In the last two articles we covered how to place a qualified tenant in your rental property and different methods to collect rent. Today topic we will take on another important aspect when renting out your property – Lease Enforcement. Lease Enforcement when done correctly will keep you protected from potential lawsuit, save money, and keep the property producing return for a longer period of time. In addition, it could enable a great rapport between the tenant and you as a landlord.
Lease Enforcement tend to be of the more time consumes and stressful aspect for self-managed property owner to implemented and enforced. It is requiring quite a bit of upfront work and continuation of “check-in” during the term of the lease.
Lease Enforcement could be breakout in to 3 main aspects which you as a landlord should be familiar with:
- Federal Fair Housing Act
- Arkansas Landlord and Tenant Right
- Lease Agreement and Lease Enforcement
Federal Fair Housing Act
All landlord should be familiar with the Federal Fair Housing Act. It will greatly reduce your risks as a property manager. Here is some of the outline information you should be familiar with.
What is The Fair Housing Act Law?
- The Fair Housing Act protects people from discrimination when they are renting or buying a home, getting a mortgage, seeking housing assistance, or engaging in other housing-related activities.
Who is Protected?
- Race, color, national origin, religion, sex, familial status, disability.
What types of Housing Are Covered?
- Owner-occupied buildings with four or fewer units. The FHA generally isn’t applicable when a building has two to four units, and the owner lives in one of them.
- Single-family homes rented without a broker. The FHA doesn’t apply when a single-family house is sold or rented without a broker, so long as the owner doesn’t own more than three houses.
What is Prohibited?
- Refuse to rent or sell housing
- Set different terms, conditions or privileges for sale or rental of a dwelling
- Provide a person different housing services or facilities
- Falsely deny that housing is available for inspection, sale or rental
- Make, print or publish any notice, statement or advertisement with respect to the sale or rental of a dwelling that indicates any preference, limitation or discrimination
- Impose different sales prices or rental charges for the sale or rental of a dwelling.
The information listed above is a sub-set of information under the Federal Fair Housing Act that applied to a rental property. For more information and details on the law please visit the HUB website (www.hud.gov)
One thing to highlight here is the number of house or unit that landlord can have under management before you have to obey the FHA regulation. Four units for owner-occupied and 3 houses for single home family. If you are a landlord that manage more than those specified amount you need to make sure that you are very familiar with the FHA regulation to avoid potential costly law suit. It is a good practice to instilled those requirements in your process no matter how many units/houses you are manage.
Arkansas Tenant and Landlord Law
Federal Fair Housing Act is regulated on the federal level but as a landlord in the state of Arkansas you also need to be familiar with the Arkansas Tenant and Landlord Law. Knowing this information will save you a lot of money in the long-term and will enable you to management your property effectively. Here are some of the highlights regarding the law:
Tenant rights and obligations
- Paying Rent in a timely manner
- Landlords must provide notice of at least one rental period before raising the rent. This rule applies to both oral and written leases
Landlords Rights
- Landlord may give notice of lease termination for any reason. Landlord must give one rental period’s notice for an oral lease or provide notice according to the terms of a written lease.
- Upon the voluntary or involuntary termination of any lease agreement, all property left in the dwelling by the tenant will be considered abandoned and may be disposed of by the landlord as the landlord sees fit without recourse by the tenant. All property left on the premises by the tenant is subjected to a lien in favor of the landlord for the payment of all sums agreed to be paid by the tenant.
Repair and Maintenance
- When a tenant rent a house or apartment, they usually agree to take it “as is.” This means that the landlord is not required to provide additional maintenance to the dwelling. There are, however, city building codes to protect the tenant health and safety. If tenant have health or safety problems with the rental, they can contact the city to find out if the home fully complies with housing codes.
Security Deposit
This law applies only to landlord who own or manage more than 5 properties.
- If a tenant is required to pay a security deposit, it cannot excess of two months’ rent. For example, if rent is $1,000 a month, a landlord cannot require a security deposit of more than $2,000.
- When tenant move, the landlord must return your security deposit within 60 days. The landlord may, however, deduct from the security deposit the cost to repair any damages made to the dwelling or any past-due rent.
- If the landlord deducts from tenant security deposit, the landlord must give the tenant a written, itemized list of the charges withheld within 60 days of the time of vacate.
- A landlord may withhold the entire amount of the security deposit if damages or unpaid rent exceed the amount of the security deposit.
