Landlord's Legal Kit For Dummies

by Griswold, Robert S.; Harmon, Laurence

• ISBN13: 9781119896340
• ISBN10: 1119896347
• Edition: 2nd
• Format: Paperback
• Copyright: 2022-09-07
• Publisher: For Dummies

Summary

Howdy, landlord! Get on the right side of the law with Dummies

Landlord's Legal Kit For Dummies contains all the resources landlords need to unpack the legal side of renting properties. Inside you'll find worksheets, templates, and friendly explanations that will help you find success. Once you have your property and your tenants, you'll need to make sure you operate within your rights, complete all the necessary admin, and handle taxes in an accurate and timely way. This book can help you do just that, with the latest paperwork, helpful details and examples, and a breakdown of taxes and laws. Plus, you can go beyond the book by accessing online documents that take your learning to the next level.

• Understand all the latest housing laws that pertain to your specific rental situation
• Find drafts of all the legal forms you’ll need as a landlord
• Access easy-to-use tax worksheets and clear descriptions of tax rules without legal jargon
• Recognize your rights as a landlord and understand your tenants' rights

This is the perfect Dummies guide for both new and experienced landlords who need a hands-on legal reference for all the laws surrounding rent, rental properties, and tenants.

Author Biography

Robert Griswold is President of Griswold Real Estate Management Inc and has served on the Counselors of Real Estate. Robert is the author of several Dummies titles.

Laurence (“Laurry”) Harmon is President of Harmon Law LLC. He specializes in real estate law and provides extensive teaching, market research, and consulting on real estate subjects.

