Tenant Compensation and the Law
The question of tenant compensation is almost entirely governed by landlord/tenant laws. As a property owner, you are obligated to ensure that your rental house is in a habitable condition. This generally means that your rental home is clean and livable. It also implies that your roof keeps the house dry and that the appliances and other elements work smoothly. When the property is unhabitable for whatever reason, that can lead to situations where a tenant may be compensated.
Reasons to Compensate a Tenant
Some of the most common reasons that a property owner may need to compensate a tenant include the following:
Repairs. One of the primary reasons a property owner would need to compensate a tenant is because of repairs. In some scenarios, a property owner may be unable to make quick repairs. Whether you are out of town or otherwise unavailable, if something breaks and causes your tenants to lose the quiet enjoyment of the rental house, you are liable to solve it. If you are unable to perform the necessary repairs, your tenant may do so within the confines of state law. It’s perfect if the tenant asks your permission first, but even if they don’t, there’s a good likelihood that you’ll need to reimburse your tenant for the cost of repairs if they follow the state requirements.
Broken appliances. Sometimes compensation results in conflicts about the condition and functionality of appliances. Failing to take responsibility for broken appliances is one of the primary reasons a property owner gets sued by their tenants. Part of this is because the situation is more complex than it first appears. Landlords sometimes argue that a broken dishwasher, while inconvenient, does not make the entire property uninhabitable. At the same time, a damaged oven or refrigerator is perceived as a significant issue, and tenants may argue that the home is uninhabitable. Let’s say you have provided appliances with the rental house. Suppose one of them fails, and you are unable to repair or replace it immediately. In that case, your tenant may be justified in repairing the machine and deducting the amount from the rent, as prescribed in your state’s landlord/tenant law. This is especially the case if your lease documents assign responsibility for the appliances to you as the property owner.
Cash for keys. On occasion, a property owner may require a tenant to vacate a property before the lease ends. In such scenarios, a landlord may propose to pay the tenant to move out. Property owners sometimes utilize this method to avoid a drawn-out eviction process and encourage a problematic tenant to move on sooner than later. Considering how long it takes to evict a tenant and that you probably won’t be collecting rent during eviction proceedings, offering to pay them to move may actually save you money in the long run.
While the most common, these are not the only reasons you may be required to compensate a tenant. Yet, if you find yourself in a setting where payment is required, don’t forget to document everything carefully and issue the funds on time. If you are pro-rating a rent payment, you need to record it and notify your tenant in writing. If you need to send payment to your tenant directly, opt for a method that gives a paper trail, such as a business check.
While landlord/tenant laws vary from place to place, staying on top of tenant compensation is important in maintaining healthy tenant relations. As a Trophy Club property owner, you’ll need a solid understanding of the landlord/tenant laws that control compensation to ensure that you are in full compliance. Real Property Management Meridian can help you prepare a lease to cover these issues or even manage your property entirely. Contact us today to get more information.
Originally published on October 9, 2020