Don’t let an avoidable legal pitfall leave you with high fees and a headache.
Most landlords have a lot more going on in their lives than just managing a property. And when you’re already juggling a full-time job and your family with managing a property, the last thing you need is a legal issue. Legal issues are time-consuming, headache inducing and downright expensive, and in our last blog, we went over a few common legal pitfalls all landlords need to be aware of. Here are a few more:
#6. You mix business with pleasure in your checking account.
If you have a rental property, it’s important to make sure that you keep all of the revenue and expenses related to that property in a separate bank account than your personal income and expenses. Why? It will make your life easier from a bookkeeping standpoint, which is also essential in case you end up having to face an IRS audit. Also, you as an individual and you as a landlord are seen as two separate legal entities, and if you operate out of a single bank account, there could be tax consequences.
#7. Failing to follow security deposit laws.
There are many laws in California surrounding security deposits. For example, you cannot charge more than two months’ rent for a security deposit on an unfurnished home, or three months’ rent if it’s a furnished home. You also have to ensure that you return the security deposit within 21 days of the tenant surrendering the property, and you must include an itemized statement of any deductions made. Failing to comply with any of these laws could result in legal trouble.
#8. Not disclosing health or safety hazards.
If your rental property has mold issues, or it contains any previous or existing, known, lead-paint hazards, you must disclose that information to your tenants. These hazards can cause long-term health issues, and it is illegal to hide this kind of information from your tenants.
#9. Failing to learn about a tenant’s criminal history.
It’s important to ensure that your tenants pass criminal background checks before they sign a lease agreement for your property. Not only does this ensure that you know who is living in your home, but it also protects you from liability. Although the law can be murky, as a landlord, you have a duty to protect your residents from known risks, and if you have other residents on the same property, you need to know about the criminal backgrounds of anyone else who could be moving in.
#10. Not auditing your processes for new regulations.
Local, state and federal regulations for the real estate industry are constantly changing. As a landlord, it’s up to you to stay on top of all of those changes. The best way to ensure that you remain in compliance is to perform frequent audits on your existing processes and procedures.
Let us help you avoid legal pitfalls.
As you can see, there are many legal pitfalls landlords commonly face, but by hiring the right property management company, you can avoid them, as well as the hassle and expense that comes with them. At Stowers Real Estate, we proudly serve Walnut Creek and the surrounding areas. Contact us today to get started.