Renting to tenants can be difficult. Whether it’s navigating complex landlord-tenant laws, like the Fair Housing Act, or simply managing your landlord obligations, there are many things you need to be mindful of when renting your house, condo, or apartment.
When you’re a landlord, you’re often told what you can’t do rather than what you can do, and that endless list of restrictions can bog you down and make it challenging to know the rights you have to help you properly manage your property.
In this article, find out the rights you have as a landlord that enable you to find and rent to tenants and maintain a positive rental experience.
What Rights Do Landlords Have?
As a landlord, you have many rights that allow you to manage your rental property effectively and efficiently. These rights include:
- Screening applicants
- Collecting rent deposits and payments, as well as any deposits or payments associated with pets, parking, and/or added amenities
- Entering the tenant’s unit with notice or due to an emergency
- Evicting tenants
- Using the security deposit for unpaid bills or repairs
If you’re a first-time landlord, it’s recommended you read a landlord guide to gain a comprehensive view of your duties and to help you answer questions such as:
- Should you hire a property manager?
- How should you advertise your unit?
- What type of lease should you use?
How Do I Find a Tenant?
It can be hard to find a suitable tenant for your property. When hiring an employee, an employer has the ability to meet and interview a candidate, sign an Employment Contract, and place them on probation before committing to the employee long-term.
When it comes to tenants, however, there is no probationary period. As a landlord, you must be confident you’ve selected the right applicant before signing the lease or risk dealing with an inadequate tenant.
To help you select the right tenant, you’re allowed to ask for information pertaining to credit and rental history in a Residential Rental Application.
A Rental Application allows you to collect all the information you need to screen the applicants and make the best choice. To be more specific, during the screening process, you can:
- Interview the applicant
- View government identification
- Perform a credit check
- Contact the applicant’s references, i.e. their previous landlords
- Confirm the applicant’s monthly income
- Complete a criminal record check
In essence, you collect this information to make sure the applicant is worthy of renting your property. The right applicant is someone who is reliable, respectful, and responsible.
What is a Security Deposit?
Around the time you sign the lease with the applicant, you can collect a security deposit.
A security deposit is a sum of money held by the landlord for the duration of the tenancy. It is normally equal to one month’s rent.
Some states have different maximum amounts for security deposits, with many state laws indicating that the deposit cannot be more than one month’s rent. Be sure to research your state’s mandated maximum when setting your deposit amount.
Security deposits are held until after the move-out inspection is completed, and all or part of the deposit is used to cover any unpaid bills (such as outstanding utility bills or rent payments) and damages considered above and beyond "normal wear and tear".
"Normal wear and tear", sometimes called "ordinary wear and tear", means deterioration of the unit due to everyday living that results in a loss of the property’s value. For example, worn-in carpets depreciate the value of a unit. If the carpet’s state was solely caused by use (i.e. from simply walking around your apartment), then it’s considered normal wear and tear and cannot be repaired using a security deposit.
In other words, a security deposit is used to repair the property if there were any unreasonable damages made by the tenant or their house guests.
Because of the potential for damages, your right to collect a deposit at the outset of renting your property is very important, and, in order to preserve your right to use the security deposit when the tenant moves out, how you handle the deposit is also crucial.
The best course of action is to place deposits in a separate bank account from your own. This will allow you to organize the payments easily, so you can provide records, if asked or required.
Commingling your personal funds with your tenant’s security deposit is not recommended for a few reasons, such as:
- You may have difficulty determining the deposit amount when it comes time to use the deposit to pay for repairs or return it to the tenant. Although the amount you collected will be noted in your Lease Agreement, some states expect you to hold deposits in an interest-bearing account. This means you will need to return the interest along with the deposit, and the exact amount will be difficult to determine if you’ve placed the funds in a personal account.
- You may accidently spend some of the deposit if you are not careful.
- You may have trouble tracking the deposit and obtaining a record of when it was deposited, if required. This could result in losing the right to use the deposit if there is a dispute over it in the future.
What Is the Difference Between a Pet Deposit and Pet Fee?
If you’re allowing pets in your unit, you may want to charge your tenant a pet deposit or pet fee.
A pet deposit is a refundable sum of money obtained by the landlord to cover any damages made by a pet. A pet fee, on the other hand, is a non-refundable, recurring payment. Usually, this fee is added to the tenant’s rent amount and paid monthly with rent.
You may see other landlords charging a non-refundable pet deposit. However, a deposit is money that is held for a certain period of time for a purpose (e.g. renting an apartment). Deposits are returned, minus any related expenses, once that purpose has been fulfilled (e.g. once you are done renting the apartment). Be sure to include the right type of charge in your Lease Agreement.
What Is a Move-In Inspection?
Before the tenant starts moving their furniture into the unit, you should complete a Rental Inspection Report.
Inspections done at the start of the tenancy are used to document the condition of the property before the tenant moves in.
To do a move-in inspection, you and the tenant should walk through the property and note any scratches, chips, holes, or stains throughout, so that the tenant is only responsible for damages that occur during their occupancy. Once the inspection is complete, both you and the tenant sign the inspection sheet to certify the state of the property.
When the tenant is ready to move out, a move-out inspection is completed and compared to the move-in report so that the landlord knows what damages, if any, were caused by the tenant.
These inspections are important because doing them gives you the right to use all or part of the security deposit at the end of the lease (if you find any damages caused by the tenant). Without a move-in inspection, you may not be able to use any of the security deposit, especially if the damages are contested by the tenant.
