Over the course of owning a rental property, you may have to contend with a variety of tenant claims. These claims can range from discrimination to inhabitability of your rental property. Although the majority of your tenants may be pleased with your rental property, it can take just one dissatisfied tenant to wreak havoc.
When a tenant approaches you with a claim, do your level best to maintain a friendly but businesslike demeanor. If you are not guilty, you’ll have an opportunity to prove your innocence. There are also many ways to settle a tenant claim without going to court.
The best way to shield yourself from claims is to maintain good records. Solid documentation of your actions and the actions of your tenants can be invaluable, should you find yourself confronted with a lawsuit, especially against a problem tenant.
At a minimum, you should keep records on the following:
- Written applications, lease agreements, and addendums to a lease. By keeping all your tenant’s signed agreements, you’ll have a paper trail from their application to their current status. This information can be critical.
- Any problems you have had with your tenants, and the steps you took to remedy them. Each time a tenant breaks the terms of your lease agreement, document it. It could be something as simple as a late rent payment, or as involved as intentional damage to your property. Your record of the event and your response will come in handy if a tenant’s version of events differs from yours. For example, if a tenant claims that you have never fixed a leaky faucet, and you have a record showing each call and repair bill, you’ll be able to prove your case.
Once you have all your records in place, you can take the necessary steps to settle the claim.
Your first step should always be to resolve the dispute amicably. If the claim is simply a misunderstanding, you can avoid extra expense and ill feelings created by a lawsuit by simply discussing the problem with your tenant. In some cases, a problem tenant may just be trying to see how much they can get away with. If you have proof that you have acted fairly and legally, they may back down.
If you’re facing a housing discrimination claim, you can present the application, and explain the reasons you denied that application. In most cases, if you have taken the proper steps with your record keeping, a denied applicant may stop their claim at this point.
Next, try mediation. If trying to resolve the claim on your own has failed, the next step is professional mediation. Both you and your tenant will need to present your sides of the case to an impartial third party (the mediator). Once both sides have been heard, the mediator will offer potential solutions. Oftentimes the addition of a third party is all it takes to defuse a hostile situation.
If mediation fails to resolve the dispute, binding arbitration could be your next step. This means that the decision of the arbiter will be binding, and both parties must cease in their attempts for further action. This process is similar to mediation, but is often used as a final step in settling a claim.
If you wish to allow for binding arbitration, you can insert a clause into your rental agreement that states how it will be used to solve either a tenant or landlord claim. If you have kept written records of your actions, you can go into binding arbitration with a better chance of coming out on top. Note, however, that state law may impact the enforceability of arbitration provisions.
In cities with rent control ordinances, such as San Francisco, there are a number of rules and regulations to be followed. Failure to follow such rules can have serious consequences, so you may need to get a veteran landlord-tenant lawyer to represent you in your tenant claims cases.