Landlord Rights Background
A residential landlord needs more than just a lease to maintain a profitable business venture. Screening tenants, understanding the laws surrounding repairs, tax breaks, privacy rights, hazard disclosures and the regulations revolving around a termination of tenancy will also prove fundamental in maintaining the health of a landlord’s business. These variables, when agglomerated, are referred to as landlord rights.
Landlord rights are the individual privileges awarded to individuals who rent properties to tenants. Landlord rights are federally mandated and state implemented; as a result, they will fluctuate based on state interpretation. That being said, federal law institutes a principal framework concerning landlord rights for all states to follow and apply accordingly.
Landlord Rights: Liability Laws
In the majority of states, a landlord will be exposed to some degree of liability regarding crimes committed to or within their properties. Landlords typically possess some degree of responsibility regarding protecting their tenants from criminal acts. These legal responsibilities stem from statutes, ordinances, building codes, precedents and state law. A landlord will typically be held liable when a crime occurs on a rental property where a similar crime occurred to the same property in the past. In summation, a landlord, in most states, must make an effort to curb illegal acts to their rental properties.
Landlord Rights: Screening Tenants
Landlord rights state that all landlords have the right to ask the permission of a prospective tenant for the retrieval of credit reports and civil/criminal background checks. If the prospective client refuses to partake in these checks, the landlord may choose to reject the application or may ask that the information be reflected on their rental application. An experienced landlord will inevitably ask prospective tenants to fill out an application that includes the following information:
2. Past bankruptcy filings or evictions
3. Driver’s license and Social Security numbers
4. Statement of income, credit history and employment history
Before accepting a tenant application, a landlord, according to landlord rights, is also permitted to contact the prospective applicant’s previous employers, landlords or other references. A landlord may contact these parties to verify income, bank account information, employment and to obtain credit reports.
The credit report is the most important document associated with the screening process; it will indicate a potential tenant’s borrowing and repayment history, as well as information concerning judgments and bankruptcy filings. To avoid violating fair housing laws, a landlord must be sure to remain fair and consistent during the screening process. If a landlord requires a credit report from one applicant, he/she must require credit reports from all applicants.
Landlord Rights: Rental Agreements or Written Leases
The rental agreement or lease is the primary legal document of the tenancy; it establishes a series of important issues, including:
• The amount of security deposits and rent the tenant is required to pay
• The length of the tenancy
• The number of tenants who are living on the property
• Who is responsible for paying utilities
• Whether the tenant is permitted to sublet the rental property
• Information regarding the landlord’s ability to access the property
• Information regarding attorney fees and responsibility for fulfilling said fees if a lawsuit concerning the implementation of the lease or meaning is put into question
• Information regarding the property’s policy toward pets
A rental agreement and lease should always be affirmed in writing; however, a number of states will enforce spoken agreements for a certain length of time.
Landlord Rights: Terminating Leases or Rental Agreements
A landlord is permitted to make deductions from a tenant’s security deposit, if an allowable reason is realized. The majority of states require a landlord to provide a written itemized accounting of deductions for all unpaid rent and for repairs and necessary cleaning that arise from abnormal use or exceed normal wear and tear.
The deadlines will vary based on state law; however, landlords are typically given a set amount of time before they are required to return deposits—two weeks to one month after the tenant movies out (by eviction or voluntary) is the average timeframe associated with the return of a security deposit.
Landlord Rights: Tax Deductions
Millions of landlords in the United States fail to take full advantage of their landlord rights, primarily those associated with available tax deductions. Rental properties provide more tax benefits than nearly any other type of investment. Typically, these investments represent the difference between earning a profit and swallowing a loss. Listed below are the landlord rights associated with the most common forms of tax benefits:
1. Interest: Typically a landlord’s largest deductible expense. Examples of interest that a landlord can deduct include: mortgage interest payments on loans used to purchase or improve properties and interest attached to credit cards for services or goods used during a rental activity.
2. Depreciation: The actual cost of a rental property is not fully deductible in the year which the landlord pays for it. However, a landlord may recoup the costs of real estate purchases through depreciation. A portion of the cost of the rental property over several years will be deducted.
3. Repair Costs: The cost to repair rental property will be fully tax deductible in the year which the repairs were finalized. Repainting, refurbishing floors or gutters, plastering, replacing broken windows and fixing leaks are all tax deductible repairs awarded as a landlord right.
4. Insurance: Landlord rights permit a landlord to deduct the premiums they pay for almost all insurance associated with a rental activity. This will include theft, fire and flood insurance for the property, as well as liability insurance. If the landlord employees individuals to provide upkeep, they are permitted, according to landlord rights, to deduct the cost of their workers’ compensation and health insurance.
5. Local Travel: A landlord, according to landlord rights, are entitled to tax deductions whenever they travel anywhere for their rental activity. For instance, if a landlord drives to a rental property to deal with a tenant complaint they can deduct their expenses associated with travel.
6. Long Distance Travel: If a landlord travels overnight for a rental activity, they are permitted, according to landlord rights, to deduct their hotel bills, airfare, meals and other expenses. IRS auditors will evaluate these deduction efforts as stringently as possible—a number of landlords get caught attempting to claim these deductions without providing proper documents or records to justify the request.