CARL L. FRAZIER (R), PB
Owner, Principal Broker
Past President, Oahu Chapter
National Association of Residential Property Managers and National Conference Speaker
Q. Can you give some advice on the best way to avoid lawsuits as a landlord?
A. The best way to avoid a lawsuit is to sell your property and get out of the Landlord business! A fellow Property Manager friend once told me, “Carl, there are two types of Property Managers (aka Landlords), those who have been sued and those who have not been sued yet.” All levity aside, legal mitigation is a real concern and I’m glad you brought it up.
One wants to avoid court because, even if you are right, you will often have to pay just to defend yourself. I suggest that avoiding lawsuits starts by advertising correctly. Make sure you are following all fair housing laws completely. Many people get jammed up here. If you are not sure what the laws are, check the HUD website and the Hawaii Civil Rights Commission (http://hawaii.gov/labor/hcrc). If you call the local offices, you will find they are real friendly and helpful. Remember to advertise the property and not for the tenant; talk about what the property has to offer, not what type of tenant you want.
Selecting the tenant is important. Maintain a set of written criteria and then stick to it. Treat everyone the same. If you run credit checks or criminal background checks, you need to do that for everyone, not certain people. Next, documentation. Make sure you use the latest forms approved by your local board of Realtors. If you make up your own lease and addenda, then I highly recommend that you have a local attorney go over your forms. The on-line forms you can get may not adhere to local laws here in Hawaii.
You have got to know your deadlines! Many people get tripped up because they give the tenant too little or too much notice to comply with items in the lease. Or they ignore or do not give deadlines. How many days do you have to give a tenant before you raise their rent? How many days do you have to return a security deposit? Are they calendar days or working days? If the tenant has an unauthorized pet, what form do you use and how many days to you give them to get rid of it? What if they don’t? So your next step is to download a copy of the Property Manager’s Bible, the Landlord Tenant Code, Hawaii Revised Statutes Chapter 521. Read it and follow it. Cite it as well when you need to send a letter to your tenant. All your legal deadlines are in the Code.
I would say that it is fair to state that most lawsuits involve security deposits. First, you must have a completed and signed Property Condition Form. This is your “before and after” document. Complete it when the tenants check in and then use the same form when they check out. Tenants must leave the property in the same condition as when they moved in, excepting normal wear and tear. And this presents a problem, because what one person may consider normal another may consider abuse. I advise that you err on the side of caution. Be sure you are right…you don’t want the headache and expense of going to court over a few dollars. Work it out before you get to the stage of going to court.
Lastly, I would say use common sense. Be nice and don’t be greedy. Here are some guidelines that will help you stay out of lawsuits: advertise within the law, select good tenants, follow deadlines, and be fair.