What are your risks as a property manager with lease agreements?

1 Legal compliance

One of the most important aspects of lease agreements is to ensure that they comply with the local, state, and federal laws and regulations. This includes fair housing, anti-discrimination, privacy, security deposit, eviction, maintenance, and disclosure rules. If you violate any of these laws, you could face lawsuits, fines, penalties, or loss of license. To avoid legal risks, you should consult with a lawyer or a professional association to draft and review your lease agreements and keep up to date with the changes in the law.

2 Tenant screening

Another risk that property managers face with lease agreements is choosing the wrong tenants. If you rent to tenants who are unreliable, dishonest, or problematic, you could end up with unpaid rent, property damage, disputes, or eviction. To prevent tenant issues, you should conduct a thorough screening process that includes checking credit history, criminal background, rental history, income, and references. You should also have clear and consistent criteria for accepting or rejecting applicants and document your decisions.

3 Lease enforcement

Once you have signed a lease agreement with a tenant, you have to enforce its terms and conditions. This means collecting rent, inspecting the property, handling repairs, resolving complaints, and enforcing rules. However, some tenants may breach the lease by paying late, causing damage, subletting, or violating policies. To mitigate lease enforcement risks, you should communicate clearly and frequently with your tenants, document everything in writing, follow the due process, and seek legal advice if necessary.

4 Lease termination

Another risk that property managers face with lease agreements is ending them. There are different scenarios that could lead to lease termination, such as expiration, renewal, early termination, or eviction. Each scenario has its own procedures and implications that you have to follow and consider. For example, you have to give proper notice, return security deposits, conduct a final inspection, and handle any claims or disputes. To avoid lease termination risks, you should have a clear and detailed lease agreement that covers all the possible outcomes and contingencies.

5 Liability and insurance

The final risk that property managers face with lease agreements is liability and insurance. As a property manager, you are responsible for the safety and security of your tenants and properties. This means that you could be held liable for any injuries, damages, or losses that occur on your premises or as a result of your actions or negligence. To protect yourself from liability risks, you should have adequate insurance coverage that covers your property, your business, and your tenants. You should also require your tenants to have renters insurance and include a liability clause in your lease agreement.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?