While you may look to your rental properties as a long term investment and a reliable source of income, some opportunistic tenants may feel they should have a piece of the pie as well.  Just by the mere fact of being an owner of rental property, your chances of being sued greatly increase over those of the general population.

For several years, my company was the target of some local tenant attorneys looking for a quick buck.  We’d buy or take over management of a run-down property, intending to renovate it, and before we could even get our plans filed with the City, we were hit with a trumped up habitability lawsuit.  It was through fighting these battles that many of my rental policies and practices were formed.  Here are three key practices that will help you stay out of court, or should you find yourself on the other end of a legal claim, help you likely prevail or at least be in a strong position for settlement. 

Document, Document, Document

Lack of good documentation is probably the biggest reason landlords lose cases when sued.  You must assume you will be viewed as ‘guilty until proven innocent’ in court and act appropriately.  In your dealings with your residents, make sure you document the reasons for your decisions and for your actions. 

One of the easiest ways to create documentation is to write a follow-up email after an important conversation with a tenant.  Even if you don’t want to send the email, you should write one explaining the issue, your decision, and next steps each party is supposed to take.  Then send it to yourself.  At least that creates a date and time stamp on your actions and intentions and creates some record of events.

If you don’t like to write, you can record yourself speaking into a microphone or video camera about the event.  Then just keep a log of your recordings.  But remember to do something to date and time stamp your notes.  Even for those who are writing, when appropriate, attach pictures.  This is especially appropriate for maintenance issues or other areas where visual documentation of the condition would be important.  The old saying that ‘a picture is worth a thousand words’ exists for a reason.

Keep the Property Safe and in Good Condition

As a landlord, you are required to keep your property in a safe and habitable state at all times.  Perform inspections regularly, and keep the results of those inspections on file.  Any hazardous issues you see should be repaired as soon as practical and dangerous areas roped off with caution signs conspicuously displayed.  And photograph this, in case someone ignores your warnings and gets themselves hurt.

I recommend doing in-unit inspections at least annually, although 2 times per year is better.  A lot can happen in a year, and many times tenants will not report issues they’ve helped create - such as mold or mildew build-up in a bathroom because they never turn on the vent fan or open the window.  Regular inspections will allow you to catch these items while they are still small and prevent potential liability. 

Document what you find on the inspections and do any needed repairs.  If you see something tenant caused, fix the issue and instruct the resident on how to prevent it from coming back.  If you experience recurring issues, you can choose not to renew that person’s lease.  If your property is in a  ‘just cause’ jurisdiction, your good documentation can help you to terminate the tenancy. 

Even if the tenant caused the damage, it is your responsibility to get it repaired.  You may have the right to charge them for the repair (check your lease), but you will create liability for yourself if you do not repair the damage.

Make sure you have a system in place to track all maintenance requests, their status, and when they are complete.  Also, make doing a follow up call part of your procedures.  Years ago, we had a flooring installer remove a tenant’s toilet in order to put down new vinyl, but he did not reinstall the toilet because he didn’t have a wax ring in the truck.  So, unbeknown to management, this toilet sat in the tenant’s tub for several days (luckily, the resident had two bathrooms in the unit).  Needless to say, a follow up phone call would have prevented several days of frustration this tenant experienced until we found out about it.

Maintain a Good Relationship with Your Tenants

Sometimes avoiding a lawsuit is simply being responsive to tenant requests and having a good relationship with your tenants.  Few people want to go to court.  Many times, they only do that when they feel no one has heard them. 

You don’t want to be their best friends, but treating tenants as valuable customers whose concerns are heard and addressed will go a long way to preventing you from ever showing up in court.  You always want to keep things professional.

Also, when unscrupulous tenant attorneys who are looking to make money off of you, they usually start by looking for some disgruntled tenants, or by trying to get tenants to manufacture evidence against you.  Having good relationships with your residents, or at least some of them, will allow you to nip this action before it has a chance to take hold.  We’ve been warned by tenants at some properties that attorneys and others were attempting to cause problems.  If you have a good relationship with your tenants, the attorneys will move on to easier prey.

A little bit of planning can go a long way…

You may feel you are a good owner (or manager) and that these types of issues won’t happen to you.  But remember, many legal actions come in ‘retaliation’ to evictions.  Don’t give your disgruntled tenant a chance to go after you.  Before filing any legal notice, be ready.  Inspect the unit, do necessary repairs, and make sure you have your documentation in place.

You have responsibilities and obligations to your tenants.  Take your time to get everything right before acting.  This is one area where a little planning, positioning, and prevention can go a long way.  Remember, if nothing else, that no one wins in a legal battle, except the attorneys.  Even if you are in the right, you will not get anything.  Your tenants likely do not have assets.  

Pay attention to complaints.  Don’t dismiss anything as trivial until it is investigated.  If you see trouble brewing, contact your attorney.  Remember, just one lawsuit can seriously set you back.