When managing rental properties, property management involves much more than simply collecting rent. There’s a legal side to property management that requires careful attention to avoid costly mistakes. Here, we’ll cover common legal mistakes in property management and how to avoid them.
Not Staying Informed About Legal Requirements
One of the most significant risks for property owners is failing to stay up to date with legal changes. Local, state, and federal laws govern everything from tenant screening to evictions, and failure to comply can result in serious legal consequences. In some instances, federal criminal juries may be involved in cases where unlawful eviction, discrimination, or fraud occurs.
Mismanaging Lease Agreements
A well-written lease agreement is essential in property management. Failure to clearly outline the terms of the lease can lead to confusion and legal disputes. In the event of a disagreement, court proceedings may be required, and in extreme cases, the issue may escalate to a civil lawsuit. For example, if a tenant violates the lease terms and the issue can’t be resolved amicably, pretrial service officers may get involved, and the case could reach the appeals court.
The property management industry is heavily regulated, and property management companies must ensure that all lease agreements follow federal rulings on tenant rights and responsibilities. Working with a property management company ensures that these critical documents are legally sound and can withstand any legal challenges that may arise.
Failing to Properly Screen Tenants
Proper tenant screening is critical to avoid renting to tenants who may cause problems. When property managers fail to perform background checks or credit assessments, they increase the risk of renting to irresponsible tenants who may damage the property or fail to pay rent. In some cases, irresponsible tenants could cause significant financial loss to property owners, requiring intervention from pretrial service officers or federal courts.
Property management companies screen tenants more effectively. They run background checks, screen credit reports, and check eviction history, reducing the risk of renting to convicted criminals or individuals with troubling pasts.
Mishandling Evictions
Evictions can be one of the most complicated aspects of property management. If an eviction is not carried out according to the law, it can lead to a lengthy and costly trial in court. For example, an unlawful eviction could result in a civil lawsuit.
It’s crucial to follow the proper steps when evicting a tenant to avoid legal issues. A property management company can guide you through the legal process, ensuring all steps are documented and compliant with state and federal laws.
Failing to Keep Accurate Records
Proper documentation can make or break your defense in a court proceeding. From maintenance requests to rent payments, keeping records of every transaction is important. Property management companies have tools to track rent payments, maintenance requests, and other important documentation. This can help avoid disputes and provide evidence if needed during legal proceedings.
Whether you handle property management on your own or partner with a property management company, having a firm grasp of the law is important. Contact Envy Property Management today to learn how we can help you avoid legal challenges!
