Ask Brian is a weekly column by Real Estate Expert Brian Kline. If you have questions on real estate investing, DIY, home buying/selling, or other housing inquiries please email your questions to [email protected].
Question from Darrell in MT: Hi Brian, I became a landlord for the first time eight months ago. It’s your typical single-family home on a typical quarter-acre lot. The house is a little over 20 years old. Before I rented it, I spent a month painting all of the walls and ceilings. I also had new carpeting installed. Other than that, the house was in good shape. All of the appliances worked, the furnace was in good shape, and the plumbing and electrical were just fine. The day after I ran a rental advertisement, I got a call from a man that said he was in a bind and needed to find a place to live fast. He was about to get divorced and his soon-to-be ex-wife had forced him out of the family house. He was living in a rundown motel and was desperate to find a place before he ran out of the little money he still had.
“Bob” met me at the house about an hour later. He was wearing nice clothes and driving a nice car. After a quick walk through the house, he said he would take it and wanted to move in that day so he wouldn’t have to spend another night in the dive motel. Bob offered me the first month’s rent in cash and a check for the deposit. That is when I made what I hope is my last big mistake as a landlord. We filled out the rental agreement and both signed it. I didn’t have him fill out an application, I didn’t do a background check, verify his employment, or check his references. I let Bob move in based on his sob story and appearance. Can you guess where this story is going?
Bob didn’t trash the house or do any serious damage, but his deposit check bounced, and I never saw another dollar from him. Bob wasn’t going through a divorce, instead, he had filed for bankruptcy the week before. His bankruptcy attorney took the position that he was legally not required to pay rent while his case was in bankruptcy court. Bob lived in my rental for seven months before I was able to evict him. I also learned he had pulled similar scams a couple of other times. I hope I learned my lesson and won’t be letting another tenant in without doing a full background check. What I want to know is why tenants always have the upper hand in these situations? Why don’t landlords have more rights since they are the property owner?
Answer: Hello Darrell. That’s a tough lesson to learn from your first tenant but you are not the first landlord to get the short end of the stick. Choosing good tenants is a critical part of protecting your real estate investment. Every landlord should have a rigorous screening process - complete with background checks that ensure that they don’t end up with risky tenants who end up costing them thousands of dollars in evictions, lawsuits, and major property repairs.
Most tenants know that the bulk of the risk and responsibility falls on the landlord rather than the tenant. Without going into drawn-out detail, part of why this happened is because many years ago landlords had all the power and some of them abused it by becoming what we call “slum-lords.” But now the pendulum has swung so far that being a landlord can be like trying to navigate a minefield. At every point, you must double-check federal and state laws to ensure you don’t cross boundaries on your own property. The various housing laws mostly protect the interest of the tenants over that of the landlords. However, landlords do have rights that protect their interests in the property that they own.
The most basic responsibility that landlords have to tenants is the implied warranty that the rental must be “fit for purpose.” That means the rental is fit for human habitation with the heating, hot water, waste disposal, and plumbing in working order. Once the tenant moves in, they become responsible for caring for the property. However, landlords still have responsibilities to ensure essential maintenance and repairs are carried out.
The reason deposits are collected is because any damage caused by the tenant is their responsibility. Either the tenant repairs the damage, it gets taken from their security deposit, or it becomes a lease violation that the tenant can be evicted for. The landlord can also demand a certain level of cleanliness in the rental. Landlords should have a cleanliness clause in the rental agreement. You probably can’t demand that they dust and vacuum every day, but you can demand that the garbage is removed regularly and that a level of hygiene is maintained to prevent attracting pests and vermin.
To protect those rights, you also have the right to periodically inspect the property if you suspect a tenant is trashing it. You’ll need to check state and local regulations about how much notice must be given to the tenant before you can enter the property. One way you protect this right is with pictures or videos taken before the tenant moves in and their signature agreeing to the “move-in” condition of the property. Destroying or damaging property is a lease agreement violation that gives you the right to evict the tenant. This usually involves serving the delinquent tenant with a “cure or quit” notice in writing. After the tenant vacates the property, you have the right to withhold part of all of the security deposit to pay for repairs.
The federal “Fair Housing Act” prevents landlords from refusing to rent based on bias, but the landlord does have the right to refuse to rent based on character defects. Besides federal law, you must also understand what is permissible under state and local law. At a minimum, you should be able to interview the prospective tenant to determine their identity, credit score/history, references from previous landlords and employers, criminal record (local law may prohibit this), and validate the tenant’s suitability for the rental property. This is commonly known as screening tenants.
Of course, landlords have the right to collect security deposits and rent. However, some local laws do govern how much can be collected. The first month’s rent and security deposit should be collected at the time the rental agreement is signed and before the tenant moves in. The rental agreement should also state who is responsible for all utility bills, taxes, and any fees such as for a pet. At the end of the lease, the landlord must generally return the security deposit to the tenant if the property is returned in the same condition that it was rented (less normal wear and tear).
Landlords have the right to evict tenants if they violate the lease agreement. This is why it is so important to have a well-written lease agreement. This includes the tenant's obligation to pay the rent and fees on time and in the manner stipulated by the agreement. The agreement typically says that the property cannot be altered or modified in any material way. If alterations such as painting are allowed, these should specifically be written into the lease agreement. The agreement should also prohibit any illegal activities. You need to understand the laws, but other clauses can be included in the agreement such as no loud noise after 10 pm and no junk cars on the property. Any violation of the agreement can be cause for eviction.
Already mentioned is a landlord’s right to access the property (with proper notice) to determine that the rental agreement is being complied with. In most states, this includes immediate access without notice in an emergency, so the landlord can secure the property from losses.
Landlords also have a right to a “move-out” inspection. Typically, the rental agreement states how much notice the tenant must give before moving out. Once a landlord receives notice, they can inspect the property for any damage that is more than regular “wear and tear.”
Darrell, as a landlord, it’s vital that you fully understand the rights of both the tenant and the landlord. It might seem that the laws favor tenants but at a minimum, landlords do have specific rights to collect rent on time, make regular inspections, and evict a tenant for a lease violation.
What would you like to say on behalf of landlords? Please comment.
Our weekly Ask Brian column welcomes questions from readers of all experience levels with residential real estate. Please email your questions or inquiries to [email protected].