Have you recently purchased a real estate investment? Perhaps you’ve come into an estate inheritance. If you’re thinking about renting out a property that’s owned under your name, there’s several important factors you need to consider before doing so. Are you aware of all the liability you’ll incur? Have you thought through the various responsibilities you’ll be accountable for? This post is designed to educate you on the lesser-known aspects of the rental realm.
Liabilities
-
- Physical Injury. A landlord is responsible for an injury on the rented premises—if the tenant can prove the landlord was somehow negligent in maintaining the property, and that negligence led to injury. Actual negligence need not be necessarily proven in most cases; it’s sufficient enough to show that the landlord knew – or should have known – about the dangerous condition and failed to repair it or give warning of its presence.
- Personal Injury. You should also be aware of injuries landlords may be accused and held accountable for outside of physical harm. These include: invasion of privacy, charges of libel or slander, and discrimination.
- Animals. If a dog or another animal attacks a person on your property, you could be held liable for “knowing” the pet was potentially dangerous. For insurance purposes, many landlords prohibit pets to reduce their exposure.
- Tenants. As a landlord, you assume potential liability for your tenants. If you know of unlawful or obnoxious behavior that amounts to an ongoing nuisance, you are required to take steps to protect the other tenants. Use rental eviction records from TransUnion SmartMove to ensure you’re leasing your property to a trustworthy renter.
Responsibilities
-
- Safety. Your building must be up to code and meet all safety standards. If you have an older rental property, it might contain lead paint or asbestos, which you are required to disclose to your tenant before they sign the lease. Be sure to maintain functioning smoke and carbon dioxide detectors. Additionally, you are required to create a safe environment free of illegal activity, and provide a lock on the door for the tenant to secure their space.
- Repairs. It’s your duty to respond to repair requests promptly. The urgency of your response should correlate with the severity of the issue. Remember that lack of heat requires immediate attention, and you can face legal ramification if it fails to turn on.
- Cleanliness. As a landlord, it’s your responsibility to maintain the property as a whole. The trash must be taken out, either by yourself, with an agreement from the tenant, or a superintendent. Observe common areas and make sure they are well-kempt and free of garbage or debris. If a tenant has problems with rodents or roaches, you will need to rid them yourself or hire a professional.
Business Obligations
-
- Legal Documents. If you rent out your property, you need to view it as a personal business that requires thorough documentation. You’ll need to create leases, late-fee contracts and security deposits. Remember to always put any communication in writing.
- Applicants. As you screen for tenants, you’ll need to go through a large amount of prospective renters. Have questions prepared for these interviews. Verify their employment and determine their risk factor by contacting references. Be sure to charge an application fee that you can use to spend on running their credit report. Keep in mind the interview process can be a time-consuming ordeal.
- Evictions. Renting out your property might require you to be a tough guy at times. Do you have the business acumen to follow through on eviction processes laid out in your lease clause? Destructive or deadbeat renters can walk all over a landlord who can’t put their foot down and take advantage of their kindness and leniency.
If you’ve read through this list of basic duties and obligations required by those who rent their properties – and aren’t scared off by everything you’ll take on – the rental business could be right for you. It’ll generate a guaranteed monthly income, and with the right renters, could be a hassle-free experience. Just remember to stay diligent on your duties and you should have smooth sailing.
