Traditionally, tenants are responsible for paying for the right to live in your rental property. Yet, there are times when an El Cerrito property manager may want or need to compensate a tenant. When certain circumstances happen, you may find yourself in the unique position of paying your tenants instead of the other way around. To be as prepared as possible, knowing what circumstances may lead to tenant compensation and when and where you should offer it is critical.
Tenant Compensation and the Law
The question of tenant compensation stems almost completely from 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 indicates that your roof keeps the house dry and that the appliances and other elements work correctly. When the property isn’t habitable, for some reason or another, that can result in cases where a tenant may be compensated.
Reasons to Compensate a Tenant
Some of the most common reasons that a property owner may need to compensate a tenant include the following:
Repairs. One of the most typical justifications a property owner would need to compensate a tenant is because of repairs. In some instances, a property owner may not be able to perform necessary repairs promptly. 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 must repair it. If you can’t, your tenant may have the repairs finished within the confines of state law. It’s better if the tenant asks your permission first, but even if they don’t, the likelihood is that you’ll need to reimburse your tenant for the cost of repairs if they follow the state requirements.
Broken appliances. Sometimes compensation comes up in disputes concerning the condition and functionality of appliances. Failing to accept responsibility for broken appliances is one of the most common reasons a property owner gets sued by their tenants. A portion of this is due to the problem being more complex than it first appears. Landlords sometimes argue that a broken dishwasher, while inconvenient, does not make the entire property uninhabitable. Simultaneously, a faulty oven or refrigerator is considered a serious problem, and tenants may argue that the home is uninhabitable. For instance, you have provided appliances with the rental house. If one of them stops functioning, 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 primarily the case if your lease documents assign responsibility for the appliances to you as the property owner.
Cash for keys. Sometimes, a property owner may need a tenant to vacate a property before the lease ends. In such cases, a landlord may propose to pay the tenant to move out. Property owners frequently adopt this strategy 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.
While the most common, these are not the only reasons you may need to compensate a tenant. Yet, if you find yourself in a scenario where payment is expected, it is suggested to document everything thoroughly and issue the funds straight away. If you are pro-rating a rent payment, don’t forget to record it and notify your tenant in writing. If it is necessary to send payment to your tenant directly, pick a method that offers 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 establishing strong tenant relations. As an El Cerrito property owner, you’ll need an in-depth understanding of the landlord/tenant laws that manage compensation to safeguard that you are in full compliance. Real Property Management Pacific can help you prepare a lease to cover these issues or even manage your property entirely. Contact us today to get started.
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