5 Legal Considerations Before Leasing Your Property

Protecting Your ROI Legally

A great Cap Rate means nothing if a lawsuit wipes out your profits. Being a landlord involves significant legal responsibilities. Before you lease your property, you must understand the legal landscape to protect your investment.

1. Fair Housing Laws

The Fair Housing Act prohibits discrimination in housing based on race, color, national origin, religion, sex, familial status, or disability. You must ensure your advertising, screening process, and leasing criteria strictly adhere to these federal laws, as well as any additional state or local protections.

2. The Lease Agreement

Your lease is your primary legal protection. Never use a generic template without reviewing it. A strong lease should clearly define the rent amount, due dates, late fees, maintenance responsibilities, pet policies, and the eviction process. Consider having a local real estate attorney draft or review your standard lease.

3. Security Deposit Regulations

Most states have strict laws regarding security deposits. These laws dictate how much you can charge, where the money must be held (often in a separate, interest-bearing account), and the timeline and process for returning the deposit or withholding funds for damages after the tenant moves out.

4. Habitability and Maintenance

Landlords have a legal "implied warranty of habitability." This means you must keep the property in a safe and livable condition. This includes ensuring working plumbing, heating, electricity, and structural integrity. Failure to maintain the property can give tenants the right to withhold rent or break the lease.

5. The Eviction Process

Eviction is a legal process, not a self-help remedy. You cannot change the locks, shut off utilities, or remove a tenant's belongings without a court order. Familiarize yourself with your state's specific eviction procedures and timelines so you are prepared if a tenant stops paying rent.