Being a landlord is not an easy business. If you thought that you can invest in this asset class and receive passive you are wrong. Renting out require sophisticated management that is strictly regulated by various federal, state, and municipal laws. Management of residential property is full of risks and liabilities. The lawsuits are a common occurrence in every landlord career. In order to minimize the loses landlord need to be well-versed in the most common tenant lawsuits.
There are various reasons for tenants to sue their landlords. Landlords have to to stay informed about the reasons tenants sue and the intricates of the legal system that allows them to. Lawsuits can be easily avoided or efficiently managed and settled with the right communication and knowledge.
1. Violating Health and Safety Standards
Tenants have sufficient legal grounds to sue their landlords if the unit or property is unlivable. Units can be considered unlivable if there is lead paint, mold, rodents no running water, or no heating in the cold season, for instance. Tenants have the right to request that those issues are resolved in a timely fashion. If those issues are not resolved promptly, tenants have every right to the landlord, withhold rent, or even move out before the end of the lease.
How to handle
Again, I cannot stress enough the importance of the pre-move out inspection. This can help you to identify current and potential problems and fix anything that is not running correctly. If a problem occurs mid-lease, tenants should instantly contact the landlord to make the adjustment. Tenants should have an established channel of communication with their landlord to report the problems. In fact, it is a tenant’s obligation to report structural problems, such as a gas leak, before they escalate and cause significant damage.
2. Keeping the security deposit
Every state and frequently even some cities have different renting laws. The landlord has to fluent in all of the legal issues that concern renting. Additionally, the landlord needs to ensure that tenants read the leases carefully so they understand the specific prerequisites for recovering their security deposit.
One of the most frequently disputed topics is wear and tear vs.damage. Normal wear and tear cannot be pinned on tenants. However, the definition of normal wear and tear may vary. Accelerated wear and tear caused by the negligent behavior qualify as damage. Similarly, a landlord can withhold or deduct the security deposit for:
- Replacing damaged or lost furniture
- Making repairs
- Unpaid rent
- Cleaning the unit
The tenants may sue the landlord if they found those claims unreasonable. Additionally, tenants obtain legal grounds to sue their landlord if they charge more than the state allows or violate the specific state guidelines.
How to handle
In the lease, articulate explicitly what constitutes normal wear and tear and what is damage tenants will be responsible for. The great way to mitigate any potential disputes is to conduct a pre-move-in inspection. It has to well-documented with images and dates.
Share this move in information with your tenants so they can make an informed choice about the property they are taking over. Consider ordering the inspection from the third party property inspector. This way you will have an unbiased certified opinion that will make you bulletproof in court. Failure to make disclosure to prospective tenants is another common lawsuit reason.
Encourage the tenant to review the photos and documents and conduct their own move-in inspection. This way you are documenting tenant’s approval of the property so they cannot claim plausible deniability. Moreover, always review your state’s security deposit regulations and policies and security compliance. Oftentimes even the most mundane thing, such as failing to return the security deposit on time may result in a lawsuit.
3. Illegal Provisions in a Rental Agreement
While you have significant leverage when composing the lease agreement, all of the clauses have to be legal. The landlord has the freedom to deny tenants with pets, for instance. However legally, they don’t have the leeway to prohibit service animals.
Another typical illegal clause includes the notice. How much notice a landlord must give before entering the property is often defined by state law. Landlords and tenants need to know the notice requirements in their neighborhood and have it affirmed correctly in the lease. If there is no state law in place, a lease clause with clarifications is helpful for both parties.
As an additional precaution, the landlord should consult with a real estate lawyer to compose the lease in line with the regulations of the location of the property, to warrant that everything is legal.
How to handle
Make sure your lease agreement is compliant with your state’s and city’s rental laws. A good practice is to check your city’s housing website to take into consideration special laws in your town.
You cannot be reckless with the lease agreement. Make sure it does not only correspond to the local also but also guarantees your rights and profits. There are various tenant responsibilities that are usually tacit but should be explicitly stated in the lease.
4. Disregarding the right to privacy
Landlords need to occasionally visit the rental property for inspections. Nevertheless, they cannot enter without purpose or without appropriate notification except the cases of emergency, such as pipe burst. Landlords must review laws of their jurisdiction to discover what reasons as reasonable and legal to enter a unit and the specific timeframe for tenant notice. However, make sure to check with your city as well.
How to handle
Examine the laws in your property’s location. Landlords should analyze state laws and practices of the neighborhood where the property is located. There may be local tenant regulations that are more strict than the state’s laws. Review the lease agreement to assure that it is obedient with the regional tenant laws for entering the property.
5. Discrimination
The federal Fair Housing Act forbids landlords from denying housing to the tenant for discriminatory reasons such as national origin, race, color, religion, disability, familial status etc. Landlords should bypass questions that may seem discriminatory or imply discriminatory intent. Some questions that are considered common courtesy, such as, how many kids do you have, may be sufficient for a lawsuit. Discrimination claim is one of the most serious issues, that the landlord can encounter. It can result in severe penalties from the city authority and may destroy your business reputation.
How to handle
Proceed with caution when reviewing any candidate from the protected categories. Additionally, review the website of the local Fair Housing Council. Several counties have additional protected classes, you might not be aware of. Similarly, consult the legal expert before denying any request for accommodation from the tenant from protected categories. Meticulously review the lease agreement and seek legal advice when necessary to exclude discriminatory clauses.
Nobody wants to be associated lawsuit. It is time-consuming, exhausting and expensive regardless of whether you win or lose. Landlords have to be knowledgeable about their legal obligations and educate tenants on their rights.
