Protecting Yourself with Paperwork
As a landlord, the most important thing you can do as the first layer of protection is proper record keeping. File management is essential in the event of an audit, housing claims, or even an unforeseen legal dispute. Going into court without documented proof to back you up can be a nightmare. While Georgia is generally considered a landlord-friendly state due to how the laws are written, that does not mean judges will side with you. One of the most beneficial perks of having a good property manager is that they should be tracking and saving all documents and communication. In the onboarding process, it is good to provide as many documents as possible and make your manager aware of any complications you’ve faced with the management of the property. While it is not required, it can save a lot of headaches in the future. Understanding the property’s current situation and history allows a property manager to get ahead of many issues. Please note: this information pertains to how Citiside does business and is not legal advice. For legal advice, consult your attorney.
Management Agreement
Privacy is very important when dealing with rental properties.. For that reason, we keep our landlord’s names out of leases. This helps prevent any unwanted contact or potential harassment from tenants. In most cases if a tenant knows who the landlord is and how to reach them they often try to contact them as a means of escalation. Whether it’s wanting extension on rent, late fees waived, or some other special consideration. While this can seem tempting at times, it can also get the owners in hot water with Fair Housing Laws for not treating everyone the same. Also, not many owners hire property managers to then have to deal with regular communication with tenants.
Property Ownership Documentation & Records
An important part of managing your property is having proof of ownership and permission to manage. Property ownership documents we requested include a deed or settlement statement, insurance policies, and in some cases tax and mortgage details. Follow up and make sure the deed is actually recorded with the county. It usually takes 90-days or more in the Atlanta area to get it recorded, but it can save headaches down the line if you catch that they have not recorded it properly.
The deed and/or settlement statement are often necessary for completing agreements with 3rd parties. This most often includes Section8 Housing authorities and utility companies. With our management agreement we are able to establish services and manage utilities for you but only with the required documentation. For utility management the most common required documents are proof of ownership (deed/settlement statement), the owner’s ID, signed management agreement, and utility authorization letter along with the provider’s application.
A side note on utilities. We don’t use Landlord agreements on our properties. It takes some extra work on turns but does save a lot of headaches. If a tenant falls behind on the bill, the utility company will automatically switch it back to the owners name and keep utilities on. The owner is then responsible for the bill until it is shut off (The bill may just come 3 weeks after the fact plus past due charges).
Maintenance Info
Maintenance record keeping is a major player when it comes to protecting yourself. Photos and receipts go a long way in highlighting how well-kept the property is when looking when dealing with disputes. The #1 thing that we have seen judges side with a tenant on is maintenance costs. It has the potential to stop evictions, lose rent, and incur liability in lawsuits. In our experience, judges tend to side with the tenant’s claims if the landlord can’t provide proof to dispute those claims. Documenting not only the work but the communication about work has helped get favorable judgements in multiple cases. Documenting work orders, receipts, texts, emails, and phone calls is very useful for this as well. When you get to court and a tenant claims that they have not paid rent because you have not completed repairs, it is powerful to be able to show that they have not put in a work order, sent a text message, an email, or called in the last 3 months. It is not generally seen as the landlords responsibility to magically know a repair needs to be done.
Receipts also help keep track of knowing what has been done to the property and when regardless of who was previously managing. Receipts are important to hold vendors accountable and the ability to execute any warranties you may have for services. We have taken over management of multiple properties that recent repairs were “done” and paid for, only to have to redo the repair. A good manager should have a system that keeps track of invoices and repairs for you. Otherwise, build a system that you keep this yourself.
The Lease
The lease is one of the most important documents that you should have. This provides you the most protection of anything you have with the tenant. Something to keep in mind is to keep the lease fair. Some people like to get creative and write special addendums that they think protect them. A lease is often not considered to be an agreement between two equal parties. Judges will throw out sections of the lease if they deem the unfair. They can do this because tenants do not really have any leverage in the terms of a lease. It is generally a take it or leave it situation. Also, keep in mind sections that can increase your liability such as “requiring” renter’s insurance. It seems like a good idea, but it is a very difficult thing to manage. And are you going to evict someone if their renter’s insurance lapses? If not, will you insurance company try to make you liable for not enforcing that portion of the lease if the tenant causes damage? We have had them try in the past.
Tenant Records
Tenant records are important when in court and when transferring management. Without an accurate tenant ledger, the court will not allow you to get money judgments. It also makes it impossible to send someone to collections in the future. If you try to collect money that you are not owed, you can get fines for thousands of dollars. Another mistake that can cost thousands is mismanaging the Security Deposit. Just remember, that is NOT your money so keep it separate.
Move-in/out inspections
These get their own section. The longer you manage properties, the more likely you are to get into a dispute over a security deposit. Fully document the condition of the property when they move in. Yes. Include pictures. We often see move-in inspections that are only a bunch of boxes that say ok and are signed. This is better than nothing but still has a solid chance of losing in court if the tenant brings documentation. No move-in inspection means you lose in court automatically if you try to keep the deposit for anything other than unpaid rent. You will also have to pay the tenant 3x the deposit for keeping it when you shouldn’t. Do the move-in inspection.
All of this applies to the move-out inspection as well. In addition, know your states timeline of when you have to have this done. We have 3 days to complete the inspection and 5 days after move-out to send the tenant notice that they are losing their deposit. No notice, no keeping the security deposit. Know your rules.