Regardless of how well landlords vet their tenants, situations will still sometimes arise that can land them in civil court. This could be anything from eviction procedures to suing for damages or unpaid rent. Unfortunately, there are a variety of mistakes that novice property managers often make that can leave them on the losing end of these cases. Identifying and preventing these potential mishaps can go a long way in a court of law.
One common reason that landlords lose in court against tenants is reliance on self-help evictions. These are evictions performed by the landlord without going through the appropriate legal channels. Self-help methods include changing locks, removing a tenant's belongings from the property, threatening the tenant, or allowing utilities to be cut off in the home.
These methods are illegal and can leave landlords open to lawsuits for wrongful eviction, illegal removal, trespassing, and even emotional distress. It is imperative to file the appropriate paperwork to keep an eviction legal.
Generic Lease Forms
Far too many landlords simply type "lease agreement" into an online search engine and use the first one that pops up. Unfortunately, rental laws vary by state, and a generic form that might be valid in California likely won't be enforceable in Florida.
Instead of researching all applicable laws and picking up legal documents from local authorities, it's often a better idea to use online property management software that provides appropriate legal documents that adhere to each state's laws. This will prevent a landlord from losing a case in court due to improper lease forms.
Excessive Late Fees
Charging late fees is one of the tried and true methods of ensuring on-time rent payments. These fees can help cover costs related to the inconvenience of not having funds in the bank on the expected date. In some instances, however, these late fees can prove excessive.
One property manager in California was recently taken to court by tenants due to excessive late fees. The landlord charged between $50 and $100 for payments that were one day late, and tenants were charged additional late fees if they had an outstanding balance – even if that balance consisted solely of unpaid late fees.
The important lesson to take from this is to always ensure that late fees are modest and actually reflect the monetary damages caused by the late payment. This is vital since courts may require landlords to justify their fee amounts.
Improper Security Deposit Behavior
Security deposits are meant to cover unpaid rent, necessary cleaning and damage that goes beyond typical wear and tear. Keeping deposits to upgrade appliances or refurbish the home is illegal.
It can be illegal to keep the security deposit solely because a tenant breaks the lease. If a two-month security deposit was required, but the unit is rented out to a new tenant within just one month, the landlord is required to return one month's deposit to the tenant.
Finally, not abiding by a state's deposit return laws can result in serious financial burdens for a landlord. Each state has its own rules dictating when reductions in the deposit must be itemized and the remaining balance returned to the tenant. Failing to abide by these laws can result in legal damages that are far greater than the initial security deposit.
Though it won't happen all of the time, property managers should always be prepared to go to court. Fortunately, following the aforementioned rules can increase the likelihood of navigating the legal system successfully. In many cases, these tips will help keep you out of court altogether.
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