How prepared are you to face the risk and liability that comes with being a landlord?
Even if you are prepared, what will it be like to defend yourself in a lawsuit or fight back against a tenant claim in court?
It’s not fun, and while investing in real estate comes with dozens of benefits and advantages, the risk is real. In some ways, the liability is inherent. You’re providing a place for people to live. It has to be safe, secure, and habitable.
What you don’t want to do is set yourself up for additional liability in which lawsuits and disputes could have been avoided. Think about unlicensed vendors, dangerous-breed dogs, and deferred maintenance. Fair housing mistakes bring on unwelcome liability and so does forcing a tenant out of your property with threats instead of following the prescribed legal eviction process.
We cannot promise a risk-free rental experience. But, we can show you some of the most common liability issues that often catch rental property owners off guard.
|Under the landlord-tenant laws in New Jersey, landlords are required to maintain their rental property in a safe and decent condition.|
|This is called a warranty of habitability. Tenants are paying rent, which means landlords must make sure the property is fit for residency.|
Does this requirement apply to all leases?
Yes. Whether you’ve signed a written lease or made a casual agreement with a handshake and a nod, you are required to keep your rental property safe and decent.
It’s a funny word, but legally it’s based on common sense. A decent and safe property has:
The tenant is responsible for maintaining and returning the property to the landlord in the same condition that the tenant received it, except for normal wear and tear. This should be written into your lease agreement. BUT, remember: your liability begins when you are unable to provide any of those systems, functions, and appliances that are required to keep your home safe and habitable. Avoid liability by:
- Responding to maintenance requests right away
- Communicating with your tenant proactively
- Conducting thorough inspections before, after, and during a tenancy
- Keeping up to date on all habitability laws, municipal codes, and state requirements
Don’t put yourself at risk for violating your implied warranty of habitability. This is where most liability starts for landlords. Provide a great rental home and keep it well-maintained. You won’t have to worry about those habitability standards slipping.
WHAT IF A TENANT IS INJURED?
Accidents happen. What if a tenant or a tenant’s guest is injured at your property?
As we have discussed, as the owner of a rental property, you are responsible for providing a safe and habitable home. There should not be any hazards at the property such as:
|Loose handrails||Fire hazards||Faulty plumbing|
|Floors cracking or peeling||Missing or uneven steps||Ice or excessive debris|
Your liability as a landlord depends on the condition of your property. Tenants can injure themselves and it’s their own fault completely. But, if a tenant or a tenant’s visitor is injured due to a defective stairwell or poor lighting at the front door, you can find yourself liable for the injuries caused by such conditions.
It also depends on who the injured party is. A tenant who slips and falls on stairs that don’t have much lighting can hold their landlord liable in a way that a door-to-door salesperson who slips because of bad lighting cannot.
Wondering where most lawsuits originate when it comes to tenants suing their landlords for injuries? Here they are:
Inadequate lighting can lead to trips, falls, slips, and injury due to cracked pavement, potholes in parking areas, and other hazards that they may have otherwise avoided.
Loose handrails can break off from the wall, leading to falls down stairs. Steps can also come loose and be unsteady underfoot, leading to landlord liability and a personal injury claim.
|3.||Slippery and icy conditions.
When the lease states that landlords are responsible for snow removal and treatment for ice, someone who falls during inclement weather can sue the property owner.
Nails sticking out of a floor can cause injury and so can loose floorboards, torn carpeting, and vinyl or laminate that’s raised or pulled up in the corners.
|5.||Smoke detector malfunctions.
If a fire starts at the building and you cannot document that the fire alarm or smoke detector was working, you could be looking at a lot of liability.
Your rental property with a pool needs barriers, fences, and the right chemical mix. In an apartment or multi-family building, note where floors may be wet near the pool.
In New Jersey, tenants can bring a lawsuit against landlords up to two years from the date of an accident.
