Congratulations! You’ve saved and invested. You’ve bought a rental property, cleaned and painted, and you are ready to lease a property to your first tenant. Before you begin to meet and interview tenants, you should be aware of the laws that will affect your relationship with your new tenants.
Remember these are general facts about what a landlord needs to do. Every case is different. This is one key area of the law where you need an attorney to help you or you will likely pay a dear price later on!
The Fair Housing Act
The Fair Housing Act states that you cannot discriminate against any potential tenants based on race, color, sex, the nation of origin, religion, handicap, or family status. States and local governments may also add other categories, such as the tenant’s source of income. The Fair Housing Act lists out that based on the above categories, a landlord cannot refuse to rent a house, set different terms of the lease, provide various landlord services or facilities, or deny that housing is available. The Fair Housing Act does not apply to any owner-occupied buildings, housing in private clubs or single-family housing rented without a broker, or housing for older persons by age (65+, retirement homes).
The Fair Credit Reporting Act
You found a tenant you are interested in leasing your property to. The tenant’s application should come with a credit report to help you evaluate the application. The credit report will also help you to understand the potential tenant’s other financial commitments (i.e., if the tenant will be able to pay rent every month).
As a landlord, it is your right to use credit reports for this purpose, however, if you choose to deny a lease to a tenant/applicant, you are required by law to provide the applicant with a notice that states the name of the credit reporting agency used, along with a telephone and address. The statement also has to include that the credit reporting agency did not make the decision, the landlord (you) did and that the potential tenant has the right to dispute any information provided
The Implied Warranty of Habitability
As a landlord, you agree to provide a tenant with a space that is livable or habitable. That means that any area you are leasing must have heat, running water, hot water, plumbing, and electricity. You must also provide grounds around your lease site that is free of trash, rodents, and pests. If the above conditions are not met, your tenant has the right not to pay rent or to terminate their lease. Your tenant also has the right to have repairs made to the leased site promptly.
The Mutual Covenant of Quiet Enjoyment
When a tenant leases your space, they have the right to (mostly) undisturbed living. This means that you cannot enter your leased property at your whim. Laws state that landlords can enter a property if there is an emergency that is a threat to the property or to life. If the resident gives you permission, you may enter the property to perform repairs, show the unit, or inspect the unit.
State Security Deposit Rules
Security deposits are often the source of legal action for landlords. So, here are a few state security deposit rule tips:
Follow your state’s laws (i.e., obey laws for how a security deposit is stored, be clear on how the security deposit can be used, know when and how the remainder of a security deposit is to be returned to a tenant and always provide an invoice of items charged to security deposit). Ohio has very specific rules about security deposits.
Always have a move-in/move-out checklist for tenants and be sure to take pictures of every room on the day of move-in and move-out.
Keep all receipts for every cost incurred.
Residential Lead-Based Paint Hazard Reduction Act
Was your rental property built before 1978? Lead-based paint is a real concern, and the Environmental Protection Agency banned it long ago. Here is what you need to know about leasing a property built before 1978:
Be sure you mention any reports of lead paint completed on your property.
Give renters the EPA pamphlets “Protect Your Family From Lead in Your Home” and “The Lead-Safe Certified Guide to Renovate Right.”
Include specific warning language in the lease as well as signed statements from all parties verifying that all requirements were completed.
State Required Disclosures
Lead-based paint isn’t the only hazard that must be disclosed by a landlord. Many states ask that landlords also disclose any environmental hazards, flooding risks, security deposits policies and procedures, nonrefundable fees, smoke detector locations, smoke detector maintenance, any nearby military or army bases, policies on smoking, and utility arrangements. Finally, all of your tenants should have the name of their landlord and property manager with accompanying phone numbers and contact information.
State Landlord-Tenant Act
Ohio’s State Landlord-Tenant Act is located at 5321 of the Ohio Revised Code. Section 5321.04 describes the landlord’s obligations and anyone who is or is thinking about becoming a landlord should go there first and make sure they understand and can comply with the requirements they find therein.
Eviction Rules & Procedures
When emotions become frayed due to unpaid rent or dishonest tenant communication, it is crucial that you follow your state’s laws regarding eviction. First, make sure you have legal grounds to evict the tenant. Second, let your tenant know that you plan to file for eviction, give them notice of the reasons why you are filing, and a notice of how long they have to fix the issue before you file. After the deadline has passed for fixing the problem, file for eviction of the tenant at the courthouse. If the court rules in your favor and the tenant does not move out by the specified date, it is then time to call the police to handle the eviction.
Mitigation of Damages
If a tenant chooses to move out before the end of their lease, the tenant must continue to pay rent until the end of the lease term. However, it is also the landlord’s duty to lessen the resident’s losses by trying to rent out space to another new tenant. Thus, the landlord must be able to show attempts to re-rent the property, such as advertisements, dates, and times the property was shown to potential tenants, and any applicants that were screened.
Serving as a landlord is a great way to invest and provide financially. Those who take the time before they rent will find their investment, in the beginning, more than pays off when the relationship with their tenants breaks down for any number of reasons.
James Schroeder is an attorney licensed to practice in Ohio, Pennsylvania, New York, New Jersey, and the District of Columbia focusing on real estate, estate planning, business and nonprofit law. He maintains offices in Sardinia Ohio and Egg Harbor City New Jersey. You may reach him at (973) 886-4563 or (609) 270-7590. Most of his clients come from Sardinia, Mount Orab, Georgetown, Russellville, West Union, Peebles and Seaman in Ohio and Egg Harbor City, Hammonton, Port Republic, Galloway and Mullica Township in New Jersey but if you are from anywhere in Ohio, Pennsylvania, New York, New Jersey, and the District of Columbia can call to discuss your legal issues.