Wise real estate investors know the importance of guarding against lawsuits. You may already employ an asset protection strategy to protect your investments. Even so, it is always a good idea to be familiar with the laws governing landlord-tenant relationships in your state. You can search your state’s website to read the text of the most current statutes, but we realize you’re busy and probably don’t want to spend your free time deciphering legalize. So we’re here to help you understand the most common types of state statutes in plain English.
Federal Laws All Real Estate Investors Should Know
There are federal laws that apply to all landlords and tenants, regardless of where they live in the United States. If you’re a landlord, here are some of the most critical federal laws to be aware of:
- Civil Rights and Discrimination Laws. The Fair Housing Act prohibits housing discrimination. This means a landlord cannot deny a person housing based on race, ethnicity, sex/gender, sexual orientation, religious beliefs, disability status, or any other protected class.
- Lease Agreements Cannot Break the Law. When a lease agreement is in violation of a state or federal law, the law is the ultimate authority. For instance, if you live in a state like New York that guarantees tenants’ rights to sublet their homes, you cannot expect a lease stating that tenants may not do this to be enforceable.
- Landlords Must Keep Housing Habitable. Landlords are always responsible for providing a safe place with the basic necessities for living.
- Tenants Must Pay Rent. Landlords may begin the eviction process if a tenant fails to pay rent.
While these laws are universal, the details vary depending on state. Let’s dive into some common statutes and how they are worded in different states.
Landlord-Tenant Laws That Vary By State
While each state has hundreds of pages of law governing the rights and obligations of both landlords and tenants, we’re going to cover some of the basics here. Many of these are the same types of a statutes, with different details. Below, we will cover some of the most common types of statutes and provide resources for you to review how they may affect your rental properties.
Security Deposit Limits and Lawsuits
Nearly every state has regulations regarding security deposits. Some of the most common types of statutes will place a hard limit on how much a landlord can require a tenant pay for a security deposit. Ordinarily, the limit is calculated based on rent. While some states will have a dollar amount maximum security deposit, many more simply say deposits may not exceed 1-2 months worth of rent.
Security deposit statutes also outline the circumstances under which a landlord may keep the deposit. Similarly, each state has a finite limit on how long a landlord may take to return a security deposit. These can range anywhere from a week to 60 calendar days.
Disputes over security deposits and their return typically occur in Small Claims Court. Most states will restrict the amount of money that a tenant can recover in damages to anywhere from $1,000-$15,000. Some states, such as Connecticut, have no limit at all on how much a tenant can recover in these types of lawsuits. Occasionally, suits are brought in different venues. In Florida, these types of disputes are settled by the Magistrate’s Court. Similarly, security deposit suits in Delaware are handled in Justice of the Peace Court.
Late Rent and Bounced Checks
Bounced check and late rental fees are a common practice. The purpose of these laws is to encourage tenants to pay rent in a timely manner. Some states allow for a “grace period” for tenants to pay late rent before eviction proceedings begin. Florida and Georgia have both guaranteed tenants a right to a three-day period. This allows the tenant to make the payment without threat of immediate eviction.
Eviction Issues: How Long Do Tenants Have to Move Out?
Some common causes of eviction include:
- Failure to pay rent. Some states even codify how many times a tenant may be make late or incomplete payments.
- Repeated lease violations inside a one-year period or intentional property damage may result in eviction.
- Intentional property damage.
- Engaging in a criminal act on the property.
Regardless of your location, you will generally have some time to remove your belongings from the property. How much time will depend on your state’s eviction statutes.
“Repair-and-Deduct” or Other Living Condition Issues
If your home needs a vital repair (such as for a leaky roof or a water heater), it is generally the landlord’s obligation to attend to this. If a landlord neglects these responsibilities, many states allow tenants to deduct the cost of making a necessary repair from the rent. This concept is known as “repair-and-deduct” rights. Tenants can even sue the landlord for the cost and inconvenience caused if they are forced to make such repairs. Repair-and-deduct rights are not universal. Check this list of state statutes to see if your area offers these rights.
Bottom Line: Understand Your State Laws
That wasn’t too painful, was it? Of course, the law is always adapting. Everything that is factual at the time of this writing is subject to change, and by no means is this a conclusive list of the real estate law that may affect you. It would be impossible, for instance, to account for all local ordinances in this space. For this reason, we recommend that real estate investors build a dream team that includes a CPA and an attorney to ensure total legal and tax compliance. A qualified real estate attorney can help you understand the nuances of landlord-tenant law as they apply to your particular investments.
At Royal Legal Solutions, our attorneys aren’t just lawyers, but fellow investors. We’re here to help you understand and comply with the legal obligations you face as an investor. Begin building your real estate dream team by consulting with one of our real estate attorneys today.