What Every Landlord Needs to Know About Legal Rights

Posted in Blog  
  on Aug 30, 2016

Did you know that becoming a landlord is not as simple as just purchasing an investment property, finding a tenant and receiving rent? What many people don’t realize is that becoming a landlord puts them in a position of responsibility, with a legal duty to uphold the rights of their tenants.

This isn’t something that should be figured out on the fly. Legal mistakes can be extremely costly and time-consuming. Below, we have shared the ten most common legal areas that tend to trip landlords up, so take a look and make sure that you are prepared.

1. The Right to Equality

Image courtesy of www.local.gov.ukTenants have a legal right to be treated fairly, and therefore, landlords may not ask discriminating questions when screening potential tenants. This includes inquiring about details such as race, religion, gender, marital status and disability.

This right is upheld by the Fair Housing Act, which is intended to protect the buyer or renter of a dwelling from seller or landlord discrimination. The following is explained by Wikipedia.

The Fair Housing Act (Title VIII of the Civil Rights Act of 1968) introduced meaningful federal enforcement mechanisms. It outlawed:

  • Refusal to sell or rent a dwelling to any person because of race, color, religion, sex or national origin.
  • Discrimination based on race, color, religion or national origin in the terms, conditions or privilege of the sale or rental of a dwelling.
  • Advertising the sale or rental of a dwelling indicating preference of discrimination based on race, color, religion or national origin.
  • Coercing, threatening, intimidating or interfering with a person's enjoyment or exercise of housing rights based on discriminatory reasons or retaliating against a person or organization that aids or encourages the exercise or enjoyment of fair housing rights.

[source]

2. The Right to Full Disclosure

Image courtesy of images.lowesforpros.comTenants have a legal right to receive full disclosure from their landlords regarding any negative facts about the rental property that may cause harm or distress to them. Therefore, landlords may not hide details such as mold on the property, known use of lead-based paint if the house dates to pre-1978, the presence of asbestos, any past deaths on the premises or known sex offenders in the area.

The disclosures can be made verbally or in writing. The key is to be honest about anything hazardous or upsetting that may affect an individual’s decision to move into the property, although the specifics vary from state to state. The following examples of required disclosures are from Nolo.com

  • Location of a former federal or state military ordnance in the neighborhood
  • Presence of environmental and health hazards, including lead-based paint, mold, radon, and bedbugs
  • Recent flooding in the rental unit (or location in a flood zone)
  • Smoking policy
  • Presence of a methamphetamine laboratory at the rental prior to the tenant’s occupancy
  • Availability of fire protection
  • Planned condominium conversions, intention to demolish the rental unit or in-process foreclosure proceedings
  • Outstanding building inspection or condemnation orders or housing code violations
  • Rights of domestic violence victims

[source]

3. The Right to a Fair Contract

Tenants have the right to receive a fair and legally sound tenancy agreement. This means that the landlord may not include illegal provisions in the contract. It will only be found null and void if it were ever considered in a court of law anyway. The tenancy agreement must adhere to legal tenant rights, specific to the state. This governs discrimination, rental due date and grace periods, and even rent control ordinances in some areas.

4. The Right to a Safe Environment

Image courtesy of images.wisegeek.comTenants have the right to live in safe conditions and to be protected from criminal activity. It is the landlord’s responsibility to inspect and maintain the rental property regularly to ensure that the tenants are not exposed to hazards or dangerous living conditions.

In addition, the landlord must install security measures, to protect the tenant from criminal activity as far as possible, with provisions such as installing adequate locks, trimming tall hedges and use of outdoor lighting where necessary.

The following is an excerpt from Home Stretch Properties, offering advice to landlords regarding criminal activity. Tenants have the power to sue and gain compensation if neglect is proven, so this should be considered carefully. The specific choices you make to protect your tenants from criminal activity will depend on the area in question.

If you have access to crime reports about theft and other petty crimes around the neighborhood, you would be well-advised to disclose this information to your [Silicon Valley] tenants.

We strongly advise our clients take the following steps:

  • Provide good lighting and window and door locks. Equip the exterior of the home with motion detector lights which are good deterrents.
  • Sign up with 24-hour monitoring service companies who provide yard signs which are also effective in deterring criminal activity.
  • Regularly inspect security systems.
  • Notify your tenants immediately if you are notified of a dangerous situation in the neighborhood.
  • If there is suspicious activity, notify the police and warn your tenants by email; keep copies of these electronic communications.

[source]

5. The Right to a Comfortable Home

Image courtesy of i.kinja-img.comFollowing on from the last point, tenants have the right to live in habitable premises. This means that the landlord must make any necessary repairs that render the accommodation uninhabitable. This right is known as the implied warranty of habitability and is defined here by Investopedia:

An unstated guarantee that a rental property meets basic living and safety standards. When a tenant rents an apartment, for example, an implied warranty of habitability means that the unit will have hot water, a working electrical system, heat in the winter, lockable doors and windows, a working toilet and smoke detectors and be free of pests like roaches and rats, among other conditions.