Table of Contents

Introduction 1

About This Book 1

Foolish Assumptions 2

Icons Used in This Book 2

Beyond the Book 3

Where to Go from Here 3

Part 1: Getting Started with Landlording Fundamentals 5

Chapter 1: The Legal Fundamentals of Managing Residential Rentals 7

Running Your Operation as a Corporation or LLC 8

Taking Ownership of a Rental Property 8

Avoiding the Legal Pitfalls of Managing Residential

Rental Properties 10

Obeying fair-housing laws 10

Setting rents and payment policies 13

Screening applicants 13

Drafting a lease or rental agreement 15

Managing security deposits 15

Moving tenants in and out 16

Fulfilling your maintenance and safety obligations 18

Dealing with co-tenants, sublets, and assignments 21

Terminating rental contracts 22

Chapter 2: Protecting Your Legal Assets 23

Forming Your Business 23

Choosing a legal structure 24

Exploring ways to incorporate 28

Knowing the Law or Consulting Someone Who Does 30

Conducting your own legal research 30

Turning to an attorney 34

Preparing for and Paying Taxes 36

Making sense of income taxes 37

Grasping (and appealing) property taxes 46

Chapter 3: Taking Possession of a Rental Property 49

Knowing What to Get Up-Front 50

A comprehensive list of the personal property included in the sale 51

A copy of the entire file for each current tenant 52

A seller-verified rent roll and list of all security deposits 52

A copy of all required governmental licenses and permits 53

A copy of all the latest utility bills 54

A copy of every service agreement or contract 54

A copy of the seller’s current insurance policy and loss history 55

Insuring Your New Property 57

Understanding the different types of insurance coverage 58

Finding the right insurance company 61

Determining the right deductible 62

Talking with Tenants about Renter’s Insurance 63

Handling Potential Claims 63

Working with the Current Tenants During the Transition 64

Meeting the tenants in person 64

Inspecting the property 64

Inspecting the rental unit 65

Using a new lease or rental agreement 66

Evaluating the current rent 67

Chapter 4: Hiring a Property Manager 69

Your Property Management Options 69

Using a property management firm 70

Hiring an individual 71

Doing it yourself 71

Hiring a Professional Property Management Firm 72

Finding the right company for you 73

Knowing what to ask a prospective management company 75

Compensating your property manager 77

Sidestepping pitfalls 79

Being aware of the tax consequences 80

Going with an Individual to Manage Your Property 82

Screening candidates 82

Signing an employment agreement 86

Compensating your property manager 86

Complying with employment laws and accounting requirements 87

Understanding independent contractor versus employee status 88

Firing and evicting an employee 90

Notifying Tenants of a Change in Management 92

Part 2: Advertising and Taking on New Tenants Legally 93

Chapter 5: Getting Current about Fair Housing 95

Examining the Fair Housing Act 96

Recognizing the seven protected classes 96

Identifying conduct that constitutes discrimination 97

Identifying conduct that constitutes preferential treatment 98

Meeting the three conditions of a violation 100

Including principals and agents 100

Knowing what you’re allowed to do under the law 101

Noting exceptions to the law 102

Paying the price for infractions 102

Digging Deeper into the Sex, Familial, and Disability Protected Classes 103

Sex 103

Familial status 104

Disability 107

Companion or service animals 112

Exploring Additional Protected Classes at the State and Local Levels 114

Steering and chilling 115

Minors 117

Safeguarding from Claims of Housing Discrimination 118

Taking a proactive/preventive approach 118

Taking a reactive/corrective approach 122

Chapter 6: The Legal Aspects of Advertising 125

Applying the Fair Housing Act to Residential Rental Property Advertising 126

Understanding the law 126

Complying with the law 128

Adhering to Truth-in-Advertising Laws 134

Accurately describing the rental units 134

Disclosing any important policies 135

Presenting rents and amenities accurately 135

Avoiding bait-and-switch advertising 136

Advertising on the Internet 136

Chapter 7: Rent Collection and Rent Control 139

Creating a Written Rent Collection Policy 140

When rent is due 141

Where rent is paid 143

How rent is paid 146

Dealing with Rent Collection Problems 148

Collecting late rent 148

Charging late fees 150

Handling returned rent payments 152

Dealing with partial rent payments 152

Serving legal notices 153

Raising the Rent without Sending Your Tenants Running 154

Figuring out how to raise the rent 154

Recognizing restrictions on rent increases 155

Keeping your tenants (relatively) happy 155

Giving tenants advanced notice 156

Dealing with Potential Rent Regulation Issues 157

Determining whether your property is subject

to rent regulation 157

Increasing rents 159

Being extra careful when evicting a tenant 161

Closing down a rent-regulated property 162

Taking Advantage of Government Programs 162

The scoop on rental subsidy programs 163

The lowdown on the Housing Choice Voucher program 164

Chapter 8: Screening Applicants 171

Preparing a Legal Screening Policy and Letter of Consent to Background Checks 172

