But I Didn’t Know!
September 1, 2001
You remember the old adage, “What you don’t know won’t hurt you.” Somewhere, sometime it may be true, but exactly the opposite is true in the rental property business. What you don’t know usually comes up to bite you on the gluteus maximus.
Witness the case of the brothers Kopchinski, who thought owning and managing rental property would be just about the coolest thing they could do. But they ran afoul of the law by removing a tenant’s possessions from the apartment and leaving them on the street because the tenant hadn’t paid rent for an eternity. Actually it was just a month and a half, it just seemed like an eternity to the Kopchinskis. They didn’t bother with an eviction, courts, judges, writs and inconveniences such as those, they just broke into the apartment (the tenant had changed the locks) and put her stuff on the street.
That is a violation of the landlord-tenant law in probably every state in the union. So the brothers got to bother with courts and a judge, anyway. “But we are young and inexperienced, and were operating in good faith,” they pleaded. The judge told them to pay the tenant $7,139.00 for the damage to the tenant’s property.
The most frequent way ignorance hurts landlords is not knowing the landlord-tenant law.
“I didn’t mean it that way, they just took it wrong.” Unfortunately, with Fair Housing enforcers, it not what you meant, it’s what somebody, somewhere thinks you might have meant. In fact, I was perturbed to learn a few years ago at a Fair Housing Litigation Conference that the people who persecute landlords for violating the Fair Housing Act believe that all landlords are bigots and are constantly looking for ways to discriminate illegally. It is their job, these enforcers believe, to catch the landlords when they inadvertently slip up thus showing their true colors. These enforcers believe that what someone, somewhere thinks you might have meant is exactly what you did mean.
So the second area where what you don’t know will hurt you is Fair Housing.
You demand good tenants, so you have a thorough screening process that involves requiring a satisfactory credit report. Nothing wrong with that. In fact everything is right with that. Trouble is if you do anything inappropriate in obtaining or using the credit report, you end up having to pay the bad tenant a wad of cash.
The Fair Credit Reporting Act spells out exactly what you may, must and may not do with an applicant’s credit report. Your tenant screening company can and will tell you all the rules. Moreover, they will even have you sign a document stating you understand and agree to those rules. That gets them off the hook. If you just sign without reading the rules, don’t understand them, or choose to ignore them, the consequences are all on your shoulders. And the consequences are severe, with fines and grief that will cost far more than a bad tenant would probably cost.
The solution? Simple. Know your state and/or local landlord-tenant law, find out how the Fair Housing Act applies to you and follow the Fair Credit Reporting Act to the letter. What you don’t know in the rental property business will most assuredly hurt you.