IMAGINE AN UNLICENSED VENDOR SITUATION
Maintenance is expensive. Repairs can be costly, time consuming, and frustrating for both owners and tenants. There’s also a bit of a labor shortage, so you might find yourself in a long line when waiting for a vendor or contractor of your choice.
It’s tempting to cut some corners.
Don’t do it. You’ll only open yourself up to additional liability and financial risk.
Maybe your brother-in-law, who isn’t a professional plumber but really loves a DIY project around the house, has offered to snake your rental home when the sinks start backing up. Or, you might meet a guy with a truck at the local hardware store who seems to know what he’s talking about and has offered to clear your gutters or paint your property for a rate that’s much lower than what you’d pay a professional.
What if you go ahead and hire them, and then something happens to that unlicensed, uninsured worker at your property? Here are some of the worst-case scenarios:
- The worker falls off a ladder.
- The worker gets electrocuted.
- The worker cuts off a finger or a limb.
- Your property gets damaged.
- Your tenants get injured because of improper repairs
There’s danger inherent in a lot of maintenance work. Licensed and professional maintenance professionals will insure themselves against these risks. If the people you hire to work at your property get injured and cannot pay for their own medical care, they’re going to come back to you. Expect a lawsuit or a claim for not only the medical expenses, but lost wages as well. There could be a pain and suffering lawsuit thrown in, too.
That’s a lot of liability, and it’s not worth the risk. Don’t hire anyone who doesn’t have adequate liability and worker’s compensation insurance.
Ask for proof of that insurance before you hire a company or a vendor.
LIABILITY AND PETS
We always encourage rental property owners to consider pets. When you allow tenants to move in with pets, you reduce your vacancy risk, increase tenant retention, and generally earn more money because you can collect a pet fee and/or pet rent.
There’s also more liability to landlords when pets are present, however.
We’re not just talking about property damage. We’re talking about personal injury.
If your tenant’s pit bull bites someone, the tenant is legally responsible for that dog and any injuries that it causes. But, the courts in New Jersey have been willing to rule that landlords, because they are aware of dogs and have approved those dogs, have a duty to protect people against injury that can potentially be caused by the animals.
Most insurance companies maintain a list of dangerous dog breeds. Some insurers won’t cover a property that has one of these dangerous breeds in residence.
Always check with your property and liability insurance company before you approve a dog that might be on their dangerous breeds list. If a tenant’s dog bites someone, you might find out too late that your insurance company won’t cover the claim because that dog is on their list of excluded animals.
Here are the dogs most insurance companies won’t consider covering:
You can expect just about every insurance company to list these three breeds on their dangerous list.
In 2021, the average dog bite claim was around $44,760, according to the Insurance Information Institute. To keep those claim payments to a minimum, insurance companies won’t provide coverage for homes with these dogs in them.
If you want to allow a tenant with a Pit Bull or a Rottweiler or a Doberman to move in, that’s your decision and you’re free to make it. Understand, however, that your liability increases, especially when your insurance policy won’t cover that animal. You might want to consider asking your tenant to supply their own additional insurance to cover any potential dog bits.
Additional Dangerous Breeds:
Don’t keep yourself out there with no insurance coverage and all the liability. Keep as much risk with your tenants, and make sure you have a strong pet policy as part of your lease agreement that protects you against the potential lawsuits that could occur if a tenant’s dog bits or attacks someone.
LEGAL MISTAKES AND LIABILITY
How well do you know the laws?
You might not even be aware of your liability. If you don’t know the state, federal, and local laws that apply to your rental property and the way you find, screen, and work with tenants, you could set yourself up for a lot of liability without even knowing it.
Fair housing laws. Security deposit laws. Eviction laws. There are so many easy ways to make a legal mistake without even realizing it. It’s risky to rent out a property without the help of a New Jersey property management company. You’re out there on your own, and if a tenant recognizes an opportunity, you could see yourself dealing with court appearances and penalties.
