11 Legal Mistakes To Avoid As a Rental Homeowner

Renting out your home long-term is a great way to earn income, but it’s not your average business transaction. Governed by a host of varied and ever-changing laws, new landlords could find that simple missteps could land them in hot water. 

Whether you’re a self-managing landlord or have professional support, it’s a good idea to get ahead of these common legal mistakes so you can avoid them.  

11 Legal Mistakes New Landlords Make (and How to Avoid Them) 

Legal Mistake #1: Using outdated lease agreement templates

The temptation to cut costs and download a free lease agreement template online is understandable… but not always legal. This is because templates often take a ‘one size fits all approach’ and tenant-landlord laws don’t. 

Local ordinances are set by counties and change often. Legislation overrides any clauses in your lease agreement, which could leave you exposed if you’ve used a template that isn’t valid. This is also true if you try to sneak in a clause asking a tenant to accept terms that aren’t permissible in your county. 

How to avoid this mistake

Have your lease agreement drawn up by a professional who is up to date with both state legislation and any local ordinances, such as:

• A local attorney or property lawyer
• A property management company
• A modern property management alternative like Belong

Legal Mistake #2: Discriminatory rental marketing

If you’re writing a rental listing or asking to promote your home a certain way, beware that you could violate Fair Housing Laws. This is because the wording used when marketing a rental, running a home tour, or selecting an applicant could be discriminatory. 

For example, if you promote a rental as in a “good Christian neighborhood”, this would be discrimination on the grounds that it seeks to attract tenants of a particular faith (or exclude others).

How to avoid this mistake

When marketing your rental home, don’t focus on trying to attract your ideal resident. Stick to the hard facts that don’t favor any applicant over another such as:

• Number of bedrooms and bathrooms
• Amenities of the home
• Walkability to local cafes, shops and restaurants
• School district zoning

If you’re looking for assurances in securing good residents and reliable income, sign up to Belong. It costs nothing to join, there’s no lock-in contracts and if you choose us to look after your home, we’ll do all the legwork to find the best residents – and even guarantee your rent. 

Read More: Understanding Fair Housing Laws When Renting Out Your Home

Legal Mistake #3: Discriminatory tenant selection

Tenant screening is another area where Fair Housing violations can occur. For example, using different income standards or higher application fees for a person based on their ethnicity, family size or race is discriminatory. 

If a rental applicant believes you have discriminated against them, you could face a lawsuit or hefty fines. As of 2024, a first offense faces fines of up to $25,597. This can climb as high as $127,983 for repeat violations.The court may also issue an injunction to prevent future violations. 

How to avoid this mistake

If you hire professional services, they should make tenant screening and compliance simple. If you are managing your own screening, it’s crucial that you document a standard check and apply it equally to everyone that applies. This creates a fair process and could support your case if you are ever accused of discrimination. 

Legal Mistake #4: Not documenting the home before move-in

Before your new residents move in, did you document every corner of the house? It’s a common mistake for new landlords to either forget to do this or not take enough specific details and photos in every room. This is risky because it leaves you open to disputes around damage and security deposits when a tenant moves out. 

How to avoid this mistake

Conduct a thorough inspection of your home or outsource it to someone like Belong or Inspectify. Take photos and detail the condition of every room, including rooms with no damage. Even the ceilings and inside wardrobes. Highlight any marks so you know what is pre-existing when it comes time to inspect the home on move-out. Remember that you are never permitted to keep a security deposit for “wear and tear” on the rental home or any breakages that happen as a result of ordinary use (e.g. carpet staining due to foot traffic).

Read More: Normal Wear and Tear vs. Tenant Damage: How To Assess Your Rental Home

Legal Mistake #5: Unlawful security deposit claims

Security deposit laws are changing in many counties. In some jurisdictions, the quality of your pre-lease inspection (as mentioned above) could also impact your claim on any security deposit. 

For example, new laws in Washington state won’t allow you to take a security deposit until you supply the new tenant with a written checklist that outlines the cleanliness of the rental home and any existing damage. This checklist will need to include descriptions of the condition and cleanliness of things like the walls, flooring, appliances and any other fixtures or furnishings. 

Both you and the tenant need to sign and date the checklist and you must provide them with a copy. If you don’t, the tenant could take legal action, including suing for the deposit amount plus costs. 

How to avoid this mistake

Find out what your local rules are on security deposits including caps on amounts and the claims process. Regardless of the law, it’s wise to document the condition of your home and any work done throughout the lease term. 

If you need to claim any of the deposit, make sure you have evidence of the costs to clean or repair any damage. Include quotes or invoices in a written statement, do not write “extra cleaning: $300” unless you have an invoice for this amount. If you intend to make repairs or clean yourself, document the time it took, along with a reasonable hourly rate in place of an invoice to use as evidence.

Read More: 5 New Laws Washington State Landlords Should Be Prepared For in 2024

Legal Mistake #6: Not taking steps to limit criminal activity 

Preventing crime is not your sole responsibility as a rental homeowner, but you do have a legal obligation to take “reasonable preventative measures” to keep the home secure. This means limiting opportunistic criminal activity where possible. 

Standard features that a secure home would be expected to have to prevent unauthorized access are reasonable. Think door deadbolts or changing the locks after evicting a nuisance/violent tenant.

