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When You Should Compensate Your Tenants

Leander Woman Calling Landlord about Roof Leakage ProblemNormally, tenants are the ones paying for the right to live in your rental property. Yet, there are occasions in which a Leander property manager may wish or need to compensate a tenant. When a particular concern arises, you may find yourself in the rare position of paying your tenants instead of the other way around. To be as prepared as possible, it is imperative to recognize what circumstances may result in tenant compensation and when and where you should offer it.

Tenant Compensation and the Law

The question of tenant compensation founds almost entirely from landlord/tenant laws. As a property owner, you must ensure that your rental house is in a habitable condition. Generally, this denotes that your rental home is clean and livable. Additionally, it implies that your roof keeps the house dry and that the appliances and other elements work well. When the property isn’t habitable, for one reason or another, that can lead to scenarios 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 common reasons a property owner would need to compensate a tenant is because of repairs. In certain situations, a property owner may not be able to make 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 need to fix it. If you can’t, your tenant may have the repairs done within the confines of state law. It’s best if the tenant has your permission first, but even if they don’t, the chances are that you’ll need to reimburse your tenant for the cost of repairs if they follow the state requirements.

Broken appliances. Sometimes compensation results in disagreements about the condition and functionality of appliances. Ignoring to accept responsibility for broken appliances is one of the most likely causes a property owner gets sued by their tenants. Part of this is because the issue is more complex than it first appears. Landlords sometimes argue that a broken dishwasher, while inconvenient, does not make the entire property uninhabitable. At the same time, a defective oven or refrigerator is seen as a significant problem, and tenants may argue that the home is uninhabitable. Let’s say that you have provided appliances with the rental house. If one of them crashes, and you can’t repair or replace it instantly, your tenant may be warranted in repairing the machine and deducting the amount from the rent, as prescribed in your state’s landlord/tenant law. This is certainly relevant if your lease documents assign responsibility for the appliances to you as the property owner.

Cash for keys. Occasionally, a property owner will require a tenant to vacate a property before the lease ends. In these situations, a landlord may propose to pay the tenant to move out. Property owners occasionally employ this method 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.

Although the most typical, these are not the only reasons you can have to compensate a tenant. The main thing is to carefully document everything and issue the funds right away if you do find yourself in a scenario where payment is necessary. If you are pro-rating a rent payment, don’t forget to record it and notify your tenant in writing. If you require to send payment to your tenant directly, use a method that provides 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 maintaining good tenant relations. As a Leander property owner, you’ll need a full understanding of the landlord/tenant laws that govern compensation to guarantee that you are in full compliance. Real Property Management Advisors can help you prepare a lease to cover these issues or even manage your property entirely. Contact us today to begin.


Originally published on October 9, 2020

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