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When You Should Compensate Your Tenants

Semmes Woman Calling Landlord about Roof Leakage ProblemTypically, tenants are responsible for paying for the right to live in your rental property. However, there are times when a Semmes property manager may wish or be obligated to compensate a tenant. Due to unforeseen circumstances, you may find yourself in the position of paying your tenants instead of the other way around. To be as prepared as possible, you must understand what circumstances may result in 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 liable for maintaining your rental house is in a habitable condition. This usually indicates that your rental home is clean and livable. It also ensures that your roof keeps the house dry and that the appliances and other elements work properly. When the property isn’t habitable, for whatever reason, that can lead to situations where a tenant may be compensated.

Reasons to Compensate a Tenant

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

Repairs. One of the most leading causes a property owner would need to compensate a tenant is because of repairs. A property owner may be unable to perform urgent repairs under certain circumstances. 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 are responsible for fixing it. If you can’t, your tenant may have the repairs done within the confines of state law. It’s better if the tenant has your permission beforehand, but even if they don’t, you will likely be required to reimburse your tenant for the cost of repairs if they follow the state requirements.

Broken appliances. Sometimes compensation leads to disagreements about the condition and functionality of appliances. Refusing to take responsibility for broken appliances is one of the most common reasons a property owner gets sued by their tenants. Part of this is due to the issue 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 bigger issue, and tenants may argue that the home is uninhabitable. Let’s pretend you have provided appliances with the rental house. If one of them malfunctions, 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 particularly 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 offer to pay the tenant to move out. Property owners sometimes employ 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 probably won’t be collecting rent during eviction proceedings, offering to pay them to move may save you money in the long run.

While the most typical, these are not the only reasons you may need to compensate a tenant. But if you do find yourself in a scenario where payment is needed, it is crucial to document everything meticulously and then issue the funds right away. 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, use a method that provides 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 keeping excellent tenant relations. As a Semmes property owner, you’ll need a solid understanding of the landlord/tenant laws that regulate compensation to ensure that you are in full compliance. Real Property Management Azalea City 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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