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When You Should Compensate Your Tenants

Barling Woman Calling Landlord about Roof Leakage ProblemGenerally, tenants are the ones paying for the right to live in your rental property. But there are moments when a Barling property manager may want or have to compensate a tenant. When a certain problem comes up, you may find yourself in the strange position of paying your tenants instead of the other way around. To be as prepared as possible, it is useful to realize 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 stems almost entirely from landlord/tenant laws. As a property owner, it’s your job to make sure that your rental house is in a habitable condition. Generally, this signifies that your rental home is clean and livable. It also suggests that your roof keeps the house dry and that the appliances and other elements work as they used to. When the property isn’t habitable, for whatever explanation, that can lead to situations where a tenant may be compensated.

Reasons to Compensate a Tenant

A few of the most common reasons that a property owner may need to compensate a tenant include the following:

Repairs. One of the most likely reasons a property owner would need to compensate a tenant is because of repairs. In some cases, a property owner may not be capable of carrying out repairs immediately. 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 should solve it. If you can’t, your tenant may have the repairs fixed within the confines of state law. It’s advisable if the tenant gets your permission first, but even if they don’t, you’ll likely have to reimburse your tenant for the cost of repairs if they follow the state requirements.

Broken appliances. Sometimes compensation comes up 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 the reason for this is that the situation 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 damaged oven or refrigerator is considered a bigger issue, and tenants may argue that the home is uninhabitable. For instance, you have provided appliances with the rental house. If one of them collapses, and you can’t repair or replace it as soon as possible, 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 undoubtedly correct 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 this situation, a landlord may propose to pay the tenant to move out. Property owners utilize this method sometimes 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.

Even though these are the most typical, these are not the only reasons you may have to compensate a tenant. But if you find yourself in a position where payment is needed, it is vital to document everything carefully and then issue the funds right away. If you are pro-rating a rent payment, be sure to record it and notify your tenant in writing. If you need to send payment to your tenant directly, use 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 maintaining good tenant relations. As a Barling property owner, you’ll need a thorough understanding of the landlord/tenant laws that govern compensation to ensure that you are in full compliance. Real Property Management First Choice can help you prepare a lease to cover these issues or even manage your property entirely. Contact us today to get started.


Originally published on October 9, 2020

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