Leasing property is a profitable way to utilize residential properties. However, with the great benefits come even greater responsibilities. These responsibilities are so critical that operating outside of them might lead to court cases and legal fees that could have been easily avoided.
Here is what you need to know about landlord liability in the state of Arizona.
Understanding the Arizona Landlord-Tenant Act
Before deciding to lease residential property to a tenant, there are a few responsibilities landlords have that they need to be aware of. In the state of Arizona, landlords are governed by the Arizona Residential Landlord Tenant Act (ARLTA).
Under ARLTA, some of the key responsibilities of landlords include:
- Ensuring that the tenants have a copy of the lease
- Informing the tenants on where to find the ARLTA
- Making all repairs to the property to ensure that it is fit and habitable
- Ensuring that all services and appliances are safe, well-maintained, and are in good working order
With responsibilities like these being placed on the landlord, it is a good idea to own the rental property through a limited liability company and obtain the appropriate type and amount of liability insurance. Failure to do so may leave the landlord personally liable for any claims against the property due to injury or issue with the property.
Using LLCs and Landlord Insurance Coverage
Using an LLC for rental properties is usually the best practice for property owners seeking to lease their property. The biggest reason for a landlord or rental property owner to use a limited liability company to operate rental businesses is to protect their personal finances from any civil actions associated with the property.
However, if the LLC is not managed properly, there are instances where your personal assets may be attacked or lost to cover the costs of damage that should have been borne by the limited liability company.
For instance, if an individual or entity making a claim against your property is successfully able to prove that there is a “unity of interest” between the company and the owner of the company (i.e., the landlord), in that the operation of one’s business is so closely intertwined with the landlord’s personal interest that it would be an injustice to separate the two, then the courts may allow for one’s personal assets to be attacked as part of a judgment.
Appropriate insurance is also key. Insurance often covers:
- The rental property itself from various “hazards”
- Additional buildings on premise, such as sheds or garages
- Equipment like tools, washing machines, or other appliances used by the tenant
Some coverages extend to possible legal fees that the landlord may have to bear in cases of:
- Libel or slander
- Accidental Damage
- Wrongful Eviction
While such coverage assists in protecting landlords from directly being at risk of paying these fees, circumstances like these can often be avoided with the help of an experienced Arizona real estate attorney.
Work with a Real Estate Attorney on Lease Agreement
With the help of a real estate attorney, landlords and rental property owners will be able to keep abreast of the requirements to maintain a tenancy. Some of these requirements entail:
- Drafting a Proper Lease Agreement
- Adhering to guidelines for preparing the property for a tenant
- Properly executing a walkthrough and hand-over of the security deposit when a tenancy has ended
Getting the Property Ready for Tenant Move-In
The following is a checklist that will help landlords ensure that the process of moving in tenants is seamless and adheres to the rental laws in Arizona.
- Review tenant’s paperwork in order to ensure that all documents are signed
- Outstanding rent and security deposits should be collected before the keys are handed over to the tenants.
- Tenants are to be provided with information on how to complete the required move-in inspection as well as be given a date as to when the Move-In Checklist should be returned.
The following documents should be provided to the tenants:
- Welcome Paperwork
- A New Tenant Welcome Kit
- A Move-In Checklist to the renter(s)
Best Practices for Lease Management
To reduce the risk of a lawsuit and landlord tenant disputes, the lease between landlord and tenant needs to be managed effectively as well. The following are guidelines that landlords or rental property owners can use to ensure efficient management.
- The terms of the lease need to be adhered to at all times. Rental terms include the due date of the rent.
- Facilitate the easy payment of rent by providing accessible means by which the tenant can pay rent.
- Ensure that as per the agreement, the property is adequately maintained as well as facilitating means by which tenants can report maintenance issues. These reports should be responded to in a reasonable time period and a periodic inspection checklist should be used during the routine inspections set out in the lease agreements.
Common Lawsuits Filed by Tenants in Arizona
Common instances where lawsuits are filed include:
- Keeping the Security Deposit – Landlords and tenants are often in dispute about what is considered damage instead of normal wear and tear. Lawsuits and serious misunderstandings can also arise when landlords retain the security deposit and apply it to outstanding rent, cleaning the property, and outstanding utilities.
- Landlords disregarding the right to privacy – Under the ARLTA, tenants have a right to privacy. While landlords may have the right to enter the property for inspection this must not be done outside of reasonable notice to the tenants. In emergency situations landlords are allowed to enter the premises outside permission given by the tenants.
- Landlords Violating Health and Safety Standards – Landlords are legally required to make sure the property that they are leasing is in safe and livable conditions. Instances where the property will be deemed unlivable include situations where:
- Lead paint is present,
- Rodents and insects,
- Absence of running water,
- No heating for the winter periods,
To avoid lawsuits of this nature, it is best to ensure that the property is thoroughly inspected when previous tenants move out and before new tenants are preparing to move in.
- Drafting Illegal Terms in the Agreement – While lease agreements exist to facilitate the meeting of the minds of landlord and tenant, those agreements should adhere to state statutes. Tenants often file lawsuits when a landlord or lease goes beyond what is allowed under state statutes, such as when a landlord alters the number of days of notice the landlord has to give before being able to enter the premises. Landlords can avoid lawsuits of this manner by staying informed of state legislation regarding the rights of tenants.
- Denying Potential Tenants on Discriminatory Grounds – Landlords should be aware that it is illegal to deny housing due to national origin, familial status, race, religion, color, disability, etc. under the Fair Housing Act. Interview questions should not include questions surrounding these characteristics.
Arizona Real Estate Attorneys Can Help
Success in real estate rental properties has a lot to do with the team you put in place. To assist in using the best practices and avoid many of the common legal pitfalls of leasing residential real estate, you need to have experienced Arizona real estate attorneys on your team.
M&G Law can represent your interests and help you grow your property rental business the right way. Our attorneys can help you structure business entities that meet your needs and protect your assets. Our team can help you draft contracts that adhere to state laws and protect your interests. M&G attorneys can make sure you have a landlord liability checklist for every property and transaction.
Contact us today at 602-533-2840 to schedule an initial consultation or make an appointment on our contact us page.