The Top Ten Things Landlords Need to Know
By Anthony DeWitt
Bartimus, Frickleton Robertson & Obetz, PC
Jefferson City, MO
Landlords don’t usually ask for too much. They want their rent payment on time, they want tenants to keep their property in reasonable condition, and they want to be notified if there are problems. Most tenants don’t consider these demands unreasonable, and landlords often let tenants slide on a late rental payments or other minor problems if they are generally good tenants.
But just like the landlord has the right to recover the rental payments due him in court, tenants are not without rights in litigation, and the smart ones know how to enforce those rights. Often, if the tenant is poor, he or she may get free legal help when the landlord seeks to enforce his rights. Volunteer lawyers across the state often undertake legal assistance to tenants even though the landlord can’t get that kind of help. As one such volunteer lawyer I’ve seen landlords make lots of mistakes before going to court, and after getting there. Here are the top ten things landlords can do to maximize their business and minimize their problems.
1. Know the Law
Fair housing is the rule in the United States. No landlord is permitted to discriminate against a tenant on the basis of race, creed, skin color, national origin, religion or disability. If you have one house and you rent in out infrequently and for long periods of time, you may be under the impression that these federal laws do not apply to you. Many landlords believe they can rent or not rent to anyone on any basis that they like. This is simply not true.
Although the law on landlord tenant relations is too complex for short synopsis, a good review can be found on the Attorney General’s website at http://www.ago.mo.gov/publications/landlordtenant.htm. If you know the law, the less likely you are to run afoul of it.
2. Get it in writing
If you lease a house, apartment, condo, or mobile home, put the lease and landlord tenant relationship in writing. If you don’t have a lease, you have fewer rights to remove the tenant, and fewer protections than if you did have a lease.
Many people believe lawyers are only good for solving problems after they arise, but in the context of a landlord tenant dispute, a well-drafted lease written by a competent attorney devoting a significant amount of her practice to the area is invaluable. A lease may be able to give the landlord additional remedies against the tenant, and in some cases may be able to protect the landlord from claims of casualty loss. While pre-printed forms are available in Staples and Office Depot, these boiler-plate lease agreements frequently are not tailored to Missouri law.
3. Document the condition of the property
One of the chief hurdles a landlord has when a tenant leaves and damages his property is being able to show what condition the property was in when the tenant took possession. A digital camera and a three ring binder where these photographs are stored along with the rental agreement or lease is the perfect solution for these kinds of problems. Before any lease is signed the tenant should be given a copy of the pictures of the property and be told that this is how that the property must look when it is surrendered at the termination of the lease. Providing photos and getting lease agreements in writing helps make sure the tenant knows you’re keeping an eye on what he does with your property.
4. Do a credit check prior to rental
Tenants need to rent, in most cases, because they cannot afford to buy. They cannot afford to buy, in most cases, because they either have a low-paying job or they are spending their money in other ways. A credit check can help the landlord spot the scofflaw. If the tenant has been sued for rent and possession, if the tenant has a prior history of suing landlords, and if the tenant has other bills he cannot pay, the smart landlord will pass on the opportunity to rent.
Every landlord should require an application to rent, and that application should give the landlord permission to do a credit check. A small fee ($25 to $50) helps offset the cost of the credit check, and ensures that the client is serious about renting. In many cases an application fee may discourage low-income renters from continuing the application process. Be careful, however, not to waive this requirement for any specific group of tenants. If only Hispanic renters are required to fill out an application, or if only Asians are made to pay for their credit checks, a cognizable claim of discrimination may be made against the landlord.
5. Insure the Property
Some landlords believe, wrongly, that when they turn over the property to the renter, it is the renter’s responsibility to insure the property. While that may be the case in certain commercial leases, it rarely is the case in residential leasing. A visitor walking across your property who is injured by a dangerous condition on the property might sue the tenant, but he is much more likely to sue you. Make sure you’re insured for these kinds of harms, and have your coverages reviewed yearly.
6. If you have to evict, get a lawyer
Sometimes even with the best planning a tenant needs to be evicted. A landlord may not evict a tenant without a court order. The landlord may begin eviction proceedings if a tenant:
Damages property.
Fails to pay rent.
Violates terms of the lease.
Injures the lessor or another tenant.
Allows drug-related criminal activity on the premises.
Fails to vacate at the end of the lease term.
Gambles illegally on the property.
If you determine it is necessary to evict, get a lawyer. The lawyer handles the notices and the paperwork and files the appropriate documents with the court. The tenant will receive a notice that an eviction lawsuit has been filed and will have the opportunity to be heard in court before any eviction. The lawyer, who knows evidence and how to admit matters before the court, can help make the eviction process manageable even if it isn’t pleasant.
7. Keep The Premises Habitable
Keep the premises habitable. If there are problems with bugs, rodents, or criminals, take steps to remedy those problems. Make sure you have sufficient outdoor lighting to prevent claims that you facilitated the assault of your tenants.
As a landlord, you provide an unwritten warranty that the premises will remain habitable. That means you have to provide the basic services to all your tenants, and you can’t withhold those services if a tenant is late with the rent. Don’t shut off the water or heat to force a tenant to relocate. This breaches your “warranty of habitability” and can result in the tenant getting a judgment against you. Instead, contact your attorney and proceed with a proper eviction.
8. Keep Great Records
If it is necessary to sue for eviction and for back rent, good records are essential. If you do the repair work (drywall, painting, carpeting, etc.) yourself, make sure you keep careful records. These records are essential to prove your claims later.
Good records are also essential for proper tax treatment since, as a landlord, you have to show that you were actively involved in the management of your investment. Good records make it easy for your lawyer and accountant to help you settle up with Uncle Sam at the end of the year.
9. Properly Refund the Security Deposit
Missouri law protects a tenant’s security deposit. If you retain any portion of the deposit, make sure you send the tenant an itemized copy of the deductions you’ve made from that deposit within thirty days. For example, if you replace two screens for $15, and return $285.00 of a $300 deposit, you still have to provide the itemization for the tenant. Failure to provide the itemized list within thirty days can leave the unsuspecting landlord on the hook for double damages. The same statute that provides for double damages provides that the tenant has the right to be present during any inspection with regard to the security deposit. Landlords can review that statute online at: http://www.moga.mo.gov/statutes/c500-599/5350000300.htm.
10. Run it like a business
If you are involved in the landlord business to make money, treat it like a business. A solid relationship with a good attorney is essential to ensuring that all the angles in your business are covered. When new demands are created by law or by the courts, your lawyer is the one who can advise you on how to comply.
Nearly every successful business has a relationship with an attorney who provides counsel and guidance. If you do business as a sole proprietorship, a lawyer may be able to show you how to recover costs and get tax breaks by virtue of changing to a corporate form. A good lawyer should be able to use her keen insight into dispute resolution measures to help you avoid lawsuits from tenants and determine if your business is properly insured.