How to avoid this mistake

Before renting your home, make sure the home is secure for new residents. And if a resident raises a safety concern, address it quickly and seriously. Failure to take action could be seen as negligent — such as not fixing a broken window, resulting in a home robbery.

Read More: Criminal Activities in Rentals: Can Landlords Be Held Responsible?

Legal Mistake #7: Not making timely repairs

A safe home is also up to code and livable. Ignoring or delaying tenant requests for repairs can lead to code violations, injuries, and even lawsuits. If you take too long, your residents may be able to legally withhold rent and arrange repairs themselves or move out without consequence. 

How to avoid this mistake

Contractors are not easy to come by these days so it pays to think ahead before you need one. Belong has an extensive vendor network of over 10,000 contractors that can be requested through our simple app. But if you can’t rely on vetted professionals from Belong or a property manager, build your own list of people you trust. Ensure your go-to handypeople are licensed, insured, and capable of handling a variety of maintenance tasks. Look to companies with national presence if you’re struggling to find a local person for the job.

Read More: Why Ignoring Rental Home Maintenance Could Cost You More Than Repairs

Legal Mistake #8: Forcing an eviction

If a resident stops paying their rent or violates their lease, homeowners naturally want them out asap to prevent further damage. But taking matters into your own hands is illegal. Known as a "self-help" eviction, it’s illegal to force a tenant out by doing things such as changing the locks or shutting off utilities. This could get you sued for up to three months' rent or damages (whichever is greater) plus legal costs under most state laws. 

How to avoid this mistake 

Let the professionals deal with evictions! If you’re a Belong homeowner, we will start any eviction proceedings necessary and cover the costs of up to $15,000 so you’re not out of pocket. We chose the resident so we will make it right and replace them.

If you have a property manager or manage your own rental home, be sure to follow local guidelines for eviction proceedings. If a tenant refuses to leave, a law enforcement official can remove them legally under a writ of possession.

Read More: How To Avoid Costly Evictions With Belong’s Game-Changing Safety Net For Homeowners

Legal Mistake #9: Being underinsured

The right insurance can shield you from costs if your home is damaged or your resident injured. The common mistake that landlords make? Homeowners insurance doesn’t cover homes that are rented. 

How to avoid this mistake 

Don’t rely on standard homeowners insurance for a rental home – you could be in for a shock when your claim is denied! Take out landlord's insurance designed for rental homes. It’s also a good idea to ask your residents to be insured for their contents and liability – something Belong offers and requires of all residents. 

Read More: What Type of Insurance Should I Get For My Rental Property?

Legal Mistake #10: Failing to make required disclosures 

If there’s something your tenants need to know about your home, you need to tell them before they move in. Under federal law, if you own an older home that has lead-based paint, you are legally required to tell tenants. Failing to disclose lead in a rental home could result in a fine of $21,699 and legal liability for health issues. 

Your local state law may need you to disclose other items too, including:

• Any environmental or health hazards, such as asbestos, mold, radon, bed bugs, and previous methamphetamine contamination
• Any recent flooding in the home (or location in a flood zone)
• State rent control rules
• Details of security deposits 
• Any non-refundable fees
• A death on the property that occurred within three years
• Smoking policies 
• Intent to demolish the property 

How to avoid this mistake

Transparency is key! Don’t try to hide issues in your rental home as they could leave you open to legal liability in the future. Most importantly, check your local laws to find out what you’re required to disclose to applicants in your lease agreement.

Legal Mistake #11: Violating resident privacy

It’s your home, you can pop-in and check up on it right? Nope. Not even to make a minor repair. Once a tenant is in place, most states legislate a minimum of 24-48 hours written notice to enter the property. The main rule to remember here is that residents have a legal right to “quiet enjoyment” of the home and shouldn’t ever feel harassed or uncomfortable. 

How to avoid this mistake

Know your legal obligations for notice periods (Nolo has a handy chart of state-based laws for entry into rental properties to check out). Keep in mind that these are legal minimums only. It is courteous to allow a week or so to give your residents time to respond or reschedule. If you are providing written notice via the post, you should also allow six days for the mail to be received. 

No surprises, just solutions for better renting

There’s no need to get stuck in a confusing legal system on your own. Belong offers professional support and full transparency over caring for your rental home. Ditch the DIY route and fee-ridden property managers to work with a residential network that will put the best people in your home. With first-class vetting, guaranteed rent and real protection against evictions, you can rest easy knowing Belong is looking after you and your financial interests. 

To see how Belong is simplifying the rental experience (and making it easier to choose long-term renting for your home), visit our homeowner's page and learn about services in places like Austin, Charlotte, Los Angeles, Miami, San Francisco Bay Area, Seattle, and many more.

Disclaimer: We don’t enjoy using the words ‘tenant’ and ‘landlord’. We prefer to refer to members in our network as homeowners and residents, since we’re on a mission to upend and redefine the traditional landlord-tenant relationship. That said, for clarity on legal matters and to support those searching for traditional terms, we have used them in this article. This article should not be considered legal advice, please consider your own personal circumstances and consult a legal or real estate professional before making any decisions on your rental home or tenants.