What to know if a tenant rents a home from you
Your pre-occupancy responsibilities
When you're choosing a tenant, you must treat all applicants equally and follow all Fair Housing Act laws, which prevent housing discrimination based on race, religion, disability, familial status and other personal factors.1 Use an application that an attorney or a licensed real estate agent has approved to ensure you're compliant with local and national laws.
It's smart to run a credit check and establish guidelines for income.2 You'll want to make sure that the tenant is in good standing, has the income needed to meet the rental payments and hasn't been evicted in the past.3 Be sure to disclose your actions to the prospective tenant and have them sign a release agreeing to the terms of the application process.
Use a lease agreement that addresses all state and local laws, as well as federal regulations. In court, the state's law will be upheld, even if your lease states something else.3
Spell out all requirements of the tenant in the lease.4 Also list your responsibilities as landlord. During the course of the lease, document all service requests, including when you received and fulfilled them. Keep track of all phone calls, text messages and other correspondence.
Ask the real estate agent or property management company, should you choose to use one, to do a walk-through with the tenant. This allows the tenant to document the condition of the property, learn how to use all systems and appliances in the home and find out whom to contact for issues.3
Use a checklist to document any wear and tear on the property, and take videos throughout the space to have a record of its condition. Talk to your insurance professional about obtaining documentation regarding testing for mold, radon and other potential issues.5 While laws vary, it's always good to have documentation on your side in case a future issue with a tenant arises.
Your maintenance responsibilities
Once your tenant moves in, you're responsible for upholding all requirements of the lease agreement. All maintenance and issues of the property and structure are your responsibility, and it's up to you to keep the property habitable for tenants.6 Before the tenant moves in, formulate plans for how you’ll address problems in a timely manner and how you’ll proactively prevent issues.
In most cases, you'll want to retain control of work performed on your property. Maintenance includes the systems of the property such as HVAC, electrical and plumbing, but can also include landscaping, appliances, and features such as pools.7
Provide tenants with contact information that's clear and allows them to get in touch at any time. Consider using a management or answering service to field calls 24 hours a day. Emergencies happen, and response time is critical not only for fulfilling obligations to your tenants and keeping them safe but also for protecting your property. Understand local and state requirements for basic needs such as water and heat so you can respond in accordance with those laws.3
Set up a preventive maintenance schedule to check all major systems on the property. Check the HVAC, electrical and plumbing systems, and conduct checks on the roof and all stairways.7 Keep landscaping clean and neat. Check for roots that people may trip over or limbs that could fall and create a hazard. Make sure that smoke detectors, carbon monoxide detectors, alarms and fire extinguishers are updated and tested on a regular schedule.7
The importance of insurance
Discuss your insurance coverage with your insurance agent.8 You may opt for additional coverage for potential issues such as injuries the tenant suffers or loss as a result of tenant negligence.8 Remind the tenant of the importance of purchasing renters insurance, too.
Navigating tenant-landlord laws requires professional knowledge. Work with a real estate attorney, a licensed real estate agent and an experienced insurance professional to help protect you and your property.
Limiting your liability is a clearer task when you understand your responsibilities as a landlord. Review your insurance coverage before starting the search for a tenant. Meet with your insurance representative and attorneys to structure a plan that protects this additional revenue stream and your property.
1 "Housing Discrimination Under the Fair Housing Act," hud.gov/program_offices/fair_housing_equal_opp/fair_housing_act_overview (accessed Aug. 15, 2020).
2 "Is Becoming a Landlord More Trouble Than It Is Worth?" Lisa Smith, investopedia.com/articles/mortgages-real-estate/09/so-you-wanna-be-a-landlord.asp (June 19, 2019).
3 "What You Should Know About Tenant Rights," Devon Thorsby, realestate.usnews.com/real-estate/articles/what-you-should-know-about-tenant-rights (Jan. 23, 2020).
4 "How to Choose the Best Tenant for Your Rental," Erin Eberlin, thebalancesmb.com/the-right-tenant-for-your-rental-2124984 (June 25, 2019).
5 "Landlord Responsibility for Radon in Rental Housing," Marcia Stewart, nolo.com/legal-encyclopedia/landlord-responsibility-radon-rental-housing.html (accessed Aug. 14, 2020).
6 "Landlords' Duties: Repairs, Maintenance, and Notice to Tenants for Entry," realestate.findlaw.com/landlord-tenant-law/landlords-duties-regarding-repairs-maintenance-and-to-provide.html (Feb. 10, 2020).
7 "Buying a House With Tenants: A Quick Guide," Jean Folger, investopedia.com/articles/investing/012117/buying-house-tenants-quick-guide.asp (June 25, 2019).
8 "Renting Out Your Home? Get Landlord Insurance," G. M. Filisko, houselogic.com/finances-taxes/home-insurance/renting-out-your-home-get-landlord-insurance (accessed Aug. 15, 2020).
This information is designed for informational purposes only and was obtained from sources believed to be reliable. It is not legal, tax or any other sort of advice, nor is it a substitute for such advice. Nationwide Mutual Insurance Company, its affiliates and their employees make no warranties about the information nor guarantee of results, and they assume no liability in connection with the information provided. Nationwide, the Nationwide N and Eagle, Nationwide is on your side and Nationwide Private Client are service marks of Nationwide Mutual Insurance Company.