Eviction
As an Arkansas landlord you have a very board authority to evict a tenant. Some of the most common reasons for eviction include:
- Nonpayment of rent: If a tenant fails to pay rent, as the landlord you may initiate eviction in 5 days after the agreed upon date when the rent is due
- Lease term violation: If a tenant is found violating the term on the lease agreement. You may issue a 14-day notice to Cure or Quit. If the tenant does not fix the problem the problem within the time-frame, the you can begin the eviction process
- Illegal Acts: Any acts that deem illegal by the law: prostitution, gambling, selling drugs, etc. the landlord to issue an unconditional Notice to Quit. If the tenant does not move out with 3 days, you can start eviction process.
The information listed above is a sub-set of information under Arkansas Gov Consumer Protection that closely applied to a rental property. For more information and details on the law please visit the Arkansas Gov website (https://arkansasag.gov/consumer-protection)
It cannot be emphasized enough that as landlord in that state of Arkansas you need to be very familiar with these laws and regulation. It is crucial knowledge to minimize your liability and risk of being sue as a landlord. It is also enabled you to maximize your potential profit know what you can do when tenant fails to pay rent, how to get the tenant out and put in a new tenant quickly so your property can start producing again. It is recommended that you should speak to or employ a real estate attorney to help with the process if the situation ever arrive.
Lease Agreement and Lease Enforcement
Lease Agreement
Once you have a clear understanding of the law and regulation the next step is to put together a lease agreement. Here is some basic information that should be in every lease agreement:
- Landlord Name and Address: define a clear line of communication for important notices & request between the tenant and landlord, it is recommended that landlord provide contact information in or alongside the lease.
- Rental Rate and Payment: Rental should be clearly stated what it would cost from month to month and how much its total for the term of the lease. Payment method should also clearly spell out for the tenant. We written an article on what method could be use. (Rent Collection methods)
- Deposit Amount and Distribution: Specified the exact amount that you collected for deposit and how it would be distributed at the end of lease term. Keep in mind if you manage more than 5 properties you need to follow the Arkansas Tenant and Landlord Law on how that deposit should be handle.
- Rental Property Information: Basic information on the rental property: address or legal description, appliances, amenities that come with the property. (HOA requirement if any)
- Tenant Name and Contact Information: Name of all tenant(s) and contact information.
Aside those information mention above the lease agreement should also spell out the Tenant responsibility, Landlord responsibility, maintenance service, late rent payment, move-in check list, utilities responsibility, pet policy, violations, disclosures, and whatever else applicable for that property. The goal here is to be as detailed and spelled out as much as possible so there is no confusion of what need to happen if a situation arrives.
Lease Enforcement
As the landlord, ensuring that your tenants comply with the term of theirs lease is critical to protecting your property and realizing the returns on your investment. There a couple of things you can do to make sure that the tenant upholds their lease agreement before result in enforce your legal rights.
- Select A Qualified Tenant: Set a standard on your tenant requirement during the application process, keep in mind that this standard have to be within the Fair Housing Act and Arkansas Real Estate regulation. We written an article on that specific topic (Tenant Placement)
- Review Lease Agreement: It is highly recommended that you review the lease agreement with your tenant and do a walk through of the property before hand it over. This will set an expectation for the term of the lease and a chance answers questions tenant will have.
- Method Communication: Have a clear line of communication whether that is for rental payment, maintenance request, maintenance services, etc.
- Property Evaluation: performed property evaluation in the form of drive by or a defined evaluation schedule or both. This will help you catch any problem or lease violation as early as possible.
- Address Lease Violation: be firm and address any lease violation as soon as you are aware of it. Enforcing the violation could be as simple as sending a letter to the tenant pointing out the lease violation and requesting tenant’s compliance. In many cases, a properly drafted letter or notice may resolve any potential dispute thereby avoiding any need for an eviction or other litigation.
These steps should help significantly reduce any potential lease violation in most situation. A great reminder when address lease violation is that “no one want to be a bad tenant” it is always best to work with the tenant to resolve the issue. However, there is a chance that you have tenant will keep violate the lease term or enact a serious lease violation, in this case best to be familiar with the eviction process. It is recommended that you should have a real estate attorney in mind for when this happen, the goal is to get the tenant out of the property quickly and put a new tenant in place.
This should wrap up this article topic about Lease Enforcement. We hope you find is information helpful, until next time!
If you have any question or concern, feel free to reach out to us here at PMI Heritage. With years of experience and well build method/process in the property management space, we are more than happy and qualified to help you with anything you might need. Our service area cover all of Northwest Arkansas for Bentonville, Rogers, Fayetteville, Bella Vista, Springdale, Centerton and all the surrounding areas.
Disclaimer
The information provided on this website, article, blog does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.
