prevent many of these issues. Avoiding legal pitfalls starts with understanding the most common legal challenges rental property owners and managers face and implementing industry best practices. Doing so can protect you and your properties and ensure conflict-free operations. In what follows, we’ll explore some of the most common lawsuits and legal pitfalls rental property owners face and some proactive steps you can take to avoid them.
Common Legal Pitfalls in Property Management
In the rental real estate industry, the common reasons why a property owner or manager may find themselves in a lawsuit or other legal nightmare come down to just a few key legal pitfalls.
Violating Tenant’s Rights
One of the main reasons a rental property owner or manager ends up in court is violating one or more of a tenant’s rights. Property owners are required to treat their residents fairly and equally and complying with fair housing laws. State and federal housing laws outline landlord responsibilities, which generally include:
- Ensuring a habitable living environment for occupants
- Responding to maintenance and repair requests in a timely manner
- complying with all applicable local and federal housing and anti-discrimination laws
- Managing security deposits in accordance with the applicable laws and in a fair manner
- Initiating legal eviction processes only in accordance with legal requirements.
The reality is that if not taken seriously, landlords can violate a tenant’s rights in these areas in many ways. Refusing to lease to a disabled person, for example, or not handling a tenant’s personal belongings correctly during an eviction are two of many mistakes that can lead to costly lawsuits. A tenant also has a right to privacy, which requires a landlord to provide proper notice before entering their home or unit. Failing to do so can lead to serious legal consequences.
Negligent Maintenance and Repairs
Another common legal pitfall related to tenant rights is neglecting to provide proper maintenance and repairs on a rental property. As noted above, the law requires landlords to keep a rental property safe and habitable. Failing to do so can lead to personal injury, illness, or damage to personal property, which can embroil a property owner in a lawsuit.
Lease Disputes
A third common area with potential for legal pitfalls is unclear or misleading lease documents. A lease is a contract outlining the terms under which one party agrees to rent an asset—in this case, property—owned by another party. It guarantees the lessee, also known as the tenant, use of the property and guarantees the lessor (the property owner or landlord) regular payments for a specified period in exchange. When lease documents are vague, unclear, or not specific enough, misunderstandings and legal action can result.
Proactive Steps to Prevent Legal Issues
The good news is that there are many things a rental property owner or manager can do to prevent legal issues before they start. These include:
- Clear and Comprehensive Lease Documents: Lease documents must be precise, thorough and legally sound, clearly outlining all key terms. Landlords should take time to review and go over the lease in detail with your tenant to confirm mutual understanding. After execution, strict compliance should follow the terms closely and communicate that you expect them to uphold their responsibilities under the lease as well.
- Training on and Adherence to Fair Housing Laws: Staying up-to-date on local and federal housing regulations is essential to compliance. Be sure that you fully understand your obligations under the law, and if necessary, get additional training on handling common issues that may arise from housing law disputes.
- Effective Communication and Documentation: Regular, positive communication is essential to tenant satisfaction. Take the time to acknowledge your resident’s efforts and invite their feedback. Respond to all maintenance and repair requests promptly and provide updates on work done on the property. Keep thorough records of all communications and agreements with tenants, including phone calls, and maintain a professional demeanor.
- Proactive Maintenance: Create and implement a proactive maintenance plan for your property. Creating and following a strict maintenance schedule can keep the property and your tenant safe.
- Fair Tenant Screening and Eviction Procedures: Use consistent and fair practices in tenant screening, application reviews, and leasing. Conduct thorough screenings and background checks and check all references carefully. In the event of an eviction, follow all state and local laws outlined in the regulations, including timelines, notices, and the correct handling of a tenant’s personal property.
Protect Your Business with Legal Precautions
Property owners and managers must understand their obligations, be proactive, and implement sound management strategies to avoid common legal pitfalls and lawsuits. They should also seek legal advice when unsure about decisions or when facing a situation that could result in a tenant taking legal action against them. By doing so, they can ensure that they, their tenants, and their property are protected.
Do you need help ensuring your property management practices are legally sound? Contact your local property management experts in Grand Rapids; the professionals at Real Property Management Partners are ready to help. Get in touch with us online or call 616-808-3088 today.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
