Investing in a rental property can be a great source of income, but it also comes with a wide number of responsibilities. Investors often think only of the profit to be made from rental properties without ever considering either the responsibility or the liability. While no one can be prepared for everything, you can simplify your investment if you do your due diligence to ensure you know in advance exactly what you are getting yourself into. Here are 5 key responsibilities of a landlord and the potential consequences if they fail to follow through.
1. Keep the Property Safe and in Good Working Order
If you own property in an area where it snows or regularly has inclement weather, it is generally your responsibility to keep parking areas, driveways and walkways plowed and clear of snow and ice. It also means paying prompt attention to cracks in sidewalks, broken stairs and even plumbing issues. If a tenant notifies you that there is a drip or a leak coming from somewhere and they slip and fall, you could be held liable. This also means ensuring all buildings and units are up to code and have proper safety equipment such as smoke detectors, fire alarms and in some cases fire extinguishers or other safety equipment.
If you own a larger building with elevators, it is your responsibility to keep elevators running smoothly. Any and all major systems and appliances are also your responsibility. This includes plumbing and electrical systems as well as major appliances such as water heaters, furnaces, A/C units, laundry facilities, refrigerators, stoves and ovens and even microwaves if they come with the unit. Doors and windows all need to close, seal and lock properly and any security systems need to be fully functional and operational.
2. Properly Screen Tenants
Of course, you will want to screen tenants to be sure they can pay their rent on time and are not felons, but if you own a multi-unit property building, just remember that you are responsible for creating quality neighbors. Part of making sure your rental rents fast and stays that way is nurturing a healthy culture of tenants. You will also be responsible for rental applications, background checks and all lease agreements.
3. Keep the Property Clean, Neat and Tidy
In some cases, such as if your property is a rental home, renters may be responsible for caring for lawns and gardens. In the case of many duplexes, multi-unit dwellings or apartments, however, it is generally the responsibility of the landlord to tend to or arrange for all landscaping to be cared for. Peeling paint, broken gutters or broken mailboxes are also the responsibility of the landlord to keep maintained.
4. Keep Security Deposits Secure
While regulations vary from state to state, ultimately, it is the landlord's responsibility to handle security deposits properly. In some states, security deposits must be kept in a separate interest-bearing checking accounts and tenants must be notified where it is being held. Luckily in Idaho, as landlord, you’re not required to do this.
Being a landlord carries with it a great deal of responsibility. Many landlords opt to simply have a property management company manage their properties for them. Not only can this free them up for other things, but it also helps minimize their liability.