Business Management

7 Tips to Keep Landlords Free From Costly Tenant Lawsuits

Expertise: Business Management, Landlording & Rental Properties, Real Estate News & Commentary, Real Estate Marketing, Personal Development, Real Estate Investing Basics
106 Articles Written

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?

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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!

While in the mortgage business, Drew rose to a VP position at the first broker he worked for and then started his own company. In the pursuit of excellence, he obtained several mortgage designation...
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    Richard Guzman
    Replied over 4 years ago
    Great article! I also believe the lease agreement is the key but who should I have review it? I read on BP some landlords have 20+ addendums to go with the lease agreement! What’s the difference in just adding those verbiage to the lease agreement itself? Ironclad lease agreement = good landlord! Thanks –
    Drew Sygit from Birmingham, Michigan
    Replied almost 4 years ago
    @RICHARD: we also don’t understand why so many landlords use addendums on every lease. Our lease has checkboxes we use to note a couple of options, but the only actual addendums we have are for pets and pools. The Lead-Based Paint Disclosure is even part of our standard lease. As for who can review your lease, find a real good residential real estate and/or eviction attorney. One of our attorneys is on retainer with a local apartment management firm, so he’s free to have other clients. The firm has over 3,000 units under management, so he’s seen a lot of issues over the years!
    Andrew Syrios Residential Real Estate Investor from Kansas City, Missouri
    Replied over 4 years ago
    Great article! One of the things my brother (our PM) always says is that if it isn’t put in Rent Manager (our PM software) it didn’t happen. Documenting everything is critical because memories are a fickle thing and tenants always seem to remember things in their favor for some reason.
    Drew Sygit from Birmingham, Michigan
    Replied almost 4 years ago
    @Andrew: your brother understands! We highly recommend having a phone system that can record tenant conversations as they will often misrepresent what was said (which should be ALWAYS f/u with an email anyways) or they will forget to tell their spouse/roommate who will then try to misrepresent what was discussed.
    Donald Zaroda Investor from Easton, Pennsylvania
    Replied over 4 years ago
    I am in favor of doing a home visit during tenant selection. Why? It’s the best way to know how they already live — and what your place will be looking like ten minutes after that new tenant takes over. My tenant was about to rent my 1911 row house with 1960’s wall paper over brick! It still lookked good and was to be the final wall appearance. While visiting the prospect at their current apartment, I noticed some home-made artwork waiting to be wrapped for their move and asked about it. Sure enough, one family member was the artist and would be wanting to hang his art in my place. Owing to the hard brick and wanting to preserve my wall paper from nail holes. I grabbed my handyman and we spent a little time & money putting up art rails (wood trim near the ceiling) around the perimeter of the main living spaces. My tenant has the place beautifully decorated with his own art and I have my nice wall paper! The rapport this gesture has built more than paid for the molding install. By contrast, I toured a 6-unit with my agent and the owner/landlord. A couple of his tenants were complete slobs, with one that had thrown newspapers and clothing inside of a small storage room onto an electric baseboard creating a sure fire hazard. And the guy told my agent he thought I didn’t know anything about land-lording…..
    Drew Sygit from Birmingham, Michigan
    Replied almost 4 years ago
    @DONALD: current residency visits can be very important! Not always practical though:(
    Kevin Izquierdo from Hillside, New Jersey
    Replied over 4 years ago
    Great Article! Short sweet and to the point. Should you pass your Lease to a RE lawyer to check to see if what you have in there is legal?
    Drew Sygit from Birmingham, Michigan
    Replied almost 4 years ago
    @KEVIN: YES! We highly recommend having an RE lawyer check your lease annually to make sure you haven’t missed any legal changes requiring lease updates.
    Delia Lopez Investor from Roseburg, Oregon
    Replied almost 4 years ago
    I am mid lawsuit and the Plaintiff whom I evicted for non-payment brought in 22 unauthorized animals and their lawyer said they did not read the lease, in a declaration to the court. That is why they violated it in so many ways the letters were too small. It is a knock off of Oregon Rental Housing Associations lease and is updated annually to keep up with changes in the law. Screening is key I am a member of for their screening and a person with an eviction still had a B? How? You must get a credit report on a decent property and join the Rental owners association in your area. Be sure you follow all the laws and document EVERYTHING. It won’t prevent a lawsuit but you should win it. There are scum bag lawyers that take cases knowing you will settle and give them 5K to split with the plaintiffs, money for nothing. It would be nice to have a list of scum bag lawyers and tenants for each area.
    Drew Sygit from Birmingham, Michigan
    Replied almost 4 years ago
    @DELIA: many attorneys sell their morals to survive, but I’m not sure how they sleep at night. Judges are also attorneys and we can’t believe how many of them seem to be in cahoots with attorneys! In your case, a logical person would ask 1) How desperate must the attorney be to take a contingency case (I’m assuming your old tenant doesn’t have funds to pay a retainer) like this? 2) Why hasn’t the judge thrown this case out with the plaintiff admission they didn’t read the lease? Our legal system is pretty messed up as you have to spend so much money proving you’re innocent!
    Replied almost 4 years ago
    Screening your tenants is your first line of defense so the more you can do to vet renters in the beginning, the more likely you will end up with no hassle. Thanks for the tips.
    Drew Sygit from Birmingham, Michigan
    Replied over 3 years ago
    @DREW: Hey I feel like I’m talking to myself Drew:) Proper screening is huge, but even the best screening system can’t compensate for “desperate people do desperate things” or “tenants will find a way to break every system”!
    Nicholas Houston from Encino, California
    Replied over 3 years ago
    So much awesome content!