Commonly, tenants are liable for paying for the right to live in your rental property. However, there are moments when a Carver County property manager may wish or need to compensate a tenant. When certain incidents occur, you may find yourself in the surprising situation of paying your tenants instead of the other way around. To be as prepared as possible, you should learn what circumstances may result in tenant compensation and when and where you should offer it.
Tenant Compensation and the Law
The question of tenant compensation is mostly governed by landlord/tenant laws. As a property owner, you are liable for ensuring that your rental house is in a habitable condition. Generally, this implies that your rental home is clean and livable. In addition, it means that your roof keeps the house dry and that the appliances and other elements work correctly. When the property isn’t habitable, for whatever reasons, that can lead to instances where a tenant may be compensated.
Reasons to Compensate a Tenant
Some of the usual reasons that a property owner may need to compensate a tenant include the following:
Repairs. One of the most common factors a property owner would need to compensate a tenant is because of repairs. Sometimes, a property owner may not be able to undertake necessary repairs immediately. 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 have to resolve it. If you are unable to do so, your tenant may have the repairs addressed within the confines of state law. It’s preferable if the tenant has your permission first, but even if they don’t, you’ll almost certainly be required to reimburse your tenant for the cost of repairs if they follow the state requirements.
Broken appliances. Sometimes compensation results in disagreements about the condition and functionality of appliances. Failing to accept responsibility for broken appliances is one of the main causes a property owner gets sued by their tenants. Part of this is because the issue 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 busted oven or refrigerator is regarded as a big problem, and tenants may argue that the home is uninhabitable. For example, you have provided appliances with the rental house. If one of them stops working, and you can’t repair or replace it promptly, your tenant may be justified in repairing the machine and deducting the amount from the rent, as prescribed in your state’s landlord/tenant law. This is particularly the case if your lease documents assign responsibility for the appliances to you as the property owner.
Cash for keys. On occasion, a property owner may need a tenant to vacate a property before the lease ends. In such cases, a landlord may offer to pay the tenant to move out. Property owners sometimes utilize this approach 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, offering to pay them to move may save you money in the long run.
Although the most typical, these are not the only reasons you may need to compensate a tenant. Yet, if you ever find yourself in a scenario where payment is requested, it is advisable that you thoroughly document everything and then issue the funds as soon as possible. If you are pro-rating a rent payment, keep in mind to record it and notify your tenant in writing. If it is necessary to send payment to your tenant directly, pick a method that generates 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 maintaining positive tenant relations. As a Carver County property owner, you’ll need a deep understanding of the landlord/tenant laws that oversee compensation to guarantee that you are in full compliance. Real Property Management Viking 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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