In property management, staying within the law is crucial. Breaking rules, even by accident, can lead to big problems like fines, lawsuits, or losing your business license. This guide will help you avoid common mistakes and keep your property management practices legal.
1. Ignoring Fair Housing Laws
Fair Housing Laws are designed to protect people from discrimination when they are renting or buying a home. These laws make it illegal to refuse to rent to someone because of their race, color, religion, sex, national origin, family status, or disability.
To stay legal, make sure all your advertising and interactions with potential tenants are fair and equal. Avoid using language that could be seen as discriminatory in your ads. Always treat all applicants the same way and base your decisions on their qualifications, not on personal characteristics.
2. Mishandling Security Deposits
Security deposits are a common source of legal trouble for property managers. Each state has specific rules about how much you can charge, how you must store the money, and how and when you need to return it to the tenant.
To avoid problems, always follow your state’s rules closely. Provide a written receipt when you collect the deposit, keep the deposit in a separate bank account, and return it within the time frame required by law after the tenant moves out. If you need to keep any of the deposit for damages, provide an itemized list of costs to the tenant.
3. Failing to Maintain the Property
Property managers are responsible for keeping rental properties safe and livable. This means fixing any problems quickly, like broken windows, leaks, or faulty wiring. Ignoring maintenance issues can lead to serious legal consequences if a tenant gets hurt or if the property becomes uninhabitable.
Regularly inspect the property and respond quickly to maintenance requests. Keep detailed records of all repairs and maintenance work done on the property. This shows that you are taking care of the property and can protect you if a tenant claims you haven’t done enough.
4. Overlooking Lease Agreement Details
A clear and detailed lease agreement is essential to avoid legal issues. This document should outline all the terms of the rental, including rent amount, payment due dates, maintenance responsibilities, and rules for the property.
To stay legal, make sure your lease agreement follows state laws and covers all necessary details. Avoid using vague language that can be misunderstood. Ensure both you and the tenant sign the lease, and give a copy to the tenant. Regularly review and update your lease agreements to ensure they remain compliant with any changes in the law.
5. Failing to Properly Handle Evictions
Evictions are a sensitive and legally complex process. Handling an eviction improperly can lead to serious legal consequences. Each state has specific rules about how and when you can evict a tenant.
To avoid legal trouble, follow your state’s eviction process precisely. This usually involves giving the tenant a written notice, waiting a certain period, and then going to court if necessary. Never try to force a tenant out by changing the locks or shutting off utilities. Always document each step of the process and keep records of all communications with the tenant.
6. Neglecting Tenant Privacy Rights
Tenants have a right to privacy in their rental homes. As a property manager, you must respect this right and follow the laws about entering a tenant’s property. Typically, you need to give advance notice before entering for inspections, repairs, or other reasons.
To stay compliant, always inform tenants in writing before you need to enter their home, and give them enough notice as required by law. Emergencies are an exception, but even then, it’s good practice to notify the tenant as soon as possible after entering. Respecting tenant privacy not only keeps you legal but also builds trust and good relationships with your tenants.
7. Ignoring Rent Control Laws
Rent control laws limit how much you can increase rent each year. These laws vary by city and state. Ignoring these laws can lead to big fines and legal trouble.
To stay legal, always check if your property is in a rent-controlled area. Follow the rules about how much you can raise rent and how often. Keep records of all rent increases and notify tenants in writing before making any changes. Staying within the limits protects you and keeps your tenants happy.
8. Failing to Provide Proper Disclosures
Property managers must give tenants certain information, called disclosures, before they move in. This can include details about the property’s condition, the presence of lead paint, or any health and safety hazards.
To avoid legal problems, make sure you know what disclosures are required in your area. Provide these disclosures in writing and get the tenant’s signature to prove they received the information. Keeping good records of these documents shows you are following the law and protects you from disputes.
9. Neglecting Insurance Requirements
Having the right insurance is crucial for protecting your property management business. This includes general liability insurance, property insurance, and sometimes even tenant insurance.
To stay legal and safe, ensure you have the necessary insurance coverage for your properties and business operations. Review your policies regularly to make sure they meet current legal requirements and cover all potential risks. Proper insurance not only protects you from financial loss but also shows your tenants and clients that you are a responsible property manager.