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When You Should Compensate Your Tenants

Southampton Woman Calling Landlord about Roof Leakage ProblemUsually, tenants are accountable for paying for the right to live in your rental property. Yet, there are circumstances in which a Southampton property manager would need or want to compensate a tenant. When specific problems develop, you may find yourself in the unusual position of paying your tenants instead of the other way around. To be as prepared as possible, you must understand what circumstances may lead to 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, you are responsible for ensuring that your rental house is in a habitable condition. In general, this means that your rental home is clean and livable. It also means that your roof keeps the house dry and that the appliances and other elements work as they should. When the property isn’t habitable, for one reason or another, that can lead to situations where a tenant may be compensated.

Reasons to Compensate a Tenant

Some of the most prevalent reasons that a property owner may need to compensate a tenant include the following:

Repairs. One of the most frequent causes a property owner would need to compensate a tenant is because of repairs. In some instances, a property owner could be unable to carry out urgent repairs. 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 must repair it. If you can’t, your tenant might arrange for the repairs to be made within the confines of state law. It’s ideal if the tenant has your permission first, but even if they don’t, there’s a good possibility that you’ll have to reimburse your tenant for the cost of repairs if they follow the state requirements.

Broken appliances. Sometimes compensation comes up in complaints about the condition and functionality of appliances. Ignoring taking responsibility for broken appliances is one of the most common reasons a property owner gets sued by their tenants. A portion of this is due to the situation being 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 faulty oven or refrigerator is seen as a major concern, and tenants may argue that the home is uninhabitable. Imagine you have provided appliances with the rental house. If one of them stops working, and you can’t repair or replace it right away, 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 doubly true if your lease documents assign responsibility for the appliances to you as the property owner.

Cash for keys. A property owner may occasionally need a tenant to vacate a property before the lease ends. In such circumstances, a landlord may offer to pay the tenant to move out. Property owners occasionally utilize this tactic 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 possibly won’t be collecting rent during eviction proceedings, proposing to pay them to move may save you money in the long run.

These are the most typical situations, although they aren’t the only reasons why you may need to compensate a tenant. Nevertheless, if you ever find yourself in a scenario where payment is necessary, it is critical to meticulously document everything and then issue the funds on schedule. If you are pro-rating a rent payment, you need to record it and notify your tenant in writing. If you must send payment to your tenant directly, choose a payment method that leaves 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 establishing excellent tenant relations. As a Southampton property owner, you must have a complete understanding of the landlord/tenant laws that govern compensation to ensure that you are in full compliance. Real Property Management Prosperity 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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