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7 Tips to Keep Landlords Free From Costly Tenant Lawsuits

7 Tips to Keep Landlords Free From Costly Tenant Lawsuits

3 min read
Drew Sygit

Drew is a classic overachiever, bringing intensity and passion to everything he does. While in the mortgage business, he rose to a VP position at the first broker he worked for and then started his own company.

Experience
In the pursuit of excellence, Drew obtained several mortgage designations and joined mortgage and several affiliate association boards. He also did WebX presentations and public speaking engagements. It was during this time, he started personally investing in single family rentals, leading him to start Royal Rose Property Management with two partners. He also joined the board of a local real estate investors association, eventually becoming its president.

The real estate crash led to an offer from the banking industry to manage a Michigan bank’s failed bank assets they acquired from the FDIC. The bank went on to eventually acquire four failed banks from the FDIC, increasing from $100MM in assets to over $2B while he was there. After that he took over as president of Royal Rose Property Management and speaks at national property management conventions.

Accreditations
Former board member of Michigan Mortgage Brokers Association, Financial Planners Association of Michigan & Mariners Inn (nonprofit)

Former taskforce Member of Michigan Association of CPAs (though not a CPA)

Involved in mortgage business for over 18 years, obtained mortgage designations: Certified Mortgage Planner, Certified Mortgage Consultant, & Certified Residential Mortgage Specialist

Board member of Real Estate Investors Association of Oakland; President since 2012

2009-2012 Shared-Loss Manager for Talmer Bank (now Chemical Bank) handling FDIC failed bank loan loss strategy, reporting, REO management, collections, & gap analysis

Started investing in real estate in 1996

President of Royal Rose Property Management since 2001

Education
Drew received an MBA from Wayne State University, concentration in Finance & Marketing.

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www.RoyalRoseProperties.com

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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!)

Related: Rehabbers Beware: How to Avoid Asbestos-Related Health Concerns (& Lawsuits!)

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.

Related: Sued by a Tenant? Here’s How to Resolve It in a Single Conversation

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?

Leave your comments below!