Landlord Mistakes that Cost Thousands
Top Landlord Mistakes that can End up Costing Thousands of Dollars
Did you know that as a landlord, you can’t send a text message to your tenant as a notice of entry? How about changing the locks on your rental property if your tenant hasn’t paid rent- did you know that is illegal? In this article, we dive into a few common, but serious mistakes that investment property owners encounter when they become the landlord of their own rental properties.
The Laws
Owning an investment property and renting it out to tenants is one way to build wealth over the long term. The idea of owning a rental property and finding great tenants can seem simple. While that can be the case for some, there are still multiple provincial laws, municipal bylaws, and protocols to follow. This includes any changes made to both municipal and provincial regulations that landlords need to keep up to date on and sometimes act on immediately.
Finding Great Tenants
Let’s start with the obvious. How do you find a suitable tenant? What information can you legally ask for, what can you legally post in an add, and what is considered discriminatory?
While this may seem simple, consider the following. You post an ad on a popular listing site, in your ad you specify no pets allowed, no smokers, no kids and on. While there appears to be nothing wrong with these at first glance, there could potentially be forms of discrimination.
Here are some basics to adhere to and if you find that you prefer the reassurance of a professional, contact a Licenced Property Manager who can assist you with Posting Ads, Sourcing Tenants and adhering to all bylaws.
A landlord cannot refuse to rent to a tenant based on their race, colour, ancestry, place of origin, religion, marital status, family status, physical or mental disability, gender, sexual orientation, age or lawful source of income. This means that unless the rental unit is in a building or development reserved for people age 55 or older, you cannot refuse to rent based on family status. In most cases, a landlord can’t refuse to rent a property to a family with children, though, they can limit the number of people living in a rental unit. Additionally, when it comes to pets, specifically dogs, according to the Guide Dog and Service Dog Act, a landlord cannot refuse renting to, or require a pet deposit from a tenant with a certified guide animal. Other infringements on human rights do occur, and while rental stipulations are necessary, it is important to make sure that you are not infringing on any Human Rights.
Personal information
While it is reasonable to expect that landlords ask potential tenants for certain types of personal information such as proof of income, references or identification, this information should only be used for completing the application process, to verify income or perform a credit check. Providing this information should not be a condition for renting. Property management companies have all the required applications, as well as privacy and protection of information guidelines in place to adhere to these laws.
The use of personal information is governed by privacy laws, so landlords cannot use any information they collect for something unrelated to the tenancy. They also cannot ask for information that would be unreasonable to share – like credit card numbers, ethnicity, religious denomination, etc.
For more information on the collection and use of the personal information, Review the Privacy Guidelines for Landlords and Tenants or connect with a local Licenced Property Manager in your area who is an expert in this area. For more information on Protection of Personal information please contact the Office of the Information and Privacy Commissioner for British Columbia .
Moving your new tenant in
It is an exciting time for both your tenants and you as a landlord. It’s also important to make sure that all the legal documents and protocols are adhered to prior to you handing over the keys. Often when landlords and potential tenants feel strongly that they trust one another or if the tenants come as a referral from family or mutual friends, following legalities can be overlooked in favour of mutual trust and a handshake. Situations like these can result in multiple things going wrong, including property damages that cannot be proven or disputed because the condition inspection documentation was not completed. Situations like this do happen and can result in legal action and disputes costing thousands of dollars.
Before handing over the keys to your new tenant, establish all the details of tenancy with your tenant, ensure that this is accurately documented in the lease agreement, and if there are any questions, address them with your tenant before move in. Prior to your tenant moving in, a thorough property inspection should be conducted. This means that any damages already existing to the physical structure is documented, as well as any damages to furnishings and home accessories if your rental property is furnished. Renting a furnished home requires that landlords document everything that is included in the home, including photographing the contents. Click here for the detailed and legal Condition Inspection Report that should accompany your lease agreement.
Establishing rental due dates, methods of payment and receipt issuance is also important and should be documented to prevent any potential issues from arising.
During Tenancy
You finally have a tenant in place and need to contact them to access their suite for repairs. You send a text message 24 hours before, but don’t hear back. When you arrive onsite to give repair people access, your tenant refuses entry or worse yet, accuses you of trespassing.
