The United States is home to approximately 45 million rental housing units, nearly half of which are small 1-4 unit properties. Interestingly, private individuals own and manage over 70% of these smaller rentals — people often call these managers “mom-and-pop landlords.”
However, what exactly is a landlord? What do their responsibilities include, and how does a landlord affect prospective tenants? What rights do both renters and landlords have?
For renters exploring their rights or aspiring landlords curious about property management, this article answers all the most common questions. We'll explore landlords’ responsibilities and tenants’ legal obligations, and we’ll provide tips for people considering the rental property market.
Understanding landlords
A landlord is someone who owns property and rents it out to others. People may also refer to landlords as property owners or lessors. The real estate assets they own include a range of building types:
Residential buildings:
- Single family homes
- Condos
- Mobile homes
- Townhouses
- Lodging houses (like a short term rental)
- Apartment complexes
- Office buildings
- Self-storage facilities
- Hotels
- Retail strip centers
On the other side of the rental agreement is the tenant — or “renter” or “lessee.” Tenants have certain responsibilities detailed by a lease agreement and the type of tenancy.
In residential leases, the renter is typically responsible for some maintenance, while the landlord handles major repairs. Commercial leases can vary more widely, with some tenants taking on significant property responsibilities like paying property taxes and insurance coverage on the building.
Landlords’ legal obligations
Landlords must follow landlord-tenant law, which varies depending on the state or jurisdiction. Generally, property law covers areas like the following:
Habitable condition
A rental property owner must keep their property in a habitable condition. This falls under the legal doctrine of implied warranty of habitability. It means that the landlord can't neglect certain things, such as the following:
- Building structure and safety measures
- Pest control and sanitation
- Maintenance of key appliances like stoves or refrigerators
Tenants’ rights and privacy
Each state specifies renter's rights that owners must follow. These include the requirements and details of the following:
- Privacy and proper notice for landlord entry
- Fair housing and non-discrimination
- Security deposit protections
- Eviction procedures
- Right to quiet enjoyment of the property
- Protection against retaliation
- Right to request repairs
Rent and security deposits
Many states enforce laws regarding rent payment amounts and security deposits. This can include everything from rent control policies to limiting how much landlords can increase rental payments each year.
Several states also have rules regarding security deposits, like how much you can charge if you need to pay interest on deposits, and timelines to return the deposit when a tenant vacates the property.
Local ordinances
Landlords must follow all local ordinances and regulations for their rental properties, which may involve the following:
- Zoning laws
- Building codes
- Health and safety regulations
Property and liability insurance
Residential estate investors must buy landlord insurance for the property to cover damage to the building and provide liability protection. In commercial leases, the lessee may pay for some insurance, but the real estate investor still needs to buy coverage for the building itself, liability protection, and any other specific risks associated with owning the property.
Tenant legal obligations
Rental laws don't just apply to the building owner. There people renting and living in the building also have obligations. These include the following:
- Paying rent: tenants have a legal obligation to pay rent on time as specified in the rental agreement to avoid eviction or other legal consequences. It's a good idea for the lessee to set up online auto-pay to avoid late rent payments.
- Complying with lease terms: tenants must follow all terms outlined in the lease agreement, including occupancy limits, pet policies, and noise restrictions.
- Maintaining the property: regular cleaning and prompt reporting of damages are important to maintaining a property’s value. If lessees ignore issues and don't report them, they could be liable for damage.
- Allowing landlord access: landlords need access to enter the property for inspections, repairs, or showings, provided they give enough notice in accordance with local laws.
- Utilities responsibility: lessees may need to pay for certain utilities as specified in the rental agreement.
- Local laws: tenants must follow local ordinances and regulations, including parking rules, and proper waste disposal.
- Proper use of the property: building occupants must use the property only for its intended purpose and shouldn't engage in illegal activities or create safety hazards on the premises.
- Intent to vacate: residents are legally required to provide proper notice to the landlord before vacating the property, as specified in the lease agreement and in accordance with local laws (typically 30 days).
- Renter's insurance: if the landlord requires renter's insurance, occupants must buy a policy.
Landlords vs. property owners
Landlords and property owners aren’t always one in the same. While the property owner owns the property, a landlord is the person or entity responsible for renting it out and managing tenant relationships.
If the property owner self-manages their building, they also serve as the landlord. However, some property owners choose to hire a property manager. In this case, the property manager acts as the landlord, handling day-to-day operations and tenant interactions on behalf of the owner.
