Being successful in managing rental properties demands your attention to many independent areas. You need to have an understanding of the real estate market, you need to track and manage your expenses carefully, and you also need to remain legally compliant at all times. In other words, you need to obey the law with precision in order to avoid fines, liability for damages, and potentially even criminal charges.
Some of these laws are intuitive and straightforward, others are a bit opaque and more complex. So what measures can you take to remain legally compliant in property management?
Work With a Property Manager
One of the easiest strategies to use is working with a property manager. If you hire a property management company, they can handle most of the responsibilities associated with the property, from onboarding tenants to collecting rent and even handling maintenance and repairs. Your property management company can help you with proactive planning, responding to tenants with official notices, and managing complicated legal processes (like eviction). They can also document things on your behalf.
Most property management companies are staffed with people who make it their responsibility to stay up to date on the latest legal developments concerning property and real estate laws. As long as you do your due diligence and hire a responsible property manager, you probably won’t have to dirty your hands with learning the law on your own (though it still might benefit you to have a cursory understanding of the laws that apply to you).
Familiarize Yourself With Local Laws (and Stay Updated)
If you don’t hire a property manager, it will be your responsibility to familiarize yourself with local laws. You’ll also need to stay updated as those laws change, since no one is going to go out of their way to notify you of these changes.
Note that there are multiple types of laws that can apply to you. There are federal laws, which apply to landlords throughout the United States. There are state laws that only apply to your state. And there may also be local laws and ordinances you’ll need to follow.
The good news is that most of these laws are publicly available. In public libraries and publicly accessible law libraries, you should be able to find all the information you need, even if it’s hard for you to parse legalese.
Pay especially close attention to:
· Tenant rights
· Lease limits and restrictions
· Landlord responsibilities
Hire a Good Lawyer
Even if you’re intelligent and competent at reading legal documents, you may eventually find yourself in over your head – or you may want an extra set of eyes to verify that your understanding is correct.
Accordingly, it pays to have a good real estate lawyer who can help you through some of these dilemmas. They can help you draft documents, approach legally complicated problems appropriately, and mitigate any ill effects that come from violations.
Make Your Leases Ironclad
It’s possible to develop a decent lease agreement using templates you find online. However, this isn’t always the best idea. Your lease agreement is arguably the most important legal document in your property management strategy, so it’s important to make it as ironclad as possible. Consider working directly with a lawyer to ensure your lease agreement is legally valid and protects your interests.
Document Everything You Can
You can mitigate many legal risks by documenting everything you can, including:
· Property condition. Photos and videos of the property condition, both before and after the tenant moves in, can help you verify points of damage that are the tenants’ responsibility. You can also prove that you’ve taken good care of the property this way.
· Efforts made. It’s also wise to keep receipts for any efforts you’ve made to improve the property or repair damage. For example, you might be in a position where you need to prove that you fixed a leaking roof.
· Communications. You should have a log of any significant communications between you and your tenant. This is especially important during conflict resolution.
Get a Good Liability Insurance Policy
Liability insurance and umbrella insurance policies can help protect you (and your financial assets) if you’re ever held liable for damages. They don’t help you be legally compliant, but they will protect you if a tenant tries to take action against you.
Build Good Relationships With Your Tenants
Similarly, it’s a good idea to build good relationships with your tenants. If you’re genuinely kind and helpful to them, and you have good rapport together, they’ll be much more likely to work with you peacefully on any conflicts that arise. Positive interactions, responsiveness, and occasional thank-you gifts can go a long way.
Use Common Sense
Laws and statutes can be complicated, and in some areas, they’re truly difficult to work around. That said, most property managers in most areas can survive by using common sense. Don’t discriminate, don’t harass tenants, respect tenant privacy and rights, and take good care of the property; if you do these things, you probably won’t have any legal trouble.
It’s not especially hard or expensive to remain legally compliant in the property management space, even though some laws can be complex and confusing.
With the help of a property manager, and potentially a lawyer, it becomes even easier.