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Real Estate
4 Illegal Property Management Practices that Can Get You in Trouble
January 7, 2022
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Sometimes, knowingly or unknowingly, property managers conduct illegal practices, which can get them in trouble. Here are four illegal property management practices to avoid.

4 Illegal Property Management Practices to Avoid

1.   Evicting the Tenant for Unpaid Rent

The primary reason for investing in a rental property is getting rent and having a positive cash flow. But when a tenant doesn’t pay the rent on time, it becomes frustrating for the owner.

If you don’t receive the rent for months, you’ll have to evict the tenant. However, you cannot just kick the tenant out of your house. You’ll have to follow legal procedures to evict the tenant correctly. Sometimes, in this type of scenario, many landowners try to use muscle to keep the tenant out of the property. But if you do that, you’ll be violating the law, and you may find yourself in a courtroom battle. That’s why if your tenant isn’t paying the rent, you’ll have to follow all the legal measures for evicting.

2.   Evicting the Tenant because You’re Selling the Property

As an owner, you can sell your property at any time. But selling the property could not be the reason to evict tenants before their lease expires. And if you do so, you’ll be violating the tenant’s rights.

If your current tenant has a few months or years left in their lease contract, you’ll have to ensure that they can live in that property until the lease period is over. If the new property owner wants a new tenant, the new tenant will have to buy out the current tenant lease.

Whatever you decide, you’ll have to document it before all the parties, including the previous and current owners and tenants.

3.   Neglecting a Property Inspection

Before renting out your property to a new tenant, you’ll have to do a property inspection by a reputed property inspection company. However, many property owners try to avoid this step because it can cost you around couple of hundred bucks for each property inspection. But in many states, it’s mandatory for property inspection each time you rent out your real estate. Besides, when you do a property inspection, it gives a clear idea about the actual condition of your property.

You may have to do several property inspections such as fire inspection, habitability inspection, occupancy inspections, and so on.

As a responsible landowner, you should never neglect the property inspection. Because if you do, you’ll have to spend 10x of the inspection cost in legal fights.

If your municipality does not require a formal inspection; your property manager should inspect the property before and after every tenant.

4.   Asking an Unreasonable Security Deposit

In some states, it’s illegal to ask for a security deposit without valid reasons. Besides, if you ask for a security deposit, it must be within a reasonable range. Generally, you cannot ask for more than twice the monthly rent. Again, the security deposit varies from property to property. For example, if you have a family house, you may be able to ask for more of a deposit than a single room apartment. It’s advised to check the local regulations about the security deposit.

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Richard Nevis

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