5 Landlord Legal Issues And How To Avoid These Costly Mistakes

Even when it’s not a full-time job, being a landlord often feels like one. Their number one duty being to keep tenants happy. Everything from landscaping and repairs to rent adjustments and attracting new residents falls under the leadership of a responsible landlord.

While many landlords and property managers usually take their work seriously, sometimes and unfortunately, some of them often find themselves in legal hot water, often stemming from mistakes that could have been easily avoided.

Here are some of the most common mistakes that landlords make and how to steer clear of them.

1. Not Fixing a Problem

For landlords, it’s not often a question of if a problem will occur, but when. Whether a home or apartment is new or not, issues ranging from minor electrical issues to major weather-related damage need to be addressed — and quickly.

This issue is most serious when safety is a concern. Not providing a safe environment is a legal matter for landlords in many states.

A landlord should act immediately, whether it concerns conducting property inspections, letting renters know about potential hazards, or making reasonable steps to strengthen security. Tenants who get injured or suffer damage or loss of property as a result of an unfixed problem on the property may instigate a lawsuit.

Problem Not Fixed Fast Enough!

Barry, a real estate investor and cash home buyer in Denver, CO found the hard way with a rental property in Aurora, CO that even when you try to fix an issue quickly you can still get into legal trouble.

“A tenant called about a water leak in the crawl space. We sent a contractor immediately (same day). The work couldn’t be completed on his initial visit because of materials. By the time the plumber returned the pipe had ruptured spraying water everywhere. The issue was repaired properly, the water remediated, and we even performed preventative treatment for mold. Unfortunately, the tenant felt they deserved compensation and sued us. It was cheaper to pay off the shakedown than go to court.”

The lesson we learned was to have a contract that addresses as many situations as possible. Clearly, this requires the help of a reputable business attorney that understands potential litigation issues.

Repairs are more common but should still be evaluated and performed promptly since many relate to the definition of habitable premises likely outlined in a rental agreement.

Every state has a list of provisions called a warranty of habitability that must be met for a unit to be habitable, including proper plumbing, heat, gas, electricity, and a safe roof. Not addressing problems related to these provisions may also lead to a lawsuit.

2. Mold Concerns

An estimated 70% of homes around the world likely have mold — that includes 50% of American households.

Landlords should regularly check for mold or signs of mold, especially in between rental periods or if a tenant expresses any sort of concern.

Mold has been linked to several serious medical conditions, especially for children, people with weakened immune systems, and the elderly. 

These medical concerns could be magnified when trying to sell a house with black mold. To avoid legal issues in this situation it is imperative you disclose the problem.

3. Overcharging Late Fees

If you’ve ever rented a home or apartment, you know that fees are a part of the deal. Some landlords have parking and pet fees. Most landlords will also demand late fees for not paying rent on time — but the amount is not up to them.

All states have guidelines for exactly how much a landlord can charge in late fees for either late rental payment or nonpayment. In Colorado, late fees may not exceed $50 a month.

In North Carolina, landlords can charge either 5% of rent or $15, whichever is larger and late fees can only be charged once.

Some states let landlords deduct fees from a rental payment, while others do not. Landlords should regularly check on landlord-tenant laws to avoid the easy mistake of overcharging.

4. Security Deposits 

Security deposits are a standard requirement for lease agreements, designed to help cover any type of tenant-responsible damage or if rent is missing. Landlords may use security deposits to pay for damage after a renter moves out.

But there are rules. Landlords almost always have to give departing tenants an itemized list of any damages and the amount deducted for each from the security deposit.

They also must give tenants the remaining security deposit balance.  Not following these two important guidelines can result in a tenant demanding compensation for the errors. 

Comprehensive security deposit guidelines should be outlined in all rental and lease agreements, including the amount required to move in and the steps to take when a tenant decides to leave.

On top of getting a signature acknowledging the information, landlords should also speak to tenants just to make sure they fully understand the security deposit rules.

Security Deposits When Selling A Rental

What happens to the security deposit when a landlord sells a rental property?

There should be clear communication to the tenant that the security deposit will be transferred to the new landlord. This can be recorded in the settlement statement. Provide the tenant with this information and you won’t have any problems during the sale.

“We recently bought a rental property in Aurora, CO, by the Anshutz Medical Center, from an out-of-state owner, who needed to sell fast to avoid an impending financial situation, and this could only be achieved if he found a solution to sell fast for cash, which he did with a local home buyer at https://webuyhousesindenver.org/sell-my-house-fast-aurora-co/

As the sale had to be fast, we hired a real estate attorney to make sure everything was done right. This included the transfer of the security deposit from the seller to us. Had we not done this the tenant may have become upset. As you know, an upset tenant can lead to being sued.

5. Not Hiring Professionals 

While some landlords may double as handymen, they are not allowed to bill tenants for repairs they made that must be done by a professional company fully separate from a landlord and the property. Those companies then bill the owner.

A good solution is working with a property management company or establishing a relationship with a reputable local service to address any repairs that need to be made.

The Bottom Line

While many landlord duties may be challenging, it’s not difficult to be a responsible and knowledgeable landlord. When issues arise, make sure you cover all the bases and know the laws before you act.

A simple mistake may end up sinking a promising income source.


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