Owning rental property can be a rewarding investment, but it comes with legal responsibilities that can’t be ignored. Whether you’re a first-time landlord or have managed properties for years, one misstep in handling leases, security deposits, or tenant rights can quickly turn into a costly legal issue. At TeamWork Property Management, we’ve seen firsthand how avoidable errors can snowball into serious consequences. Below, we outline the top five legal mistakes landlords commonly make—and how you can avoid them to protect your investment and reputation.
1. Not Having a Legally Sound Lease Agreement
Using a generic lease or copying one from the internet might seem like a quick solution, but it can leave you exposed to legal loopholes. Every state—and in many cases, each city—has specific landlord-tenant laws. A lease that doesn’t align with local laws can be challenged in court, especially if it omits critical disclosures or includes unenforceable terms. To avoid this mistake, work with a legal professional or a knowledgeable property management company to create a customized lease that meets all local and state regulations.
2. Mishandling Security Deposits
Security deposit laws are among the most commonly violated regulations by landlords. Many states require deposits to be stored in a separate, interest-bearing account, with detailed records and receipts provided to tenants. Additionally, strict timelines dictate when and how deposits must be returned after a tenant vacates. Failing to follow these rules could result in hefty fines—even if the tenant caused damage. Always familiarize yourself with your state’s requirements and document all deductions with photos, receipts, and clear communication.
3. Improper Notice for Entry or Eviction
Landlords do not have the legal right to enter a rental unit whenever they wish. Most states require landlords to give 24 to 48 hours’ written notice before entering a property for inspections or maintenance. Likewise, evicting a tenant without proper notice or trying to force them out without a court order (like changing the locks or shutting off utilities) is illegal and can result in significant penalties. Always follow the legal process for entry and eviction to protect your rights as a property owner.
4. Discriminating—Even Unintentionally
The Fair Housing Act makes it illegal to discriminate against tenants based on race, color, national origin, religion, sex, disability, or familial status. Many landlords unintentionally violate these laws during the screening process by asking inappropriate questions or advertising in a way that suggests preference. Avoid this pitfall by standardizing your screening process, keeping all questions professional and relevant, and staying informed about both federal and state fair housing laws.
5. Failing to Keep Accurate Records
Poor record-keeping can hurt you in a legal dispute. If a tenant challenges a charge, claims unfair treatment, or takes you to court, your documentation will be your strongest defense. Keep detailed records of rent payments, maintenance requests, communication logs, lease agreements, inspection reports, and any legal notices. Digital property management tools can help streamline this process and ensure you always have access to the information you need.
Managing rental property is a serious responsibility, and staying legally compliant is key to long-term success. By being proactive and informed, you can avoid these common legal mistakes and run a smoother, more professional rental business. If you’re feeling overwhelmed by the legal complexities of being a landlord, partnering with a trusted property management company can take the guesswork out of compliance. Contact us today to learn how we can help protect your investment and provide peace of mind.