20 Aug Renting Your Residential Property? – Be Smart from the Start
There are four things to keep in mind when renting out your residential property. Being smart from the start allows you to avoid headaches down the road and protects you from the financial risks of renting property.
1. Know Your Responsibilities as a Landlord.
As a Landlord, you must provide a property that is fit for habitability and is in compliance with all applicable housing and building codes. A property is generally fit for habitability if it has available running water, reasonable amounts of hot water, reasonable heat, and all electrical, gas, plumbing, sanitary, heating, ventilation, and air conditioning are in reasonably good and safe working order and condition. If you are unable to satisfy all of these criteria, you should contact a repair man or lawyer before renting your property. Be sure to read our post about hiring a contractor before you make any repairs.
2. Screen Tenants Carefully.
Choose your tenant carefully! You need to be able to depend on this person not only to pay rent on time, but also to keep your property in good condition. Gather references from the tenants’ previous landlord and check the tenant’s credit history. Finally, ask your lawyer to check if the tenant has been evicted in the past or sued for failing to pay rent. If the tenant owes someone else money, it is very likely he or she will end up owing you money too.
While you are free to reject a potential tenant based on bad credit history, negative reference, or bad past behavior, you are NOT free to discriminate against prospective tenants based on their race, religion, national origin, sex, familial status (such as having children under age 18), or physical or mental disability. These characteristics are “protected categories” under the federal Fair Housing Act of 1968.
3. Use a Written Rental Agreement.
The rental agreement, signed by you and your tenant, establishes the basis of your relationship with the tenant and is full of crucial business details, such as the following information:
– Terms of the Rental – How long will the tenant by able to rent the property – 6 months, 1 year, 3 years?
– Amount of Rent – How much will the Tenant’s rental payment be, how often does it need to be paid, and where should the Tenant mail his or her check?
– How Late Payments are Handled – Will you charge a late fee if the rent is paid over 5 days late?
– Use of the Property – Are you renting the property solely as a residential property or is it a commercial property?
– Utilities – Is the tenant responsible for paying all the utilities for the property?
– Maintenance – What items will be the tenant’s responsibility to maintain? Generally, the tenant is responsible for all basic maintenace inside and outside of the house and any repairs caused directly by the tenant’s misuse of the property.
– Tenant’s Failure to Comply with Terms of Rental Agreement – What happens if the tenant quits paying the Rent or unexpectedly moves out of the property?
No matter how well you know your tenant, always put the terms of your agreement in a signed and dated written document. If you are concerned or have questions about any part of the rental agreement, you should contact your attorney.
4. Collect a Security Deposit.
Security deposits exist to protect you, the Landlord, from a portion of the financial risk associated with renting property. You must deposit the security deposit in a separate escrow account until the Tenant’s rental period expires or the rental is terminated.
When it is time to return the security deposit to the Tenant you can withhold amounts for any outstanding rent and damages suffered due to the Tenant’s failure to comply with the rental agreement. However, you cannot withhold money for the normal wear and tear of the property associated with everyday living.
After calculating how much of the security deposit to withhold, you must send the Tenant a written letter outlining your withholdings and returning the remainder of the security deposit within thirty (30) days from the last day of the rental.
The most important thing to remember as a Landlord is to put all communications and agreements with your Tenant in writing.
Lauren Williams is an attorney with Russell P. Patterson, P.A. in Hilton Head, SC. She can be reached at (843) 341-9300 or email@example.com.
Information or interaction on this page should not be construed as establishing a client-attorney relationship or as legal advice. For advice about your specific situation, please consult one of our attorneys.