5 Common Landlord Mistakes to Avoid

Renting out an investment property is a great way to earn extra income, but it comes with significant responsibility. Legally, landlords must meet many requirements to remain in compliance with the law, which can be tricky. Consider these five common landlord mistakes to avoid when renting out a property.


1. Failure to Repair Dangerous Conditions

Since landlords do not live in the property they are renting, it is more difficult to notice when repairs are needed. Landlords must rely on tenants to tell them about items requiring repair, and, if tenants do not properly care for the property, repair problems may escalate to a dangerous level. Landlords are liable if dangerous conditions are reported and are not repaired in a reasonable amount of time, or if a landlord had reason to know that a dangerous condition existed and did nothing about it

Before giving the keys to tenants, ensure the home is safe and in working order. This includes fire alarms and locks. Also, be sure to schedule yearly or bi-yearly inspections to proactively diagnose potential safety problems

2. Neglecting to Follow Fair Housing Laws

Fair housing laws state that landlords cannot select one tenant over another on the basis of their race, religion, gender, national heritage, disability or familial status. This law seems easy to follow, but many landlords have unknowingly violated to the law because courts may interpret a variety of actions as discriminatory. For instance, if a landlord only advertises a property for rent at a particular church, he or she may be in violation of the Fair Housing Act. Landlords can only legally reject applications based upon criminal history, eviction history and credit history.

A landlord reviewing rental applications must remain objective. For example, if one rental application is from an older couple with no children and a lower income, and another application is from a couple with three young children and a higher income, the landlord could be found to be in violation of the law for selecting the older couple with no children. The landlord may reason that the older couple would be less likely to damage a property, but that reasoning would be in violation of the law. The landlord must have a legal reason not to rent to the family with young children.

3. Failure to Disclose Lead Paint Hazards

Lead paint documents must be given to tenants to disclose lead paint hazards in homes built before 1978. These documents should also be included in lease agreement. Many areas will also require lead paint inspections between each tenancy. It is important to pay careful attention to the specific disclosure requirements in your state because judges are typically not lenient when people’s lives are at stake.

4. Neglecting to Incorporate a Property

Incorporating a rental property will protect landlords from many types of liability. If a lawsuit occurs, the company will generally be responsible for the financial liability rather than an individual owner. Real estate attorneys can help landlords organize a limited liability company (LLC) for their properties.

5. Failure to Provide a Lease
Written leases protect landlords and tenants. Tenants will know in advance of occupying the property what to expect from the experience, and landlords have the opportunity to express their requirements. The laws that govern what must, and may, be included in the lease agreement are very detailed and vary widely based on the location of the rental property. Location-specific form leases are available on the Internet, and attorneys or licensed real estate professionals can devise leases that comply with all local laws and protect the landlord to the maximum extent allowed by law.

How Can Property Managers Help?
Properly licensed property management companies are required to know and comply with all of the local landlord-tenant laws. Property managers are also trained and specialize in managing rental properties, so they know how to attract and retain quality tenants. For a small monthly fee, property managers will handle every aspect of the rental process from tenant prospecting to maintenance repairs and even financial reporting. Property management companies can ensure that the landlord does not violate any laws related to renting out a property and are a good investment for conscientious landlords who want to remain in compliance with the law.