How to Avoid a Lawsuit as a Landlord

Real estate is a great way to invest your money for a great return. There are many ways to make money from such an investment, including renting out your property. You can let someone else pay your mortgage and accrue value so that you can sell the property one day for even more profit.

But being a landlord isn’t all fun and games. Along with the regular maintenance and repairs that must be made, landlords must also consider the risk of potential lawsuits. Without proper due diligence, landlords can face significant liabilities that could result in a lawsuit.

“Landlords and tenants do not typically enter into their relationship looking for conflict,” says Erin Eberlin of The Balance. “Sometimes, however, problems develop that cannot be easily fixed by a phone call or email. In these situations, a tenant may consider suing their landlord to resolve the issues in court.”

Once your tenant has filled out their free rental application and begun moving in, you want to be on your toes at all times to avoid any problems with the property that could end in a lawsuit. Here’s what you need to know to avoid this eventuality.

Limit liabilities

Consider all the potential liabilities attached with a certain property before you let a tenant live there. Most importantly, remove any safety hazards from the property. If you don’t, it can be considered negligence which will work against you in a lawsuit.

If you fail to remove hazards from your property and it results in an injury, a tenant is perfectly justified in contacting a personal injury lawyer and suing you for compensation. Doing your due diligence to prepare the property ahead of time will keep you and your tenant safe.

This includes cleaning up your property and removing debris and other items that could be a tripping hazard. Install safety features like handrails on stairs and fix cracked or heaving sidewalks. Remove things like wood-burning fireplaces, gas stoves, play structures, and swimming pools that could potentially end in disaster.

Focus on The Lease Agreement

When you have a strong lease agreement, you’re protected against a lot of potential lawsuits.

“Having an ironclad, detailed lease agreement that details how every potential circumstance that might arise between you and your tenant will be handled is an absolute must,” warns real estate expert Drew Sygit of BiggerPockets. “Every item that comes up between the two of you that isn’t covered is a potential lawsuit waiting to be lost.”

Rather than simply downloading a lease agreement from the internet, draft one from scratch. List protections for all the liabilities you can think of. Then, have an attorney who specializes in rental real estate look it over and confirm its viability. This is one of the best protections you can have from lawsuits.

Screen Tenants ahead of Time

Tenant screening has become a gold standard in rental properties, and those who fail to properly screen tenants before allowing them to move in are often sorry. Well-screened tenants typically offer few financial difficulties. They pay their rent on time and cause few problems.

On the other hand, skipping the screening process can result in tenants who keep the property in good repair. They’re less likely to cause hazards that can result in a personal injury suit against you. Additionally, they’re more likely to work with you to resolve a problem rather than jumping straight to a lawsuit.

Document Everything

If you can keep good records of a property’s condition and repairs, you’re far less likely to run into issues. Every time a tenant moves in or out, document the state of the property with pictures and maintenance reports.

Keep copies of all your receipts, emails/texts from tenants, and verbal information was given to you by tenants. This information could protect you from a potential lawsuit down the road where a tenant claims something was your fault when it really wasn’t.…