12 Illegal Property Management Practices You Should Avoid

There are many different types of landlords. Some are experienced and have been renting properties for quite some time, while others are fairly new at professional property management. Whichever you are, there are still many property management rules and regulations that are essential to understand in order for you to succeed. This article will provide you and all landlords, despite experience, with what property management practices you should avoid. If you are a landlord looking for new investment properties, click here.

Below will discuss the 12 most important property management issues to avoid because it makes you seem like a bad landlord, as well as them potentially being illegal property management practices.

1. Charging More Rent in the Middle of a Lease

There are many reasons in which a landlord may want to increase rent. Sometimes they want a tenant out of a specific property or sometimes they just feel as though they are not charging enough. While landlords hold the right to increase the rent when the lease needs to be renewed or when someone is beginning a new lease, this isn’t so much the case during the middle of an individual’s lease. For the most part, you must abide by the terms signed upon in the signed contract. Sometimes, if it is agreed upon by both parties, rent may be increased in order to property improvements or any other services. In some states, though this is prohibited by the law. 

Landlords may also want to increase rent so current tenants cannot afford to pay it anymore, and new tenants who can are able to move into that space. This situation is seen commonly in rent-stabilized apartments. In this case, rent can only be increased by a landlord by a certain percentage each year to protect these tenants’ rights. This means certain tenets might be paying far less than others. As a landlord, you must only increase the rent as much as the law allows you too and anything more could break property management laws. This is one of the most common illegal property management practices.

2. Evicting a Current Tenant Due to a Sale

As a landlord, you reserve the right to sell a property whenever you decide to. You must take into account current tenants’ rights before following through with a sale though. This might mean either ensuring the current tenants can stay in the property until their specific lease is over or having the new tenants buy the current ones out of their lease. It would violate the current tenant’s rights to just evict them once they sign the new one. Any agreement that comes up with, whatever it may be, should be written out and signed by all parties involved to ensure everyone is within their rights.

3. Entering a Specific Property Without Notice

If you are a landlord, you must respect your tenant’s rights to privacy. In almost all circumstances, you must give proper notice to a tenant if you are planning on entering their property. The only case in which a landlord could just enter a property without notice is during an emergency. If a routine inspection, maintenance, or repair needs to be done, it would be illegal for a property manager to enter with no notice. 

You also should be aware in some states, there is a certain timeframe in which you must provide notice. This could be a few hours to a few days. No matter how much advance you need to tell your tenants if you are planning on dropping by their property, you should always seek out the tenant’s consent before they drop by, or at least a confirmation that they received your message.

4. Not Getting the Proper Inspections

Another common illegal property management practices include landlords not getting the required inspections complete before a tenant moves in. It is essential you complete these inspections before someone moves into a property as most states require proof of an inspection being completed. Some possible types of inspections that would need to be done are

• Habitability inspection
• Certificate of occupancy inspection
• Fire inspection

Landlords may not want to do these inspections because they can cost upwards of a few hundred dollars. This would be nothing compared to the cost of getting caught not doing these inspections though, so it is better just to complete them in the first place.  It is best not to fall into these illegal property management practices.

5. Evicting a Current Tenant Because They Don’t Pay Rent

Having a tenant that doesn’t pay their rent regularly could be one of the most frustrating things for landlords. Your first instinct is to evict them so you can fill that space with someone who will pay their rent. You must make sure you take the right legal steps if you want to evict your tenants. Some landlords try to avoid this lengthy process and attempt just to lock their tenants out of their space. This is an illegal property management practice. Make sure you take the correct legal steps to evict a tenant or you could get yourself into legal troubles yourself. 

6. Evicting a Current Tenant Because They Cause Problems

Another common reason landlords might want to evict a tenant is that they are causing problems. This could be problems towards other tenants such as harassing them, making loud noises keeping people up at night, or being rowdy in general. They also could just be causing problems in general such as breaking things in the building or causing a mess all the time. This would make any landlord upset, and want them to move out of their building because it could drive other tenants away or keep new people from signing leases. It could also give you a bad reputation overall which could prevent leases in the future. 

If you want to evict them from the property you must follow the correct legal steps to do so. An unprofessional property manager may just want to try and lock them out of their rooms to keep them from coming back, but this action is on the list of illegal property management practices and could cause them to be even more destructive. Follow all the necessary legal steps to evict a disruptive tenant from their property. 

