There are many state, federal, and local laws that control the tenant-landlord relationship. If you are already a landlord or if you’re thinking about renting out that garden cottage, you will need a working knowledge of these essential laws. As a landlord, you are required to comply with the following:
- Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA), allows you to use credit reports to evaluate rental applications. However, if you deny housing to an applicant based on information contained in the credit report, you must provide the applicant with an adverse action notice that includes the following information:
- The contact details (name, address, and phone number) of the credit-reporting agency (CRA) that gave the report.
- A statement that the CRA that supplied the report didn’t make the decision to take the adverse action and can’t give the precise reasons for it.
- Notifying the applicant they have right to dispute the accuracy or completeness of any information given in the credit report. And the applicant’s right to a free report from the CRA upon request within 60 days.
The FCRA also governs the report the nonpayment of rent to one or more CRAs. If you report a tenant for nonpayment of rent and the tenant cures the debt, you are legally required to update the tenant’s credit report to show that the debt has been cured.
- Fair Housing Act
There are seven protected classes of applicants that the Fair Housing Act prohibits you from discriminating against:
- National origin
- Family status
The Fair Housing Act institutes only minimum protections. Your state or local authority may set additional protected classes, e.g. source of income.
- The implied warranty of habitability
The implied warranty of habitability obliges landlords to provide living space fit for human residence. Living space must be habitable: have heat when it’s cold, running water, adequate hot water, plumbing and electricity in proper working order. Buildings and grounds must be clean and sanitary, free of debris, rodents, vermin filth, rubbish, and garbage.
Tenants are responsible for fixing anything they or their guests break, but the landlord is required to do any repairs required to maintain fit and habitable living conditions in a realistic span of time.
- The mutual covenant of quiet enjoyment
Tenants are granted the right to the undisturbed use and enjoyment of the rental property. This is the mutual covenant of quiet enjoyment, which is implied in every lease or rental agreement. As the landlord, this applies in the following ways:
- You cannot enter your tenant’s home whenever you want, only when:
- In an emergency that threatens life or property,
- When the resident gives you permission,
- To perform necessary inspections or repairs
- To show the unit to future renters or buyers (after giving the tenant ample notice).
- You need to reasonably investigate complaints and potentially take action against any resident who’s disturbing his neighbors.
- Your state’s security deposit rules
Your state will have a security deposit statute that usually specifies the following:
- How the security deposit is to be held; generally in an interest-bearing account in an in-state bank
- What the security deposit may be used for; usually to cover unpaid rent, damage beyond ordinary wear and tear, and cleaning.
- When the unused portion of the security deposit must be returned to the resident
- The landlord must give an itemized invoice of monies deducted off the security deposit
The security deposit is one area where disagreements are common and often lead to the tenant taking legal action against the landlord. By complying with your state statute and taking these steps you can avoid a lot of problems.
- Have a separate interest-bearing account for holding security deposits.
- Make an inventory checklist to document the condition of the property at the beginning and end of a tenant’s stay.
- Create a visual record of the property’s condition by taking photos (or video) of the property at the start and end of a tenant’s stay.
- Keep receipts for all repairs and cleaning needed to ready the unit for the next renter.
- Return the unused portion of the security deposit to the resident as soon as possible as required by state law.
- Along with the unused portion of the security deposit, include an itemized list of all costs deducted from the security deposit.
Knowing the basic essential laws that govern the landlord/tenant relationship and adhering to them will let you confidently move ahead with your rental property plans.