Setting criteria for acceptance 172

Starting with a boilerplate screening policy and making adjustments 173

Getting consent for a background check 181

Developing Your Rental Application 182

Knowing Your Options When Screening 183

Taking the do-it-yourself approach 183

Outsourcing to a screening service 184

Charging a fee to cover your costs 185

Notifying Unqualified or Less-Qualified Applicants of

“Adverse Action” 186

Keeping Essential Records 188

Keeping records for rejected applicants 188

Maintaining tenants’ files 189

Securing sensitive information 189

Chapter 9: Composing Your Rental Contract 191

Eyeing the Need for a Rental Contract 191

Comparing leases and rental agreements 192

Realizing the importance of putting the agreement in writing 193

Starting with a State-Specific Template 196

Customizing the Lease Template 196

Introductory language 197

Rental unit 198

Rent 199

Security deposit 200

Term 201

Utilities 202

Cash payment 203

Occupants 203

Prohibitions 203

Smoking prohibition 204

Quiet enjoyment 205

Fines and penalties 205

Repairs and alterations 206

Acceptance of premises 206

Care, cleaning, and maintenance 206

Landscaping 207

Smoke detection device 208

Carbon monoxide detection device 208

Renter’s insurance 209

Waiver of breach 209

Joint and several liability 210

Entry 211

Subletting and assignment 211

Breach of lease 212

Sale of property 213

Notice 214

Addenda 214

Entire agreement 215

Credit report 215

Attorney’s fees 216

Signatures 217

Considering Additional Provisions 218

Delay of possession 218

Delivery of notices 218

Pets 219

No illegal use 220

Notice of injuries 220

Delay in repairs 220

Notice of absence from premises 221

Abandonment 221

Materiality of application to rent 221

Remedies not exclusive 222

Destruction of premises 222

Eminent domain 223

Governing law 223

Chapter 10: Establishing a Security Deposit Policy 225

The Legal Uses of Security Deposits 226

Deciding How Much to Charge as a Security Deposit 228

Setting separate deposits for pets 229

Considering security deposit alternatives 231

Avoiding nonrefundable deposits 233

Exempting Ordinary Wear and Tear 234

Distinguishing damage from ordinary wear and tear 234

Assessing damage with move-in and move-out checklists 236

Safeguarding and Returning Security Deposits 237

Holding security deposits in a separate account 237

Using a security deposit itemization form 238

Keeping receipts for repairs and cleaning 240

Deducting from the security deposit 240

Paying interest on security deposits 242

Collecting damages and unpaid rent in excess of a security deposit 243

Handling security deposit disputes 244

Chapter 11: Moving in a New Tenant 245

Agreeing on the Move-In Date 246

Meeting with a New Tenant Prior to Move-In 247

Establishing your policies and rules 247

Reviewing and signing legal documents 249

Transferring the utilities to the tenant 252

Collecting the rent and security deposit 253

Inspecting the property with your tenant 254

Providing an informational letter 258

Taking crime prevention measures with a rental unit 260

Keeping Detailed Tenant Records 261

Choosing a Reliable Means of Communication 262

Part 3: Recognizing Your Responsibilities and Liabilities 265

Chapter 12: Repairing and Maintaining the Premises 267

Honoring Your Duty to Maintain Habitable Housing 268

Defining “habitable” 268

Adhering to local codes 269

Preventing and eliminating nuisances 270

Protecting minors 272

Suffering the consequences of falling short 273

Informing Tenants of Their Legal Obligation to Maintain Their Units 275

Knowing your tenants’ responsibilities 275

Seeking damages when tenants fall short 277

Putting a Proactive and Responsive Maintenance and Repair System in Place 277

Recognizing the benefits of a proactive and responsive system 278

Establishing a policy and setting goals 279

Conducting regular maintenance and repair inspections 280

Responding to tenants’ maintenance requests 281

Dealing with Tenants Who Withhold Rent 284

Exploring Contractor-Related Legal Issues 285

Hiring licensed, bonded, and insured contractors 286

Insuring uninsured workers 287

Getting warranties to cover the work 287

Chapter 13: Minimizing Injuries from Potentially Dangerous Conditions 289

Preventing Injuries in Rental Units and Common Areas 290

Using materials safer than standard glass 290

Using safe cords (or no cords) for window coverings 291

Using anti-tip brackets for free-standing ranges 292

Securing swimming pools, spas, and hot tubs 293

Ensuring limited access to construction sites 293

Improving exterior lighting 294

Preventing injuries from animals 295

Focusing on fire safety 296

Preparing for natural disasters 298

Identifying Potentially Dangerous Conditions 299

Encouraging tenants to report safety concerns 299

Conducting regular inspections 299

Evaluating Your Legal Liability 301

Negligence 301

Failure to maintain or repair 301

Violation of a health, safety, or building code 302

Reckless or intentional acts 302

Chapter 14: Preventing and Minimizing Hazardous Environmental Conditions 303

Clearing the Air Your Tenants Breathe 304

Asbestos 304

Carbon monoxide 306

Formaldehyde 308

Radon 309

Assessing and Limiting Your Liability for Lead Paint and Mold 311

Lead-based paint 311

Informing and protecting tenants during repairs and renovations 315

Mold 315

Preventing and Exterminating Pests 316

Preventing and Eliminating Hazardous Waste 318

Determining whether something is a hazardous waste 319

Identifying common sources of hazardous wastes 319

Educating tenants and staff about proper use and disposal of hazardous substances 321

