Generally, tenants are the ones paying for the right to live in your rental property. But there are cases in which a Sylmar property manager would need or require to compensate a tenant. When certain issues arise, you may find yourself in the unusual situation of paying your tenants instead of the other way around. To be as prepared as possible, you need to recognize what circumstances may warrant tenant compensation and when and where you should offer it.
Tenant Compensation and the Law
The question of tenant compensation stems almost entirely from landlord/tenant laws. As a property owner, it is your responsibility to make sure that your rental house is in a habitable condition. In general, this signifies that your rental home is clean and livable. It also entails that your roof keeps the house dry and that the appliances and other elements work effectively. When the property is unhabitable, for one reason or another, that can lead to scenarios where a tenant may be compensated.
Reasons to Compensate a Tenant
Some of the most common reasons that a property owner may need to compensate a tenant include the following:
Repairs. One of the most typical reasons a property owner would need to compensate a tenant is because of repairs. Occasionally, a property owner may not be able to conduct urgent repairs. Whether you are out of town or otherwise unavailable, if something breaks and causes your tenants to lose the quiet enjoyment of the rental house, you need to address the issue. If you can’t, your tenant might arrange for the repairs to be performed within the confines of state law. It’s great if the tenant seeks your permission first, but even if they don’t, there’s a strong chance that you’ll need to reimburse your tenant for the cost of repairs if they follow the state requirements.
Broken appliances. Sometimes compensation comes up in disagreements about the condition and functionality of appliances. Failing to take responsibility for broken appliances is one of the most common reasons a property owner gets sued by their tenants. Part of this is because the situation is more complex than it first appears. Landlords sometimes argue that a broken dishwasher, while inconvenient, does not make the entire property uninhabitable. At the same time, a malfunctioning oven or refrigerator is regarded to be a significant problem, and tenants may argue that the home is uninhabitable. Imagine you have provided appliances with the rental house. If one of them collapses, and you can’t repair or replace it straightaway, your tenant may be legitimate in repairing the machine and deducting the amount from the rent, as prescribed in your state’s landlord/tenant law. This is especially relevant if your lease documents assign responsibility for the appliances to you as the property owner.
Cash for keys. In some cases, a property owner may ask a tenant to vacate a property before the lease ends. Sometimes, a landlord may offer to pay the tenant to move out. Property owners occasionally use this tactic to avoid a drawn-out eviction process and encourage a problematic tenant to move on sooner than later. Considering how long it takes to evict a tenant and that you probably won’t be collecting rent during eviction proceedings, agreeing to pay them to move may save you money in the long run.
These are the most typical situations, although they aren’t the only reasons you need to compensate a tenant. However, if you ever find yourself in a situation where payment is required, it is advisable to document everything carefully and issue the funds promptly. If you are pro-rating a rent payment, be sure to record it and notify your tenant in writing. If you need to send payment to your tenant directly, use a method that offers a paper trail, such as a business check.
While landlord/tenant laws vary from place to place, staying on top of tenant compensation is important in preserving positive tenant relations. As a Sylmar property owner, you’ll need a thorough understanding of the landlord/tenant laws that govern compensation to ensure that you are in full compliance. Real Property Management Vision can help you prepare a lease to cover these issues or even manage your property entirely. Contact us today to get started.
Originally published on October 9, 2020
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