Mistakes for Property Managers to Avoid to Stay on the Right Side of the Law

We’re all secretly addicted to those late-night cop shows, or prison-centered television illustrations like Scared Straight. There’s something about them that’s strangely intoxicating, that keeps your eyes glued to the screen and stops you from continuing to channel surf. Despite this, none of us actually wants to end up behind bars. Property managers might be surprised to learn that there are a collection of errors that they can make that could result in a hefty fine, a lawsuit, or even some hard time. However, with a little guidance, you’ll learn what to avoid and how to stay within the law when dealing with your residents.

No property manager wants to do a bad job. Keeping yourself educated about the law can not only protect yourself, but also your community. While there will always be legislation that varies by state, here are some laws that all property managers should be aware of:

  1. Discrimination
    It shouldn’t have to be explained that most discrimination is inherently wrong, and the Fair Housing Act is in place to stop people from discriminating based on race, color, national origin, religion, sex, familial status, and disability. Some states also include things like immigration status and sexual orientation as a discriminatory factor within their own state laws, so it’s a good idea to look up the specific laws in your area. The severity of the case is ultimately what determines whether a property manager could face a fine or jailtime, depending on the nature (i.e. violence, harassment, threats, etc.) of the discrimination. To stay in the clear, make sure you have your rental criteria written down (like credit score range, deposit, criminal history, etc.) and apply this standard to all your applicants. 
  2. Failure to Make Disclosures
    Communication is obviously an important part of maintaining a good relationship with your residents, but it is actually illegal to not disclose certain types of information. If you have knowledge of mold in the residence, a sex offender in the area, or a death in the rental property, those pieces of information must be shared. While those are the most common disclosures, there are others such as making sure your residents are aware if the building was put up before 1978 and contains lead paint. Be sure to look up what you are legally required to disclose in your state in order to avoid any legal ramifications, and be aware of changing legislation. 
  3. Illegal Provisions
    When drafting up a lease, it is illegal to add certain provisions. Anything discriminatory, or that takes away certain resident rights are not allowed. Each state has different laws that relate to what must be in the lease. Make sure to approach this type of document with a legal mindset, and consult your lawyer. 
  4. Failure to Provide a Safe Environment
    You’re required by law to provide a safe environment for your residents to live in. This includes things like making sure there’s no mold, having up-to-date and working smoke detectors, properly working electrical units, and even making sure that criminals can’t get into the house. Should someone get hurt due to unsafe conditions, you could be liable for their accident. 
  5. Refusal to Make Repairs
    Not maintaining your community could land you in hot water. If the lease doesn’t specify that the resident is responsible for making repairs, you are the one who must make sure it gets done. Should it not be completed, the renter can take matters into their own hands and do the repair themselves, and try to subtract the cost from their rent payment. They can also report the violation to the state safety instructor. 
  6. Ignoring Eviction Laws
    Be sure to check up on your state’s eviction legislation. Most require that the resident be given notice of the lease termination before the eviction lawsuit can be filed, but some states have more requirements. If you’re trying to get rid of a resident it is important to do it the right way, and therefore avoid creating more trouble for yourself. 
  7. Tax Fraud
    It’s no secret that you have to pay taxes, and that it’s a universally irritating thing to do. But occasionally some people try to hide some of their income to reduce the amount owed, which is, not too surprisingly, against the law. Be honest with your earnings and pay what you owe; it’ll save you a lot of trouble in the long run. Plus, there are tons of property deductions you can utilize. 
  8. Disregarding a Resident’s Right to Privacy
    Just like everyone else, your renters have a right to privacy. You must give a renter notice before entering the property, and can enter afterwards to make necessary repairs, do an inspection, or written permission to show potential future residents the rental (if it’s not notated in the lease). In the case of an emergency, a property manager can enter without notice. 
  9. Wrongfully Keeping Security Deposits
    Sometimes residents cause damage to a property, and you have no choice but to keep their security deposit to cover the cost of repairs. However, the law also requires that you give the renter an itemized list of the damages, and, should any money remain, return that to them. Residents could go to court for monetary damages if the deposit money is not handled correctly. 
  10. Handling Abandoned Property Inappropriately
    There are certain procedures that must be followed when a tenant leaves property behind, although they do vary slightly by state. Generally, you must treat the items as abandoned property, and notify the residents of where they can pick it up, how long it will be held, etc. If the property is never picked up, then you may be able to sell or keep the items.

With legislation ever changing, it is important to keep up-to-date on the laws in your area. This knowledge could protect you from making mistakes that could lead to you being fined, or even sent to prison. As good as you may look in orange, no one wants to spend time behind bars and simply avoiding these simple errors could keep you on the right side of the law.

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