Last modified on May 28th, 2021
By Brittany Benz
New to property management? While handling day-to-day tasks, managing staff, and fostering resident relationships make up a large part of your role as property manager, staying up-to-date with the local laws that govern your multifamily apartment rentals and single-family rental homes is also incredibly important, as they can vary greatly across the country. While this article does not substitute for legal advice, it can help you avoid certain actions that some property managers or owners may think are fine, but could actually be breaking the law in many American cities and towns.
As always, before you make any decision regarding your rental property and its residents, it’s best to consult your legal professional to make sure you’re not violating any specific terms or rules for your area.
6 Do’s & Don’ts When it Comes to Renting Your Properties
Avoid these six common things when renting your properties.
1.) Don’t: Drop In
Residents have the right to enjoy their privacy. If you need to stop by for a routine inspection, maintenance, or repairs, you should offer advanced notice. Depending on what state you reside, the number or hours or days in which you must provide advanced notice can vary. But generally, a property manager must seek a resident’s consent to enter because they’ve surrendered possession of the premises over to the renter upon signing the rental agreement. If a resident happens to be home, they may waive their right to get advance notice, but you should not just use their keys to stop by at any time and without prior warning.
Do: Utilize Mobile Communication Tools
Dropping in may not only be illegal, it also erodes the relationship you have with your residents and diminishes trust. Instead, consider implementing mobile communications tools — such as texting and email — to ensure your residents know exactly when you plan to enter their unit and why well ahead of time.
2.) Don’t: Have an Inconsistent Screening Process
If your current screening process varies from applicant to applicant, then you might be breaking the law. As stated by the U.S. Department of Housing and Urban Development, “It is illegal to discriminate in the sale or rental of housing, including against individuals seeking a mortgage or housing assistance, or in other housing-related activities. The Fair Housing Act prohibits this discrimination because of race, color, national origin, religion, sex, familial status, and disability.”
Do: Follow a Standardized Screening Process
Your screening process should be the same for each and every applicant. An applicant’s name, phone number, rental references, and their social security number can be used to help screen and qualify renters, however there are regulations when it comes to tenant screening and these laws sometimes change. To learn more about how you can develop a standardized tenant screening process with the help of technology, check out this article.
3.) Don’t: Increase the Rent in the Middle of the Lease
Property managers may reserve the right to increase the rent with a new lease or renewal. At the same time, they are usually not allowed to increase rent in the middle of the lease term. If both parties agree, it might be possible to modify the lease because of some property improvement or additional service, but in some cases this is prohibited by law.
Do: Stick to Your Lease Terms
As defined in your lease terms, it’s important both you and your renters abide by what was agreed in the document upon signing. Think about implementing software that allows for easy document sharing and retrieval. This way you and your team can quickly look up a lease agreement, so you don’t have to worry about accidentally changing the rent before the term is over.
4.) Don’t: Evict Renters Because of a Sale
Property owners usually reserve the right to sell a property whenever they choose. However, this sales transaction can’t violate the tenant’s lease. Sellers should make sure the new owners will keep the current residents in place until their lease ends or offer to potentially buy the renters out of their lease. Any agreements like this should be made in writing and signed by all parties involved.
Do: Leverage an Online Portal to Keep All Parties Informed
While you ultimately can’t control what your owners decide to do with their properties, you can lean on digital tools to make sure owners and renters are informed and aware of what is happening. With an online portal you can easily share lease agreements, maintenance updates, property information, and more with the click of a button.
5.) Don’t: Fail to Provide a Certificate of Occupancy
Certain types of rental units might not prompt renters to ask to see a Certificate of Occupancy. For instance, few renters of established apartment complexes probably bother to ask. On the other hand, renters might want to make sure that a garage apartment or basement room will provide them with a legal, safe, and comfortable dwelling.
Do: Make Sure Every Property is Up to Code
Property managers, owners, and renters can help protect themselves by making sure each of their units have been maintained up to the standards of local codes, including regularly inspecting the property and taking care of any maintenance issues. Property management software with built-in maintenance requests and work orders can give you more visibility into the work that has already been performed and if there are any outstanding problems.
6.) Don’t: Charge Too Much for a Rental Deposit
Some states may not allow owners and property managers to charge more than the price of rent for one month; however, some states may have different limits or no limits at all. In addition, single-family rentals may require higher deposits due to the property value. In any case, property managers and owners need to be careful that they comply with local rules and are not overcharging.
Do: Clearly State Deposits in Writing
Always have the rental deposit listed in writing in the lease, so both parties have full transparency. Upon move-out the renter may also be entitled to receive their deposit within a certain number of days depending on your state’s rules, unless there are any damages, then your team will need to explain the issues and clearly show any deductions for maintenance in writing.
It’s important to recognize that your property management practices are a crucial element of your business. Not only does compliance protect renters, it also protects managers and owners against expensive penalties, potential liability, and a bad reputation. All parties involved in a rental agreement should learn about local laws and pay attention to red flags. When you are fully compliant, your team, renters, and owners can breathe easy and you can focus on providing an outstanding customer experience.
By utilizing a comprehensive property management platform with built-in online leases, document sharing, tenant screening, and digital communications tools, you can streamline your processes and build a respectable reputation for your business. To learn more about how you can deliver exceptional service in today’s on-demand economy, listen to this podcast episode.
Thanks for the update
“…it’s also possible to argue that limits may keep property managers from giving potential renters with poor credit a chance.”
Actually it is a good property management practice to screen out renters with poor credit. A property manager has a fiscal responsibility to their owner and should mitigate risks.
A property manager however may not want to set rental deposit limits so high that it out prices people with lower incomes. Nor should a property manager equate people of low income with people with poor credit. That’s a fallacy. Many low income people live within their means and maintain good credit.
People with higher incomes are just as susceptible to poor credit as low income people, and a prudent property manager may not want to rent to either.