Figuring out who’s legally liable for cleanup 321

Chapter 15: Protecting Tenants and Workers from Criminal Acts 323

Your Obligations and Legal Liability 324

Knowing your responsibilities 324

Grasping the potential costs of lax crime prevention 325

Taking Practical Crime Prevention Measures 326

Turning to a crime prevention program 326

Taking necessary crime prevention precautions 327

Educating and connecting tenants 330

Enhancing crime prevention measures 332

Securing Your Business 333

Safeguarding the rental office and tenant records 334

Maintaining control over locks and keys 335

Screening potential employees 335

Keeping tabs on employee behavior 338

Dealing with Troublesome Tenants 339

Responding to general criminal behavior 339

Handling domestic issues 341

Dealing with drug users and dealers 341

Being Truthful about Safety and Crime 342

Chapter 16: Understanding Tenant Privacy and Your Right to Enter the Premises 345

Balancing Owner and Renter Rights 346

Exploring the influence of contract and property law 346

Honoring the implied covenant of quiet enjoyment and warranty of habitability 347

Looking into state statutes 347

Stating your right to enter the premises in your rental contract 349

Exercising Your Right to Enter an Occupied Rental Unit 350

Building rapport with tenants 350

Entering a rental unit only when necessary 351

Giving tenants advance notice and getting permission 351

Responding to a tenant’s unreasonable refusal to let you enter 353

Counting the potential costs of abusing your right to enter 353

Honoring Additional Tenant Rights: Do’s and Don’ts 354

Implementing a reasonable overnight guest policy 354

Don’t release information about a tenant 355

Don’t call or visit a tenant at work 356

Don’t be snoopy 356

Don’t ostracize a tenant you don’t like 357

Chapter 17: Resolving Landlord-Tenant Disputes 359

Settling the Most Common Problems 359

Late-, partial-, or nonpayment of rent 360

Additional occupants 361

Inappropriate noise level 363

Unsupervised minors 365

Consulting Your Attorney for Advice 366

Resolving Problems without Eviction 366

Hashing it out: Listening and talking 367

Bringing in a mediator 368

Writing a warning letter 370

Taking a tenant to small-claims court 370

Encouraging a voluntary move-out 371

Avoiding Retaliation 372

Part 4: Changing and Ending Leases 373

Chapter 18: Handling Co-Tenancies, Sublets, Assignments, and Guests 375

Recognizing Legal Issues Involving Nontenants 376

Understanding co-tenancy and why it matters 377

Dealing with Common Co-Tenant Issues 378

Deciding who pays the rent 378

Raising the rent and security deposit 379

Taking a hands-off approach to co-tenant disputes 380

Terminating a co-tenant’s lease 381

Deciding Whether to Allow Subleases or Assignments 382

Chapter 19: Revising and Terminating Rental Contracts 383

Changing the Rental Contract Terms 383

Terminating a Rental Contract 385

Terminating a lease 385

Ending a rental agreement 387

Dealing with a tenant’s termination of the rental contract 388

Requiring an intent to move out notice 389

Accepting rent after the lease ends 389

Prorating rent 390

Evicting Troublesome Tenants 391

Serving legal notices 391

Filing a formal eviction action 392

Following the do’s and don’ts of the eviction process 394

Collecting judgments 395

Chapter 20: Moving a Tenant Out 397

Requiring Written Notice of Your Tenants’ Move-Out Plans 398

Providing Your Tenant with a Move-Out Information Letter 398

Conducting the End-of-Lease Inspection 399

Thoroughly inspecting the property 400

Completing the move-out checklist 401

Taking photos to document any damage 401

Reclaiming an abandoned rental unit 402

Part 5: The Part of Tens 403

Chapter 21: Ten Tips for Staying Out of Legal Trouble 405

Acting Beyond Reproach 405

Screening Applicants Carefully 406

Keeping Abreast of Changing Laws 407

Writing a Solid Rental Contract 407

Complying with Fair-Housing Laws 408

Maintaining Your Property 408

Keeping a Paper Trail 409

Following Legal Eviction Procedures 409

Practicing a Reasonable, Legal Security Deposit Policy 410

Promising Less, Delivering More 410

Chapter 22: Ten Tips for Being a Better Landlord 411

Assessing Your Landlord Readiness 411

Maintaining Rapport with Tenants 412

Establishing Professional Relationships 413

Joining an Association 413

Taking Landlord Training Courses 414

Getting Certified 414

Keeping Abreast of Legal Developments 415

Being Proactive 415

Honing Your Communication Skills 416

Hiring an Expert When Necessary 416

Index 417