Top 5 Mistakes a Landlord Should Avoid

piggy bank surrounded by stacks of dollar bills from a rental propertyOwning 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.

The materials on this website are provided for informational purposes only and do not constitute legal advice. These materials are intended, but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as an indication of future results. Transmission of the information is not intended to create, and the receipt does not constitute, an attorney-client relationship between sender and receiver. You should not act or rely on any information contained in this website without first seeking the advice of an attorney.

Real Estate Closing Procedures: What They Mean for the Home Buyer

Finding a new home is just the start of your legal journey to home ownership.  The next step is drafting an offer to purchase, which can be done by an attorney or real estate agent.  Because of recent changes to government regulations to the real estate closing procedures, the last step of the transaction, closing, has seen some significant changes for lending agencies and home buyers.  Here’s what you, the home buyer, needs to know as you navigate through your real estate closing.Loan Estimate form
Forms
Three forms have disappeared from the closing table: the HUD-1, Good Faith Estimate, and Truth in Lending Act Disclosure.  In their place, the buyer should expect to see two nicknamed ‘Know Before You Owe’ forms: Loan Estimate and Closing Disclosure form.  The Loan Estimate form includes the loan type, terms of the loan, interest rate, estimated tax, insurance, and assessment figures, as well as other costs that affect the final cost to the property owner.  The Closing Disclosure has fields that detail closing costs, fees charged to the buyer and seller, and other figures that help all parties understand how much they need to bring to closing and loan-related costs.

Time period
One of the major real estate closing changes involves the time period the buyer receives documentation before closing.  Prior to October, closing documents were presented to the home buyer and seller usually on the day of closing. Under the new regulations, borrowers must receive documents three days prior to the closing date.  Once the buyer has completely reviewed and approved the documents, a borrower must indicate via email, phone call, or signature on a printed form that they have intend to proceed.

Closing Day
On closing day, the home buyer should bring all necessary documentation to the meeting such as (but not limited to) proof of homeowner’s insurance, Loan Estimate, and the Closing Disclosure form.  The home buyer also needs to bring any payments they want to pay for out of pocket such as closing costs, down payment, fees, etc.

If you have any questions about the closing process, or to draft an offer to purchase on your new home or rental property, contact an attorney. An attorney ensures compliance with the terms of the offer, reviews lending documents and title insurance, addresses title concerns, reviews closing documents, and overall makes sure the transaction proceeds as smoothly as possible.
The materials on this website are provided for informational purposes only and do not constitute legal advice. These materials are intended, but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as an indication of future results. Transmission of the information is not intended to create, and the receipt does not constitute, an attorney-client relationship between sender and receiver. You should not act or rely on any information contained in this website without first seeking the advice of an attorney.