Lawsuits and legal pitfalls can be a persistent challenge for rental property owners and managers, often resulting in costly settlements and operational strain. With the right knowledge and proactive steps, these risks can be mitigated. Avoiding legal pitfalls begins with understanding the most common legal challenges rental property owners and managers face and adopting industry best practices. This helps protect you and your properties while fostering efficient management. In this article, we’ll outline the common lawsuits and legal pitfalls rental property owners face and provide steps you can take to avoid them.
Common Legal Pitfalls in Property Management
In the rental real estate industry, certain legal pitfalls can lead a property owner or manager into a lawsuit or legal nightmare. Here are the main reasons a rental property owner or manager ends up in court.
Violating Tenant’s Rights
One of the most common reasons a rental property owner or manager ends up in court is violating one or more of a tenant’s rights. Property owners are responsible for treating their residents fairly and equally and complying with fair housing laws. State and federal housing laws outline landlord responsibilities, which typically include:
- Providing a habitable living environment for tenants
- Addressing maintenance and repair requests promptly
- Following local and federal housing and anti-discrimination laws
- Properly managing security deposits
- Adhering to legal eviction processes
Mistakes like refusing a lease to a disabled person or mishandling handling a tenant’s personal belongings during an eviction are mistakes that can lead to costly lawsuits. Tenants also have a right to privacy, requiring landlords to provide proper notice before entering, with serious legal consequences for non-compliance.
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: Create lease documents that are legally sound and define key terms clearly. Go over the lease with tenants, then follow the terms closely and enforce them consistently.
- Training on and Adherence to Fair Housing Laws: Stay up-to-date on local and federal housing regulations to understand your obligations under the law. Train on handling common issues related to housing law disputes.
- Effective Communication and Documentation: Enhance tenant satisfaction with regular communication. Solicit feedback, address maintenance and repair requests quickly, and provide updates on work done on the property. Document all communications and agreements with tenants, maintaining a professional demeanor.
- Proactive Maintenance: A proactive maintenance plan with a strict maintenance schedule can keep the property and your tenant safe.
- Fair Tenant Screening and Eviction Procedures: Apply consistent and fair practices in tenant screening with thorough background checks. For an eviction, follow state and local laws and ensure proper handling of a tenant’s personal property.
Protect Your Business with Legal Precautions
To avoid common legal pitfalls and lawsuits, property owners and managers must stay proactive and implement sound management strategies. When uncertain, seek legal advice to prevent a tenant taking legal action, ensuring you, your tenants, and your property are protected.
For assistance ensuring your property management practices are legally sound, contact property management experts in Scottsdale at Real Property Management Exclusive. Get in touch with us online or call 480-716-7899 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.
