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When You Should Compensate Your Tenants

St. George Woman Calling Landlord about Roof Leakage ProblemMostly, tenants are the ones paying for the right to live in your rental property. Yet, there are events in which a St. George property manager may wish or need to compensate a tenant. When particular incidents happen, you may find yourself in the uncommon position of paying your tenants instead of the other way around. To be as prepared as possible, it is critical to 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 comes up almost entirely from landlord/tenant laws. As a property owner, it is your job to ensure that your rental house is in a habitable condition. Generally speaking, this implies that your rental home is clean and livable. Additionally, it means that your roof keeps the house dry and that the appliances and other elements work properly. When the property isn’t habitable, for one reason or another, that can lead to scenarios 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 typical reasons a property owner would need to compensate a tenant is because of repairs. In some cases, a property owner may be unable to make necessary repairs right away. 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 liable to repair it. If you can’t, your tenant may have the repairs finished within the confines of state law. It’s ideal if the tenant gets 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 leads to arguments concerning the condition and functionality of appliances. Refusing to accept responsibility for broken appliances is one of the main reasons a property owner gets sued by their tenants. Part of this is because the problem is 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 malfunctioning oven or refrigerator is regarded as a major issue, and tenants may argue that the home is uninhabitable. Assume you have provided appliances with the rental house. If one of them fails, and you can’t repair or replace it urgently, 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 certainly relevant if your lease documents assign responsibility for the appliances to you as the property owner.

Cash for keys. A property owner may occasionally ask a tenant to vacate a property before the lease ends. In such scenarios, a landlord may propose to pay the tenant to move out. Property owners occasionally employ this approach 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.

Although the most typical, these are not the only reasons you can have to compensate a tenant. The most important thing is to meticulously document everything and issue the funds as soon as possible if you do find yourself in a scenario where payment is required. If you are pro-rating a rent payment, don’t forget to record it and notify your tenant in writing. If you need to send payment to your tenant directly, prefer 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 sustaining good tenant relations. As a St. George property owner, you’ll need a solid understanding of the landlord/tenant laws that determine compensation to guarantee that you are in full compliance. Real Property Management Southern Utah can help you prepare a lease to cover these issues or even manage your property entirely. Contact us today to know more.


Originally published on October 9, 2020

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