5 Legal Pitfalls Landlords Should Avoid

5 Legal Pitfalls Landlords Should Avoid

Being a landlord is profitable but comes with financial and legal risks. When state landlord-tenant laws aren’t followed to the letter, a tenant can file a lawsuit against you, which could cost you thousands of dollars.

While landlord-tenant law might appear simple, there are nuanced complexities that make it hard to follow without the help of an expert. Winging your landlord duties will save you money now, but could cost a fortune if you violate a tenant’s rights.

If you’re a landlord, here’s how you can avoid 5 of those legal pitfalls.

1. Know your state’s specific support animal laws

Service and support animals are the source of major contention between some landlords and their tenants. Not wanting pets is understandable, but not all animals are pets. By denying applicants for having a service or support animal, you’re asking for a lawsuit. Under the Fair Housing Act, most landlords are required to make a reasonable accommodation to allow tenants to have a service or emotional support animal.

While the Fair Housing Act has been in effect since 1968, the U.S. Department of Housing and Development (HUD) just released official guidelines to help landlords comply with tenant requests for support animals.

Emotional support animals are not pets

Some landlords treat support animals as pets despite the fact that support animals have the same legal protection as service animals in a housing unit. Some of these landlords attempt to make their discrimination legal by inserting a no-pet clause in the lease that defines support animals as pets.

For example, a San Francisco landlord in the Mission District has been outed for requiring applicants to certify that they don’t have any psychological issues that would necessitate getting an emotional support animal. This landlord defines support animals as pets. Attorneys say this requirement violates state and federal laws.

While emotional support animals don’t require specific training like service animals, landlords are required to allow both in a rental unit.

2. Handle tenant deposits according to the law

In many states, a landlord is required to hold a tenant’s deposit in a separate bank account for the duration of the tenancy. You may be tempted to put deposits into your personal or business bank account either for convenience or to generate interest, but that’s asking for trouble.

If you manage 25 or more properties, you might be required to pay your tenants interest on their deposit.

Security deposits are one thing you don’t want to mess with. In many states, the courts routinely award tenants 2-3 times the amount of their deposit when a landlord mishandles a deposit.

3. Do everything possible to return a tenant’s full security deposit

You already know it’s unwise to keep any portion of a security deposit you aren’t entitled to keep. However, it’s a good idea to actively try to return as much of a deposit as possible. For example, if you need to use a tenant’s security deposit to repair a hole in the wall, don’t take the opportunity to replace the entire wall and charge your tenant a percentage of the overall repair. If the hole is small and takes ten minutes to fix, charge them appropriately.

4. Follow new laws even when you don’t like those laws

Sometimes laws are enacted on a whim, like the COVID-19 emergency orders prohibiting landlords from evicting tenants. While a loose version of this prohibition was passed federally, some local counties passed stricter laws. For instance, Los Angeles passed the Safer at Home orders that prohibit evictions for missed rent payments. After the orders are lifted, tenants have one year to make up missed rent payments.

As a landlord, this might mean not getting a majority of rent owed to you for a period of time, but violating the law can bring on harsher penalties.

5. Handle repairs and maintenance fast

Nothing irritates tenants more than slow maintenance and postponed repairs. By responding to repair needs quickly, even simple fixes, your tenants will be less likely to be upset and try to pursue legal action against you in court.

If you let a repair slip by for too long, you might end up with a tenant who will drag you to court over complaints they’ve been saving up for a while. If you haven’t been documenting your tenant interactions, you might have a hard time proving your side of the story.

If the laws are confusing, hire a property manager

Laws are tedious and one mistake can be costly. If you want to avoid costly legal pitfalls, hire an experienced property manager to handle all your tenant relations.