Laurence Harmon

Being a landlord certainly sounds easy. All you have to do is line up responsible residents, maintain the property, and count your money as the rent rolls in, right? Actually, no. Owning and leasing residential real estate requires that you comply with a host of federal, state, and local laws. Certain residents may complicate your life by taking legal action against you or forcing you to take legal action against them.

Some unsavory landlords treat security deposits as another source of income that’s theirs for the taking. In the eyes of the law, however, a security deposit is actually the resident’s money that the landlord holds in trust for the duration of the lease. Most states restrict landlord use of security deposits to only three or four purposes, including the following: Compensation for unpaid rent To repair damage to the rental unit, excluding ordinary wear and tear, caused by the resident or members of his household or guests To restore or replace property in the unit, such as furniture and furnishings or other items of personal property (including keys) according to terms of the lease, excluding ordinary wear and tear To clean the rental unit, so it’s as clean as it was when the residents moved in To recover any portion of the security deposit used by the resident as payment for the last month’s rent Landlords can withhold from the security deposit only amounts that are reasonably necessary to remedy these damages.

As a landlord, it’s good for you to realize that resident rights extend beyond the doors of their dwellings and beyond the confines of the rental property. You also need to respect and protect any personal data you collect about residents, avoid the temptation to contact your resident at work, and be very careful not to spread negative rumors about a resident.

As a landlord, you can choose to document your arrangement with renters using a lease or a rental agreement. You should know what each of these is and which is best for any given situation. All enforceable contracts, including leases and rental agreements, have three requirements: Offer: One party offers the other something in return for receiving something else.

Carefully screening applicants is essential to keep your rental units occupied with residents who pay on time, take care of the property, and get along with their neighbors. Careful screening can help you avoid legal issues, because you have less need to take legal action against good residents, and they’re less likely to file legal claims against you.

Full compliance with fair housing laws doesn’t give landlords immunity from prosecution. Anyone can file a claim of housing discrimination against you, and you can be hauled into court over even frivolous lawsuits. The following information clarifies the legal process, so you know what to expect if someone files a housing discrimination claim against you.

The quality of your property management company directly affects the success of your real estate investments and your peace of mind. Visit the company’s office armed with the following questions: Can you give me a list of exactly what management services you provide and a breakdown of management fees/costs? Is your firm an Accredited Management Organization (AMO) recognized by IREM?

If you’re thinking about buying a rental property and becoming a landlord, you need to start by researching the property and its current residents, if any, and finding out exactly what’s included in the sale. During the due diligence period, which is when your escrow and purchase are pending, ask lots of questions.