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10 Most Common Landlord Legal Pitfalls - And How to Avoid Them

Sep 07, 2011 Matt Roesly

Renting out property, especially residential apartments, presents its own unique legal challenges. Here are ten examples of common mistakes landlords might run into:


1. Failing to regularly check for health and safety, and for hazardous conditions: This is a basic one, but still one that is often skipped over. Landlords and property managers have to check for this, or it may put them into dire legal straits later on.


2. Not knowing how to deal with dissatisfied tenants: Make a plan for when a tenant doesn’t like the situation, be respectful and accommodating but always firm, and always be consistent! If situations are not handled, or handled inconsistently and erratically, that could create a legal problem.


3. Using a cookie-cutter lease agreement, or an informal “arrangement”: Using any kind of generic legal form, like a property management agreement from the Internet, can create a variety of headaches later on. Be sure to use your own! And a casual lease-purchase arrangement will not suffice either. Make it a true, legitimate agreement.


4. Being aware of tenants’ credit issues: Similarly, landlords should make sure their tenants have decent credit histories. If not, there might be similar problems for you when collecting rent.


5. Being aware of tenants’ criminal issues: Landlords must be sure tenants don’t have a potentially damaging criminal history, for which a landlord might be stuck sharing some liability. You should be aware when you might be accepting, for instance, a known sex offender.


6. Being aware of tenants’ prior evictions: And it is imperative that you have complete knowledge of any times tenants have been evicted from residences in the past. That is an extremely relevant, but unfortunately forgettable, piece of information.


7. Not holding legal audits often enough: Regulations for real estate -- local, state and federal -- are constantly changing. So conduct a regular legal audit to stay on top of it.


8. Failing to get tenants to sign liability waivers: These will protect you, legally, from any liability from normal operating practices.


9. Mixing the revenue from multiple properties in one account: This is also a big no-no -- it creates confusion.


10. Putting a security deposit in an improper account: As many states make clear, money should not go directly to the owner. There should be a separate property management trust account apart from the general trust account.  Or do away with security deposit entirely -- risky, legally troubling, confusing.  Entirely replacing the security deposit system can make residential apartment management so much easier. 

But all of these are easy to correct. Just make sure you are diligent when screening tenants and thoroughly research your local landlord/tenant laws.