Landlords Steps To Prevent Tenant Lawsuits

Rental property ownership can be a rewarding path to financial freedom. However, whether the property is a vacation rental property that has tenants only renting for short periods of time, or an apartment building with year-round lessees, managing an investment property can also be intimidating,

Without prudent safeguards in place to shield against lawsuits from tenants, the landlord can be held personally liable for lawsuits stemming from the property ownership.

Landlords can protect their investment property from tenant lawsuits if they set up their business under the protection of a Limited Liability Corporation or LLC. This will protect any personal assets against a lawsuit from a tenant against the property.

A carefully drafted rental agreement, or lease, dictating precisely how the tenant is expected to treat the property is a necessity. Adding a clause that would make it necessary for arbitration instead of court is advisable.

Another layer of protection is an insurance policy for the property that includes liability coverage. That way, it is quite possible that the insurance company will show up in court to defend the lawsuit, should one occur.

To avoid premise liability lawsuits, landlords should also comply with all local fire and building codes. Routine inspections with local inspectors of all systems (think: fire alarms, CO2 alarms, hot water heaters, etc.) are advised to have on record annually. Being aware of any hazards such as trip hazards, lead paint, or chemical leaks, and not warning the tenants or removing the hazard can also lead to a lawsuit.

Discrimination is another area that can lead to lawsuits. Be familiar with the Fair Housing Act, or FHA, which not only states that landlords cannot refuse to rent based on race, religion, nationality or gender but also based on disability status.

Multifamily properties must also be accessible to all disabilities, per the FHA. Any requests made for disability modifications (within reason) must be granted.

Security deposits can be a major dispute between tenant and landlord. When a tenant leaves their rental property, they are expecting a quick return of their security deposit. Disputes over the cost of damages or repairs could lead to the tenant suing a landlord.

Doing a pre and post rental walk-through with the tenant and providing an itemized list of the damages and necessary repairs can minimize the risk of litigation.

Another important strategy to avoid tenant lawsuits is compliance with state laws and what they say about security deposits.

Investing in rental property can bring a lifetime of reliable income. Capable property management is important to protect that income from tenant lawsuits. If overwhelmed, to help with the day to day management, there is the availability of property management companies to assist.

With the right systems in place, the proper compliance techniques, and the best business practices, a landlord should be able to operate a successful and litigation-free property for many years.

Commercial Lease Agreements

Commercial Lease Agreements

You’ve purchased a rental property, and now you’re figuring out how to get started as a landlord. Failing to specify all of your requirements and expectations in the lease is one of the more common landlord mistakes.

Commercial real estate investors know the best way to safeguard their investment from potential tenant trouble is to craft a solid rental lease agreement that includes these key things:

1. The basic clauses. Every rental lease agreement must list the parties to the agreement, which would be you and the tenant, along with the property’s address.

2. Security deposit clause. Your lease should require the tenant to put up a security deposit that matches one month’s rent or more, depending on the value of furnishings and repair costs if something goes wrong.

3. Maintaining the premises. The lease should specify that tenants are required to maintain the premises, abide by noise control rules and not change the locks without your written approval.

4. Warning of concealed defect. In some jurisdictions, you have a legal duty to warn of a concealed defect known to you, or a defect that it is reasonable for you to know about.

5. Subleasing clause. At some point, most landlords have a tenant who wants to sublet the apartment to a friend or stranger. To avoid trouble, make sure your lease agreement includes a subletting clause that requires the tenant to obtain your written permission before turning the rental over to someone else.

6. Termination. The best practice is to know your jurisdiction’s rules on terminating a lease and include those details in your rental lease agreement so your tenant will not be surprised.

7. After the tenant leaves. Would you ever hold a tenant’s personal property for unpaid rent? In some states it’s against the law for a landlord to confiscate a tenant’s property and demand rent money in return.

Include these important clauses in your rental lease agreement and you will be well on your way toward building a successful real estate investment business.

With a core focus on flexibility, Winston Rowe & Associates really wants to be able to find a way to help everyone who comes to them find a funding solution that meets their needs.

They can be contacted at 248-246-2243 or visit them online at http://www.winstonrowe.com