7. You Can’t Have an Inconsistent Screening Process

You need to ensure that you have the same screening process for every applicant. Different screening processes could be breaking the law. The US Department of Housing and Urban Development passed The Fair Housing Act in which protects and prohibits discrimination against race, nationality, color, region, sex, disability, and familial status. If you are screening applicants differently based on any of these factors you are participating in illegal property management practices. This could get you in serious legal trouble and may prevent you from being a landlord in the future. Make sure to practice the same screening process for all applicants in order to abide by the Fair Housing Act and avoid any discrimination.

8. Making Illegal Deductions From the Security Deposit

Sometimes, a landlord may try to keep or use a tenant’s security deposit for things other than its purpose. This could be for fake repairs, fake branches in the lease agreement, or for their own persona use for a new investment property, and just tell them they used it for other things relating to that tenant. It is illegal for a landlord to use a security deposit for anything other than its intended use. Some valid reasons for landlords to use a security deposit are 

• To repair unpaid rent or damage to the unit
• To replace anything a tenant may have taken that wasn’t theirs or specific in the lease

9. You Can’t Charge Too Much for a Security Deposit

Most landlords lease their properties so they can have an income property. This means they are trying to make the money back that they used to pay for the property, as well as make additional money to generate an income. Sometimes, landlords try to charge much more than they are allowed to for security deposits, as they plan to try to keep these once the tenant’s lease is over. As discussed before, it is illegal to try to keep a security deposit for reasons that are not valid, but it is also illegal to charge too much for these security deposits. Most states have regulations stating how much you are able to charge for a security deposit. Typically, you are not allowed to charge more than the rent. 

How much you can charge for a security deposit also depends on the kind of property. Family homes usually have a higher security deposit as the property value is higher. No matter what sort of property you are leasing out, it is a good idea to check with the regulations of your state on how much you are allowed to charge for a security deposit to ensure you are not doing any illegal property management practices.

10.  You Cannot Refuse to Make Repairs

One of the responsibilities of a landlord is to make sure the tenant’s space is safe to live in. It is required of a landlord to make sure each property is habitable to live in. This means it is illegal to refuse to make repairs to a tenant’s space that would affect their health or safety. As these repairs can sometimes get costly, landlords may hire unlicensed people to attempt to do these repairs in order to save money. This is also illegal, professionals need to be called in to make any repairs that affect the health and safety of a tenant. 

Landlords might also attempt to cover up this issue rather than permanently fixing it. If caught, this could be extremely problematic for you and legal actions can be taken against you. If there are any issues that can affect the safety and health of any of your tenants, make sure to fix the issue in a timely manner and hire professionals to do so. 

11.  You Cannot Ask for More Rent if Property Expenses Increase

Sometimes during the duration of an individual lease, the cost of things such as property taxes, utilities, or maintenance increases. Landlords might not want to pay these expenses, as it takes away from their income on an investment property. Some landlords may try to increase the cost of rent during the middle of someone’s lease or hire people who are not professionals to complete maintenance in order to try to save some of this money. Additionally, landlords may decide to not do required property inspections to save money from the increase of property expenses. All of these would be considered illegal property management practices. Landlords are not able to do any of these things in order to save money to use in other places.

12. You Cannot Retaliate Against Tenants Who Complain A Lot

Landlords have many onsite property manager rights including dealing with tenants who have a lot of complaints. Although this may get quite annoying to deal with, you must handle all of these complaints professionally. You cannot just file an eviction for a tenant who may have more complaints than another. You also cannot retaliate against the tenant in any way, this means you cannot alter the living conditions of their property to make the living conditions uncomfortable or refuse to make necessary repairs that could compromise the tenant’s safety and health. You must continue to handle every complaint from a tenant professionally no matter what. 

Conclusion

If you are a landlord you should make sure you are not doing any of the illegal property management practices mentioned above. Participating in any of these practices could cause you to get into legal trouble with the state your property is located in. Doing any of these practices could also cause you to lose ownership of your properties, and prevent you from leasing new properties in the future. If you are a landlord and a real estate investor, make sure to stay clear of any illegal practice. Additionally, to start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.