While sending a text message as a notice of entry seems like it meets protocol, in fact, it does not. Understanding protocol for notice of entry, including wait times after notice is served, is very important. How you communicate with your tenant, including documenting your communication and adhering to any necessary wait times as required by law are crucial to maintaining a great tenant-landlord relationship, as well as to protect yourself against any potential disputes that could result.
Here are some basics to remember when serving a notice to enter:
• A landlord may access any common areas that are shared with others like hallways, courtyards and laundry facilities – no notice is required
• A landlord may access the rental unit once per month to inspect the condition of the property – proper notice to tenants is required
• A landlord may access the rental unit to complete repairs or maintenance – proper notice to tenants is required-under emergency situations
• A landlord may access the rental unit to show the property to prospective buyers or tenants – proper notice to tenants is required
Proper notice to your tenant means a tenant is given written notice of the date, time and purpose for entering the property. By law, notice must be delivered in-person or considered by law to have been given to the tenant at least 24 hours before the landlord enters the unit. The time scheduled for entry must be between 8 a.m. and 9 p.m., unless another time is agreed upon by the landlord and tenant.
The purpose of entering a rental unit must be reasonable – a landlord may enter a tenant’s rental unit only when:
• There’s an emergency and entry is necessary to protect life or property
• The tenant is at home and agrees to let the landlord in
• The tenant agreed, not more than 30 days before, to let the landlord enter
• The tenant was given written notice outlining the date, time (between 8 a.m. and 9 p.m.) and purpose – at least 24 hours before and not more than 30 days before
• The tenant has abandoned the rental unit
• The landlord has an arbitrator’s order or court order to enter the rental unit
Notice of entry needs to be abided by 100 percent of the time. Other issues arise throughout the life of a lease agreement that may require specific actions and need the correct protocols to handling them, for instance delinquent rental payments which leave landlords frustrated. Often landlords think they can simply change the locks on the rental property until the rent is paid, but changing the locks is illegal. There are proper protocols to follow in situations like this to ensure that landlords are acting within their legal rights and not at risk of potential legal disputes resulting from incorrectly handling tough situations. Again, serving proper notice to end a tenancy for unpaid rent or utilities is a requirement, as BC Landlord and Tenancy act specifies: Landlords and tenants are responsible for ending the tenancy lawfully, ensuring both parties have an opportunity participate in condition inspections and agree on any deposit deductions that may be required. Landlords or tenants can be ordered to pay money to each other if they don’t follow the law. More information can be found here or by connecting with a licenced residential property manager.
Ending Tenancy
Your tenant is moving out. You’ve followed all the proper protocols, including written and delivered ending tenancy notices and even completed your moving out inspection report with no issues to report. Everything is great. Months later you receive an angry email from your former tenant asking for their security deposit back and threatening legal action. You had tried to return their security deposit, but realized you had no forwarding information.
As simple as this may sound, it does happen. Tenants may move out, travel for an extended period of time, or become unreachable and forget to provide forwarding information. After a tenant has moved out they must give the landlord a forwarding address in writing and the landlord has 15 days to:
• Return the deposit(s) with any interest to the tenant
• Ask the tenant to agree in writing to any deductions and return the difference to the tenant
Failure to return deposits may result in legal action taken against the landlord. If the landlord does not take action within the 15 day timeline, the tenant can apply for dispute resolution requesting their deposit be returned. The landlord may be ordered to pay the tenant double the amount of the deposit. Be sure to request any forwarding information in writing and adhere to bylaws.
The Takeaway
Managing your rental property on your own is feasible, there are many regulations both municipally and provincially to adhere to. It can be challenging and daunting to navigate the world of property management if you are a first time landlord or if you simply don’t have the time to immerse yourself in the needed expertise. If managing your investment property is something you prefer to do on your own, be sure to familiarize yourself with the landlord and tenancy act in your respective province and city. Read through our article giving you some tips on managing your rental property versus hiring a property manager or connect with a licenced Rent it Furnished Property Manager who is always happy to help you.