Property managers handle various tasks, from setting rental rates to scheduling maintenance and repairs.
Steps for aspiring landlords
If you want to become a landlord and buy your first investment property, here are the steps to follow:
1. Buy a property
The first step to becoming a landlord is finding property you want to buy. Start by evaluating your budget and researching the market. Get a sense of the current rental rates and identify which types of properties support those rates. When you compare properties, focus on similar building types, square footage, and amenities to make accurate assessments.
You might need to look out of state if local prices are too high or don't support rental rates that give you a good return on your investment.
Wherever you invest, research the local economic drivers, regulations, and landlord-tenant laws. You'll find that some states are more landlord-friendly than others. Your niche matters, too. Vacation rentals often have more regulations and licensing requirements than long-term rentals, so do your homework before you invest.
2. Get the unit rent ready
After buying a building, you'll need to prepare it for tenants. This could range from a deep clean and fresh paint to full renovations. Your goal is to meet all requirements for a livable rental unit which includes the following:
- Replacing locks and securing windows
- Installing fire extinguishers and carbon monoxide detectors
- Making sure all essential appliances work
- Verifying proper plumbing and water supply
- Checking electrical systems for safety
- Confirming adequate heating and ventilation
- Addressing any pest infestations
- Repairing any structural issues
3. Fill vacancies
Now that you have a rentable real estate asset, the next step is to find great tenants. Here's what you need to do:
- Advertise: list your rental unit on various online platforms, community boards, and social media outlets. Use high-quality photographs, and highlight the best features and amenities.
- Applications: direct potential renters to an online application that allows you to easily collect and organize information from multiple interested parties. You'll also need to conduct detailed tenant screening to find the best renter for your property.
4. Create and sign a written lease
You and the tenant need to sign a contract that defines the lease. It should cover the lease term, rent amount, payment method, responsibilities for both parties, and other terms like prohibited actions.
Ensure your agreement is legally compliant with state and local laws, and include any special addenda like pet or guest policies.
5. Conduct inspections
Before your new tenant moves in, do a walk-through inspection with them. This documents the property's condition before occupation. This record allows you to assess the property’s status when the tenant moves out, reducing disagreements over who pays for maintenance and repairs.
Note that all properties will experience some wear and tear, but owners can deduct the cost of repairs from the tenant's security deposit for damages beyond this.
6. Manage on-going operations
Landlords have ongoing responsibilities when it comes to managing their properties. Many use property management applications like Azibo to assist with these tasks:
- Tenant management: screen potential tenants with comprehensive background checks, credit assessments, and rental history verification. Generate state-specific, legally compliant lease agreements using customizable templates and e-signature capabilities.
- Collecting rent: you'll need to set up a system for collecting rent payments from tenants. Azibo's rent collection capabilities help you automate this task, add rent reminders, and charge late fees for unpaid rent.
- Property maintenance: keep your property in good condition by managing maintenance requests. Allow residents to submit requests and track their status.
- Financial operations: use Azibo's built-in financial and accounting features to track income and expenses, maintain financial records, and generate key statements for tax season.
- Document management: centralize your document management for quick access to lease agreements, inspection reports, repair records, and safety certificates.
The role and importance of landlords in property management
Understanding the roles and responsibilities of landlords and tenants helps both parties in the rental market. From property acquisition to ongoing operations, landlords face various challenges and obligations. Tenants, too, have specific rights and duties that shape their rental experience.
As the rental market changes, both groups must stay informed about local laws, market trends, and best practices. Knowledge of landlord-tenant dynamics benefits property owners and renters, leading to smoother relationships and more successful rental experiences.
By applying these insights and using modern tools like property management software, landlords and tenants can handle the rental market more effectively, creating better living environments and investment opportunities.
What is a landlord: FAQs
Why do we say landlord?
The term "landlord" originates from the Old English word "landhlaford," which combines "land," meaning property or estate, and "hlaford," meaning lord or master. Historically, it referred to someone who owned land and had authority over it. Over time, it has evolved to refer to someone who rents out property to tenants.
Is a renter the same as a landlord?
No, a renter is not the same as a landlord. A renter, also known as a tenant, is someone who leases or rents property from a landlord. A landlord is the owner of the property and rents it out to tenants.
What is the term for landlords?
The term for landlords is "lessors."
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