Most landlord-tenant lawsuits could have been easily prevented. Sadly, we see too many DIY landlords get into lawsuits over things that could be avoided. To avoid ending up in a legal mess, here’s the most common types of lawsuits and how to protect yourself as a landlord.
Landlording is much more than getting a check in the mail every month. To landlord legally and profitably, you’ll need to know how to handle the specifics.
How do you place a tenant? Do you have a protocol as you meet with applicants to choose the best one? What if someone files a discrimination lawsuit against you because they didn’t get the house?
What do you do with security deposits? What kind of account do you need? How can you use it to pay for damages? What types of damages even qualify?
What do you do when someone doesn’t pay rent? When is it appropriate to start the eviction process, and how long will it take for you to collect damages and place a new tenant to start collecting rent again?
There’s more to being a landlord than finding a property, placing a tenant, and collecting an automated income. You’ve got to know what you’re doing. If you don’t, you’re opening yourself up to a lawsuit that could cost you your property and more.
What Are The Most Common Landlord/Tenant Lawsuits?
Mishandling security deposits causes more lawsuits than any other issue. To keep any part of the deposit, you must complete an itemization of the security deposit form and document evidence for each deduction.
If this isn’t done according to the law, or the security deposit isn’t returned to the tenant within 30 days, you have a pending lawsuit. And if they take you to court, you’ll owe them three times their deposit, even if they completely trashed your house.
Breach of lease also requires landlords to follow specific legal protocol. Landlords get in trouble when they handle lease violations one of two ways. Some just ignore it and pretend they don’t know they’re supposed to notify the tenants. Then they get in trouble for not returning documents on time.
Others are too aggressive and just change the locks. Neither approach works — you have to follow the legal process since they’re still legal residents of the property.
Best Practices for Preventing Lawsuits Against Landlords
The best way to avoid being sued is to know what you’re doing before you do it. If you’re not sure, find out before your act. You have to be backed by the law.
I’ve had landlords tell me they’re just not going to give back the deposit because a tenant destroyed their house. Why? They’re emotional. They’ve seen a renter mess up their home, and now they’re mad. But if they haven’t followed protocol from the beginning, this type of emotional decision will end up costing them a lot more money than the deposit. Sure, the tenant is the one who messed up, but the landlord gets the consequences.
Most of our tenants are great, but there are some who are savvy to these laws and take advantage of DIY investors. For example, we had a client go out on their own. A week later, the tenant found out and put in their notice six months before the lease was up, hoping to profit from the landlord’s inexperience. Our former client quickly called us back asking what to do.