A Cautionary Tale for Landlords

In a perfect world, landlord/tenant relationships would be easy for military homeowners. And while most relationships are amicable, there are instances when things go awry. We have discussed various ways to prepare for new tenants, but we have yet to delve into ways to prepare and protect you, as a landlord, in the event that the relationship breaks down.

Landlords and tenants alike believe that there is a code of conduct that exists between military families, and more often than not, this is true. However, even military personnel can make bad choices or missteps along the way.

We were recently contacted by a customer who was seeking advice on how to amicably end a tense relationship with their tenants. They were aware of modifications that had been made to the property without consent, and the tenants were not pleased about being held to the full lease agreement. In wanting to be fair to their tenants, the landlord wanted to find a way to make sure they were both satisfied with the release/retention of the security deposit.

Because landlord/tenant laws vary from state to state, it was essential that she refer to documentation from the North Carolina Attorney General regarding security deposits that would ensure that she was operating within the laws of the state in which the home was located.

Taking precautionary measures prior to your tenants taking occupancy of the home can help avoid situations of this nature.

Here are four ways to prepare and protect yourself as a landlord:

1. Screening

It is important to perform a thorough tenant screening to ensure that your tenants are in a financial position to meet the rental requirements, but the information obtained through the process may also aid you in the event your tenant fails to pay the rent. Emergency contact information or personal references can assist you in tracking down a tenant should the need arise.

2. State-Specific Legal Forms

The landlord/tenant laws vary from state to state, so in order to protect your interests, it is crucial that you use the proper legal documents for the state in which your home is located. It is also advisable to research and review the proper process for stipulating additional items within the lease agreement, such as guidelines the tenant must follow if they wish to paint, remodel, or modify the residence in any way. If our customer had clearly documented within the lease agreement that the tenant must first receive permission before making any modifications, then the landlord may have been able to withhold monies to repair any unauthorized changes.

If specific requests are made, documenting the communication with your tenant through email, written communication, or noting the time and dates of conversations can prove to be valuable in the event that you have a dispute with your tenant.

3. Condition of the Home

As a landlord, it is important to repair or remedy any issues that could jeopardize the safety of your tenants. Once you have prepared the property, protect yourself through the use of still and/or video photography, taking photos of every inch of your home. Photograph walls, carpets, sinks, tile, showers, toilets, closets, doors, pools, landscaping, and kitchen appliances. If you are unable to visit the property yourself, employ a friend, neighbor, or local real estate professional to take the photographs. Ensuring that you document the condition of the home prior to occupancy may be your strongest argument in the event of a dispute over damage, modifications, or the return of a security deposit. Make sure the photos are date stamped and that a copy is kept with your lease agreement and other important documents.

4. Move In/Move Out Checklist

In addition to a complete set of photographs, use a Move In/Move Out Checklist, which could prove vital should a “normal wear and tear” vs. “damage” debate arise upon your tenants vacating the property. If you are unable to meet your tenants in person for a pre-occupancy walkthrough, send them a copy of the checklist, which you filled out after preparing the home and then have your tenants fill out the same form once they move into the home. If there are any discrepancies between your checklist and the tenants, these can be addressed immediately to avoid any future conflict. Again, keep a copy of the signed and dated checklist with your other legal documents so that you have it to refer to when the tenant moves out of the home.

When the time comes for the tenant to vacate the property, if possible, perform a final walkthrough with your tenants, referencing the original checklist for a clear understanding of the condition prior to and after occupancy. This document will help ease the tension that may be present when doing the walkthrough, as both you and the tenant agreed upon the condition of the property when they took occupancy. If you are unable to do a final walkthrough in person, again referencing the Move In/Move Out Checklist will assist you in properly substantiating the withholding of security deposits. Taking a second set of photos that document the condition of the home post move-out could prove valuable in the event of any dispute.

For our customer, hindsight is 20/20, however this situation can serve as a cautionary tale to help prepare and protect other landlords to avoid situations similar to this one.

If our customer had a lease agreement that clearly stated that prior authorization must be obtained before to making any changes to the home, and these changes could be substantiated through photographs, this may have been enough evidence to warrant holding back the proceeds of the security deposit.

Entrusting the care of your property to that of a tenant or property manager can be a leap of faith, but taking proper precautions can help protect you and your investment should the landlord/tenant relationship degrade in any way.

Protecting yourself with the use of state-specific legal documents, a thorough application screening process, photographic and video images, and a signed and dated Move In/Move Out Checklist, you will have built the proper foundation given any cracks that may occur in the future.