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Advice for Avoiding Legal Problems when Investing in Rental Property

You have heard the old adage to hope for the best and prepare for the worst. When it comes to investing in rentals, most property owners are great at hoping for the best but then they forget the rest. Now more than ever, if you own rental property without preparing for any of the legal pitfalls, the risk can cost you. With the average lawyers’ fees being more than $250 an hour, a single legal issue can wipe out a rental property’s entire annual profit.

Here are 10 ways to prepare yourself, protect yourself, and do your best to avoid legal hassles as a landlord.

Americans with Disabilities Act

Complying with the ADA means you cannot discriminate against potential tenants with disabilities. You need to allow them to install any features or accommodations that they need. You can also require them to put the property back to the original condition. Plus, you may never restrict or charge for service animals. Be accommodating.

Fair Housing Act

The Fair Housing Act and common decency prevents property owners from making housing decisions based on race, color, sex, national origin, religion, handicap, or familial status. States and localities can add additional protections, and violations can cost tens of thousands of dollars. So, make sure you are fair.

Habitability Laws

Habitability laws vary from region to region. They require you to provide a rental property that is a safe and comfortable living environment for your tenants. If you ignore these items, respond slowly, or ineffectively, or you require tenants to pay for them, you can end up with landlord tenant disputes, lawsuits, and potential government actions.

Licensing Requirements

Some owners try to cut costs by making their own repairs or hiring unlicensed labor. Most states have requirements for licensing and minimum liability and workers comp policies. Shoddy repairs or the injury of an unlicensed repair person can lead to costly lawsuits. So, be conscientious and only hire licensed and professional contractors.

Real Estate Licenses

Many aspects of property management are regulated as well. Conducting activities that are only to be done by licensed real estate agents can lead to costly fines. Be licensed.


Respond promptly to maintenance requests and urgent calls to avoid liability. Maintaining a dedicated 24-hour contact system is the best way to be available after hours, over the weekends or on holidays.

Accounting Requirements

Most fines for property managers are due to improper handling of security deposits and other funds in violation of trust accounting and other laws. Violating these laws can cost three times the amount of the security deposit. Be diligent.

Record Keeping

You are best protected when keeping accurate records of all tenant requests including when they were made and how you responded. This documentation is the primary source of reliable information in litigation. Keep date and time stamped documentation for the full length of time that state statutes require. Be accountable.

Data Security

You collect and hold a lot of personal information on your tenants. You are required to keep that information secure. Failing to keep private data secure in how you store and what you share can open you up to liability.

Stay Current on the Law

Rental property owners must get and stay current on all federal, state, local, and industry laws, codes, and regulations. This will help you avoid litigation, liability, and expense. It’s critical that you or your property manager remain vigilant and current on all requirements. Be and stay knowledgeable.

Most property owners don’t have the time or interest to stay on top of it all. That’s why your compliance team at RPM stays on top of this with impeccable integrity, proven systems, and local regulatory expertise that reduces your risk. Put our experienced team and proven processes to work for you.

If you have any questions about how our property management services can help you avoid liability, please contact us at Real Property Management Gold.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

  1. Thank you Ryan. That is great advice for anyone looking to avoid legal problems with rental properties.

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