Local building codes outline the standards that rental units must meet. A landlord whose rental units do not meet these conditions is known as a slumlord. Tenants living in uninhabitable units have legal remedies to force landlords to meet their obligations. [source]

Thanks to the warranty of habitability, in the event that the landlord fails to make the unit “livable,” the tenant can actually move out and report the violation to a building inspector without violating the lease agreement. There can be a specific agreement drawn up stating who will make the repairs, whether the landlord makes the arrangements or the tenant completes them and deducts costs from the rent.

6. The Right to Privacy

Tenants have a right to privacy while living on the rental property. This means that the landlord must give a 24-hour notice before attending the property, except in the case of an emergency. This notice can be given verbally or in writing, whatever is agreed upon between the two parties. It is not acceptable for the landlord to arrive without warning for inspections on the property, for example.

Reasonable grounds for visiting the rental property include showing a prospective tenant around, conducting inspections and performing repairs.

7. The Right to a Fair Eviction

If a tenant violates the terms of the lease agreement or fails to pay the rent, the landlord has the right to evict them. However, the tenant is legally protected in this instance by eviction laws which prevent threatening behavior, for example. Landlords are required to follow the state specific legal process for evicting tenants, which can be expensive and time-consuming.

8. Fair Use of the Security Deposit

Image courtesy of www.cresinsurance.comThe security deposit is another area many landlords don’t realize is covered in the law. At face value, it appears to be for the sole benefit of landlords. Take a look at the definition below, for example.  

A security deposit is any money a landlord takes from a tenant other than the advance payment of rent. The security deposit serves to protect the landlord if the tenant breaks or violates the terms of the lease or rental agreement. It may be used to cover damage to the property, cleaning, key replacement or back rent. [source]

Of course, tenants also have rights regarding the security deposit. In many states, there are even limits imposed on the amount a landlord can charge as well as rules on how they should be returned once a tenant has moved out.

In some instances, landlords are required to place the security deposit in a separate account for the duration of the lease, and this must then be returned within a particular number of days following the end of the tenancy.

The typical scenarios in which a landlord can deduct money from the security deposit include:

  • Non-payment of rent
  • Repairing damage to premises caused by the tenant (except for wear and tear)
  • Any necessary cleaning (beyond wear and tear)

It is the responsibility of the landlord to provide an itemized breakdown of any deductions and pay the balance to the tenant promptly.

9. Abandoned Possessions

In the event that a tenant abandons their personal possessions inside the rental property after they have vacated, the landlord is not allowed to simply dispose of the items. There are laws which govern the removal of a tenant’s property at the end of a lease. These include notifying the tenant of the removal and providing an opportunity for the items to be collected. The landlord may include a charge for the cost of storage and also a deadline for collection.

Depending on the state, if the deadline is passed without collection, the landlord may be required to place a notice in the local paper, stating that the property will be sold at a public sale. This is typically an area that trips up many landlords, so tread carefully if you find yourself in this position.

10. Adequate Insurance Coverage

There is a legal requirement for the landlord to have adequate rental insurance on their investment property. This will not only provide coverage in the event of a natural disaster, but also protect the landlord in the event of a lawsuit brought by the tenant.

Summary

These ten areas of landlord law are frequently overlooked by individuals seeking to rent their investment properties, but mistakes can be extremely costly. Although some of these laws are controversial, it is important to be aware of the rules in your state and be sure to adhere to them. It is not unusual for tenants to sue their landlords, so keep yourself protected in order to prevent losing your profits in costly legal battles.


Related

Fair Housing Legislation: A Primer

The Fair Housing Act was first adopted in 1968 and covers most housing in the United States. In 1988, the U.S. Department of Housing and Urban Development increased its power to enforce the... More


Fair Housing Legislation: A Primer

The Fair Housing Act was first adopted in 1968 and covers most housing in the United States. In 1988, the U.S. Department of Housing and Urban Development increased its power to enforce the... More


How to Write a Lease Covering All Bases

When it comes to writing a lease, every state and locality has its own set of rules and regulations. Nonetheless, there are certain general guidelines which you should follow to protect your interests... More


How to Write a Lease Covering All Bases

When it comes to writing a lease, every state and locality has its own set of rules and regulations. Nonetheless, there are certain general guidelines which you should follow to protect your interests... More


5 Home Repairs To Handle for Your Tenants

Your tenants have needs -- including maintenance on the space that they rent from you. If you’re lucky, you have reliable contractors who are always available when your tenants need them.... More


What Makes a Good Landlord Insurance Policy?

  Before renting out your property, you should purchase a landlord insurance policy. Unlike a homeowner's insurance policy, a landlord insurance policy will protect you from common... More


The Millennial Rental Market Trend Report

Millennials now make up just under one quarter of the total population of the United States. Compared with previous generations, millennials are much more likely to rent their homes rather than owning... More


Rental Property Deductions

Owning a rental property means that you are a business owner and property owner at the same time. Because of this, the owner must be aware of key rental property deductions that you can take every... More


Section 179 Deduction Rental Property?

Depreciation is one of the nicest aspects of owning a rental property. Over the course of 27.5 years, you can take out the true value of your investment until you completely recover the amount you... More


Self Directed IRA Rental Property

Most people let a third-party manage their IRA, but this doesn't have to be the case. A self-directed IRA might not be very well known, but it is an effective way to build up a nice nest egg for a... More