Laws Landlords Must Know

March 1, 2007

Managing rental property is a great alternative or addition to selling residential real estate. But you have to know the rules to play the game.

  • Fair housing laws: Federal and state fair housing laws prohibit discrimination in advertising rental property and renting property on the basis of race, religion, national origin, color, sex, handicap, or familial status. Some state laws go further and protect marital status or sexual orientation. One mistake many landlords make is denying a rental unit to a family on the basis of the number of bedrooms available. Be careful to review local occupancy laws and how they apply to the number of people who can occupy each bedroom. Also remember that you can decline to rent to persons in a protected class, but the denial must be based on criteria poor credit, not having a job for more than three months used with all prospective tenants and for reasons other than their membership in a protected class.
  • Fair Credit Reporting Act: You can refuse to rent to an individual because of a poor credit rating or rent payment history. However, if you do, federal law requires you to tell individuals a poor credit rating was the reason their application was rejected. You should also inform them that within 60 days of the rejection, they have a right to obtain a copy of the report from the agency that reported the poor credit. You must also give applicants the name, address, and phone number of that agency. In most states, you may charge an applicant for the cost of obtaining a credit report.
  • Lead-Based Paint Hazard Reduction Act: Federal law requires that before tenants sign a lease on a property built before 1978, the landlord or agent must provide them with a copy of an Environmental Protection Agency pamphlet on possible lead hazards and have them acknowledge receipt of the pamphlet (available at www.epa.gov/lead). The landlord or agent must also provide information about any known lead hazards on the property, including copies of any lead hazard test reports. The lease also must include a specific lead hazard warning statement. If your building has four or more units, you must also notify tenants in those units about the potential health threats when renovation work is done at the property.
  • Reasonable accommodation requirements for the disabled: Under the federal Fair Housing Act, you must permit tenants with disabilities to make reasonable alterations to their rented apartment at the tenants’ expense so that they can use the premises. You may require that a tenant return the property to its former condition upon vacating. In addition, you must make reasonable accommodations in the rules and regulations governing your housing so that a disabled tenant can fully enjoy the premises. Examples of accommodation include allowing seeing eye dogs in a no pet building or waiving rules banning large vans in your parking lot for those in wheelchairs.
  • Landlord-tenant laws: Many municipalities have laws governing how you must handle security deposits made as part of an apartment rental and what procedures you must follow to evict a tenant. Like earnest money deposits, security deposits must usually be kept in a separate account and often must accrue interest. You may also be required to provide a written account of any deductions taken from the security deposit to repair the apartment at the time a tenant moves out. Eviction regulations often set down what types of notice you must give tenants before filing for eviction and how much time a tenant must be given to resolve any problems before eviction.

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