When you’re a landlord, there are a lot of things that can go wrong. Economic shifts and natural disasters, however, have absolutely nothing on the power of your own tenants to ruin your life. Even if a tenant seems to be doing just fine, gives notice without griping, and vanishes quietly, you could find yourself getting served unexpectedly even months later. So how do you avoid getting sued?
7 Tips to Keep Landlords Free From Costly Tenant Lawsuits
Your Lease Agreement is The Pillar Upon Which Everything Else Rests
Having an ironclad, detailed lease agreement that details how every potential circumstance that might arise between you and your tenant will be handled is an absolute must. Every item that comes up between the two of you that isn’t covered is a potential lawsuit waiting to be lost.
Screen Like Your Life Depends on It
Screening your tenant is quite simply the single most important part of being a landlord. Not only do well-screened tenants offer fewer financial difficulties, but they’re dramatically less likely to sue. (If for no other reason than that they’re not comfortable being in front of a judge!)
Treat Your Tenants Well — And Consistently
If one of your tenants gets wind that you’re offering a different tenant significantly better than you’re treating them, you’re opening yourself up for a discrimination lawsuit. If all of your tenants are being treated poorly, well, you’re not going to be a terribly successful landlord — so your option is to extend the same middling-to-high level of treatment to all of your tenants.
Document Absolutely Everything
Keep copies of every piece of paperwork that moves in either direction between you and each tenant — and that’s just the beginning. You should also keep copies of every receipt for a property-related expenditure, copies of every communication you get from and/or give to a tenant, and of course every bit of information given to you by the city, your vendors, and so on. If you feel an issue is serious, document with video, record calls, and require everything to be in email form.
Keep a Close Eye on Environmental Hazards
Even if your lease agreement has clauses that prevent you from paying for pest control, mold remediation, home security measures, or other potential health hazards, you might still be found liable in court. Even if your lease insists that the tenant pay, you should be willing to put in a modest amount of (well-documented) effort to ensure that they can and do make those payments and have the proper experts come out.
Make Repairs Quickly and Thoroughly
Repairs are one of those issues that can relatively quickly turn an otherwise-sterling tenant into a screaming banshee of litigious aggravation. Quite simply, you need to communicate quickly about a repair that they mention, and you need to establish a time that you can get someone out there to look at it. Fail on any of those fronts (or on actually getting the repair finished), and you could be looking at a lawsuit.
Stay Acutely Aware of Tenant’s Rights
Tenant’s rights vary widely from state to state — no matter which state you’re in, make it your business to know what those rights are. Any violation can get you in trouble with the law, which can mean a lawsuit at the least. You don’t want to get that far, much less to the point of having cops knock on your door.
Alternately, you can hit the easy button and hire a property manager. A good PM will already have these and a dozen similar tips covered — but even a bad one is quite likely to end up the target of most lawsuits, as most tenants aren’t really that aware of who owns the property they rent anyway.
What tips have helped you stay out of legal trouble?
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.