Fair Housing Laws and Liability
“Fair Housing is Not an Option. It’s the Law”
-Carl Harris, U.S. Department of Housing and Urban Development
The Federal Fair Housing Act makes housing discrimination illegal when it comes to the sale, rental, or financing of homes. It also protects consumers who are obtaining insurance or other housing-related professional services.
The U.S. Department of Housing and Urban Development (HUD) enforces the Fair Housing Act by investigating complaints from individuals and community organizations across the country. If HUD determines that housing discrimination has occurred, the U.S. Department of Justice, Civil Rights Division can bring the case to Federal Court. The maximum penalty currently for your first offense is $16,000.
That’s a lot of liability.
So, how can you be sure you’re not violating any fair housing laws – intentionally or unintentionally? Here’s what we suggest:
1. Know the protected classes. Federally, you cannot make housing decisions based on:
- National Origin
- Sex (including gender identity and sexual orientation)
- Familial Status
2. Pay attention to your marketing materials. It’s easy to say a home is “perfect for families” or “close to churches” but those things may seem like you’re looking for a tenant with a certain family background or religious affiliation. Focus instead on the property and its features without assuming what kind of tenant would want to live there.
3. Conduct tenant screening based on a written and established set of rental criteria. Every applicant has to be screened consistently and you have to demonstrate how you do that.
4. Work with a professional property manager in south Jersey. We’ve found that landlords and property owners often violate fair housing laws without even realizing it. We can ensure compliance.
Security Deposit Mistakes and Liability
Not returning a tenant’s security deposit on time will invite a lot of liability into your rental process. Charging that deposit for normal wear and tear issues will also open the door to liability and potential tenant disputes. If a judge finds that you have violated a security deposit law in New Jersey, you’ll have to return the full deposit to your tenants and pay additional fees and penalties.
Here are some things you need to know about New Jersey security deposit law to limit your liability:
Security Deposit Limits
Under New Jersey law, landlords may charge no more than the equivalent of one and one-half months’ rent for the security deposit.
Security Deposit Timelines
Landlords must return the tenant’s security deposit within 30 days of the tenant moving out and surrendering the rental property.
Holding Security Deposits
Landlords must keep security deposits in an account that’s separate from personal and other funds.
Security Deposit Deductions
Landlords can deduct for unpaid rent and utilities, cleaning and hauling costs, and tenant damage. Wear and tear is not deductible.
Evicting a New Jersey Tenant
When rent hasn’t been paid in a month or two and you’ve received every excuse a tenant can think of, you might be tempted to change the locks. Maybe you’ll contact the utility company and have the water shut off. Or, you’ll bang on the door in the middle of the night and demand that they pay or get out.
You cannot do any of those things.
There’s a process in place for how you handle evictions, and missing even one detail can get your case thrown out. You’ll be back to the drawing board, losing more money and more time.
Don’t evict without legal help. It’s just too risky.
While you can evict for a few good reasons in New Jersey, the most common reason for eviction is nonpayment of rent. When your tenant has not paid rent, protect yourself from liability by following the necessary legal steps.
Here’s something interesting: In New Jersey, you do not have to file a written notice before you begin to evict your tenants unless the rent is federally subsidized (i.e. you have a Section 8 tenant). In that case, you need to provide a 14-day notice.
Nonpayment of rent is the only eviction reason for which no notice is required under New Jersey’s eviction laws. You might want to give your tenants a courtesy notice to let them know that you’ll be filing for eviction if rent isn’t paid in the next three or five days.
Otherwise, you can file for eviction as soon as a rent payment is late.
Work with an attorney. Talk to a property manager. When you get to the courthouse to file the necessary paperwork, you want to make sure it’s all correct. You don’t want to show up for your eviction hearing without the property paperwork and documentation.
With built-in legal expertise in our company, we’re your best resource for avoiding liability.
Please contact us at Realty Solutions, and we’ll see what we can do to help you avoid liability and have a profitable and pleasant rental experience. We lease, manage, and maintain homes in Audubon, Collingswood, Cherry Hill, Haddon Heights, Blackwood, and the surrounding communities.