Owning an income property, and consistently generating income from that rental property, can feel like an art—the art of always trying to minimize mistakes that interrupt your bottom line. In addition to common home repair mistakes, a landlord also has to minimize costly legal mistakes that could cost far more than a leaky pipe or dead furnace.
Not vetting a potential tenant before renting to them
Ignoring this important step can lead to headaches later: missed rental payments, excessive damage to the home, broken rental agreements. You’d be foolish not to vet your prospective tenants, but it’s essential that you know what you can do—and not do—during the vetting process and what questions you can ask applicants. Improper execution of either process can lead to legal repercussions from denied applicants.
Not having a signed rental agreement
Don’t be in such a rush to rent that you neglect to have your tenants sign the rental agreement, or that you pass over the opportunity to review the terms of the rental agreement with them. You should also provide your tenant with a copy of the signed agreement, and document that you provided the tenant with the agreement.
Using a generic rental agreement
Using a generic one-size-fits-all rental agreement that you download off the internet, or get from another landlord, can leave you open to problems because of the different laws specific to each state. Contact a local attorney to make sure your rental agreement that is updated and specific to your state, protects your rights and the tenant’s rights, doesn’t include prohibited terms, and doesn’t place any additional and unnecessary obligations on your shoulders.
Failing to document the condition of the premises
This important step has to happen at two different points in the rental process: when the tenant begins tenancy and when they move out (or end tenancy). Don’t ever underestimate the value of documenting as a landlord; if any problems turn into a legal proceeding, the landlord needs to have the original documentation.
Making illegal assumptions
Don’t assume that your actions are legal without contacting an attorney. Even actions that seem common-sense can lead to legal issues. Simply put, a few minutes of your time now can save you from the cost, time, and effort of landlord legal hassles later.
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