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When You Should Compensate Your Tenants

Bowling Green Woman Calling Landlord about Roof Leakage ProblemTypically, tenants are liable for paying for the right to live in your rental property. Yet, there are moments when a Bowling Green property manager may want or need to compensate a tenant. When particular problems happen, you may find yourself in the unique situation of paying your tenants instead of the other way around. To be as prepared as possible, you should know 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 the one who ensures that your rental house is in a habitable condition. As a whole, this signifies that your rental home is clean and livable. In addition, it indicates 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 some reason or another, that can result in situations where a tenant may be compensated.

Reasons to Compensate a Tenant

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

Repairs. One of the most common grounds a property owner would need to compensate a tenant is due to repairs. In some scenarios, a property owner may not be able to perform vital repairs instantly. 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 may have the repairs carried out within the confines of state law. It’s ideal if the tenant asks your permission first, but even if they don’t, the chances are that you’ll need 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. Failing to take responsibility for broken appliances is one of the most common grounds for 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 considered a significant problem, and tenants may argue that the home is uninhabitable. For illustration, you have provided appliances with the rental house. If one of them is not 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 especially the case if your lease documents assign responsibility for the appliances to you as the property owner.

Cash for keys. At times, a property owner may need a tenant to vacate a property before the lease ends. In other situations, a landlord may propose to pay the tenant to move out. Property owners sometimes utilize this strategy 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, attempting to pay them to move may save you money in the long run.

While the most common, these are not the only reasons you may need to compensate a tenant. Yet, if you find yourself in a position where payment is demanded, it is recommended to document everything thoroughly and issue the funds immediately. If you are pro-rating a rent payment, remember to record it and notify your tenant in writing. If you need to send payment to your tenant directly, choose a method that gives 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 sustaining strong tenant relations. As a Bowling Green property owner, you’ll need an in-depth understanding of the landlord/tenant laws that govern compensation to safeguard that you are in full compliance. Real Property Management Clarity Team can help you prepare a lease to cover these issues or even manage your property entirely. Contact us today to begin.


Originally published on October 9, 2020

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