Collecting Rent from a Tenant
Your right to collect rental payments is probably one of the reasons you became a landlord. But to start accepting rent payments, you’ll need to decide when the tenant will pay rent and how.
Most landlords arrange rent payments for the first of every month. However, you can choose any due date (for instance, the fifteenth) so long as it is the same every period, be that weekly, bimonthly, or monthly.
Sometimes, arranging a different due date for rent is better for your situation. For instance, if your mortgage payment is in the middle of the month, you may want to make the rent due before that date. An unorthodox rent date can also be helpful to some tenants, especially those who have a few other bills due on the first of every month.
The best way to receive rent payments is through an easy-to-use, verifiable method such as direct bank withdrawal or check. Cash, credit card, and debit can also be used, but these methods of payment can be difficult to use and are often not recommended.
For cash payments in particular, if you have more than one tenant, accepting cash can make coordinating and organizing multiple rent payments complex. Moreover, accepting cash for rent payments without proper documentation, like a Rent Receipt, can leave room for dispute about whether or not the tenant paid rent.
With credit or debit payments, you can verify and organize payments using your online transaction history or bank statements, which is useful. However, the downfall is that you sometimes need a third-party service to enable you to accept credit or debit. These services can be costly, sometimes charging 1% to 2% of every rent payment.
Can I Enter My Tenant's Unit?
A landlord’s right to enter a unit is necessary. Some of the reasons you may need access to your tenant’s unit include making repairs to the unit, inspecting the unit, showing a unit to potential buyers or tenants, or controlling pests.
To enter a unit legally, you simply need to provide a Notice to Enter (normally 24 hours before entry). Keep in mind that most states consider 24 hours to be the minimum amount of notice you can provide to a tenant before entering their unit. You should also review the section about providing notice in your Lease Agreement in case it dictates a longer notice period for entry (as compared to your state laws).
In the event of an emergency, such as a flood or fire, you do not need to provide notice to legally enter the unit. This is so the issue can be fixed quickly and before any substantial damage occurs.
How to Evict a Tenant
There are times when a tenant may not do what is expected of them as per the Lease Agreement, such as not paying rent or regularly making late payments. In such instances, you will be required to take action to stop the tenant from continuing their misconduct.
Eviction is the procedure that landlords follow to remove a tenant from the rental property. How to Evict a Tenant varies between states, but in most cases, evicting a tenant requires an appropriate reason (for instance, a substantial breach of the Lease Agreement) and proper notice.
It’s also important to know that you can’t take certain actions to evict the tenant unless you obtain a court order. For example, you’re not allowed to shut off the tenant’s utilities, change the locks, or remove the tenant’s things or the tenant themselves without permission from the courts.
Even the best tenant can fall on hard times and struggle to make their rent payments, but continual breaches of the Lease Agreement should not be ignored and should be followed up with a warning (e.g. indicating they have violated their lease agreement) or an Eviction Notice.
How to End a Tenancy
At the end of a lease, a tenant can renew the Lease Agreement, if possible, or move out.
If the tenant is moving out, there are two things to keep in mind: notice and move-out inspections.
If you are ending the tenancy, you will need to inform the tenant with a Notice of Termination. If a tenant is ending the tenancy, they should give you a Notice of Intent to Vacate.
The purpose of providing notice is to ensure the person who received the notice has enough time to find a new tenant (if it’s you as the landlord) or find a new apartment (if it’s the tenant).
Remember, you’ll need to provide a Notice to Enter when showing the property to potential tenants or buyers.
When your tenant first moves in, you will create and sign a move-in inspection report together, and when it comes time for the tenant to move out, you’ll need to complete a final, move-out inspection.
The purpose of a move-out inspection is to document the condition of the property after the tenancy. It is then compared to the initial Residential Rental Inspection to determine if the tenant damaged the property in any way and if you can use part or all of the deposit for repairs.
Using and Returning the Security Deposit
Over the duration of the tenancy, you’ll hold the tenant’s security deposit, and, when the tenant moves out, you’ll have to use or return it.
Using a Security Deposit
To use a security deposit, you will need to have an appropriate reason or it could be contested. For instance, if there are unpaid utility bills, outstanding rent, or damages, you have the right to use all or a portion of those funds to pay those debts or repairs.
You should also list the amounts for unpaid utility bills, rent, and/or repair costs. Keep this list with your records and provide a copy to the tenant.
Listing how you use a deposit provides proof of how each dollar was allocated in the event of a dispute. You can also use it to track repair expenses and perhaps even find or negotiate cheaper repair services in the future (because you’ve already documented the approximate service price and are able to compare).
Returning a Security Deposit
After any debts and repairs costs are paid, the security deposit is returned to the tenant. Each state has different laws on when the unused deposit needs to be repaid, ranging from immediately to 60 days, so make sure you are in accordance with your state laws.
Landlords are legally required to return unused deposits. Remember that you cannot use the security deposit to restore anything caused by normal wear and tear.
It was your right to hold onto this deposit but not to keep it, and not adhering to this rule could allow a tenant to file a claim against you.
Knowing Your Landlord Rights
There are certain rights, such as screening tenants or conducting inspections, that allow you to properly manage your rental property, and taking the time to learn and evaluate your rights in the landlord-tenant relationship can protect you from possible monetary loss.