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Managing Landlord-Tenant Risks

March 2017

Managing Landlord-Tenant Risks

Managing rental property can be a rewarding, yet risky business. In addition to many other responsibilities, you must ensure the property is a safe habitat, as you could be liable for lawsuits that arise because of injuries sustained. What steps are you taking to reduce the likelihood of lawsuits?

Here is a scenario: A family awoke when a fire broke out in their apartment building. When flames prohibited them from exiting from the main door, they were forced to break a window and exit by jumping from the second floor. They lost personal property in the amount of $25,000 and also incurred medical expenses from multiple burns and injuries.

They residents filed a negligence case against the landlord, claiming the apartment was not equipped with functional fire alarms and smoke detectors. They reported the alarms never sounded during the fire. The property owner denied the allegations, stating the residents never reported the alarms not working prior to the fire.

This real-life lawsuit did not end particularly well for the landlord, who settled the case before going to trial for a total of $108,000.

Here are ten simple and inexpensive steps you can take to reduce the likelihood of a lawsuit from a tenant:

  • Screen prospective tenants. If the prospective tenant is too good to be true, he or she probably is.
  • Be mindful of what you say. Discrimination, even unintended, is illegal and can be a costly mistake. If you refuse to rent, point to a solid, non-discriminatory reason.
  • Enforce a good lease agreement. Consult with experts for assistance. You may also use Nolo forms from www.nolo.com that you can customize to your need. Join your local Landlord Association for support and discussion of relevant issues that may affect your lease.
  • Test fire alarms, smoke detectors, and other fire prevention equipment. Test all units twice a year, and replace any defective devices immediately.
  • Consider your insurance company's loss prevention recommendations. Compliance with the recommendations, which may include repairs and strategies to help prevent future claims, may cost you money and time, but non-compliance may cost you more.
  • Establish a good maintenance routine. Put a regular maintenance routine in place and never put off a repair no matter how small or insignificant the damage may seem. The quicker you resolve a problem, the less costly it will be in the long run.
  • Communicate with your tenants. From educating tenants of your rules to checking in with them to make sure there are no problems, communication with your tenant should be open and regular. Consider it as a part of your regular maintenance and you will have fewer unpleasant surprises to worry about.
  • Document all infractions. Notify the tenant, in writing, of even minor breaches of the lease agreement.
  • Use security deposit wisely. Make sure your lease is clear on exactly how the security deposit will be used.
  • Be nice. While lawsuits should not be personal, the decision to sue is often based on emotions. The occasional nice gesture could go a long way.
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