Investing in a rental property and becoming a landlord can help you generate steady revenue. But as a landlord, it's important not to cross certain boundaries in the course of screening tenants, addressing complaints, and dealing with disputes, financial or otherwise.
In fact, so you don't wind up with legal problems, it's important you understand what a landlord cannot do when managing a building and the tenants who live there. Here are six things that are off limits.
1. Enter a tenant's home without notice
As a landlord, you have the right to enter a tenant's rental unit without notice if a true emergency arises, like a fire or gas leak. Otherwise, you must give tenants proper notice before entering their homes. Each state sets its own laws regarding proper entry notice, and the specific amount you need to give should also be outlined in your lease agreement -- so be sure to follow those rules.
2. Increase a tenant's rent without notice
You might incur added expenses while managing a building or home, but you can't just pass those costs on to your tenants overnight. If you're increasing a tenant's rent, you must be prepared to give proper notice. Usually, that means a minimum of 30 days. Again, the specifics should be spelled out in your rental agreement.
Furthermore, if you're renting out a rent-controlled or rent-stabilized apartment, be really careful about following the rules. Rent control laws vary by city and state, but generally, they place a limit on how much a tenant's rent can increase when a lease comes up for renewal. That limit is usually based on factors like local cost of living and inflation.
But if a tenant moves out of a unit subject to rent control, that unit then becomes deregulated, at which point you're free to charge market rent in line with what your other tenants are paying. However, there may be exceptions, so check your local city or state guidelines carefully when dealing with rent control situations.
3. Refuse to make reasonable repairs
It's a landlord's duty to ensure all rental units are safe and habitable, so refusing to make reasonable repairs could result in a tenant taking legal action against you, especially if the issues in question are compromising a tenant's safety or health. For example, if there's lead paint or mold in a unit you own and you don't remedy the problem, you could wind up the subject of a lawsuit. So be prepared to properly maintain your property and address valid tenant concerns.
4. Withhold a tenant's security deposit
It's common to collect a security deposit at the start of a lease, typically one month's rent, to cover damage to a rental unit caused by a tenant. In many states, you're required to place that security deposit into an escrow account during your tenant's lease term.
While you are allowed to keep a security deposit if a tenant causes major damage to your rental property, you cannot keep that security deposit to cover the cost of repairing normal wear and tear. And if you attempt to keep that money for an invalid reason, your tenant can sue you in small claims court.
That said, most states do allow landlords to keep a security deposit if a tenant breaks a lease early. That way, the deposit can cover unpaid rent.
5. Evict a tenant without going through the proper channels
You may encounter a scenario where a tenant refuses to pay rent or follow the rules outlined in your lease agreement. In that situation, you may be tempted to take action by locking the tenant out of their unit and removing their personal property from the premises. But if you don't go through the proper legal channels, you could wind up with an illegal eviction on your hands, which could hurt you more than your tenant.
Before you try to kick a delinquent tenant to the curb, you must provide that tenant with a formal eviction notice that states that the tenant must either remedy the problem at hand (for example, catch up on rent) or vacate the property by a certain date (you'll need to check your local laws to see how much time you're required to give).
If your tenant doesn't comply, your next step is to file your eviction in court, after which you'll be given an eviction hearing date. If a judge rules in your favor during that hearing, you'll get a court order for an eviction, which your tenant will need to follow. If the tenant still refuses to move out, you'll need to turn to a local sheriff's department or law enforcement agency to have that tenant and the accompanying belongings removed from your property.
Unfortunately, the eviction process can be drawn-out and costly, but you'll need to follow the rules to avoid legal backlash. Also, you may, at some point, be subject to eviction moratoriums. For example, moratoriums were put into place during the coronavirus crisis to protect renters. Violating an eviction ban could get you into serious trouble, so pay attention to applicable laws and consult an attorney before taking action.
6. Refuse to rent to a tenant based on race or other discriminatory factors
As a landlord, you have every right to screen tenants and deny someone based on poor credit or financial red flags. However, it's illegal to deny a lease to a prospective tenant based on the following factors:
- Skin color
- National origin
- Family status
It's all part of the Fair Housing Act, which you may want to familiarize yourself with if you're new to being a landlord. Not only is it illegal to refuse to rent to someone based on these factors, but it's also illegal to discriminate against certain tenants by offering them lease terms that are less favorable than what you're giving to other tenants. For instance, you can't hike up a tenant's rent or impose extra restrictions based on any of the factors listed above.
Follow the rules
Landlord-tenant law is a complex issue, but you must keep yourself informed if you're going to maintain a rental property. Since these rules vary by state, you can consult this list to see what requirements apply to you.
Remember, being a landlord isn't easy, but it's important to always stay within the limits of the law when dealing with tenant issues. Doing so could save you a world of headache, not to mention preserve your reputation as a landlord worth renting from.