Oftentimes, we think of Lease Agreements as a formalized list of Tenant requirements.
When is rent due?
What are the Tenant’s maintenance responsibilities?
When is the Tenant required to provide a notice to vacate?
Obviously, when a Tenant enters into a Lease Agreement, you expect them to abide by the provisions stated in the Lease.
And if they fail to honor those obligations, you, as a Landlord, have definite rights to seek damages.
But here’s something that I think Landlords sometimes overlook…
When you enter into a Landlord-Tenant relationship, not only does the Tenant have obligations, but you do as well.
Yes, you, as a Landlord, have responsibilities.
Even if those responsibilities aren’t explicitly mentioned in the Lease.
Just as you can evict a Tenant for violating the Lease, you can indirectly and inadvertently “evict” a Tenant by not providing adequate or safe housing.
In real estate law, this is called a Constructive Eviction and it’s much, much worse for Landlords than a regular eviction.
So, let’s dig into this a little bit.
What is a Constructive Eviction?
Constructive Eviction occurs when a Landlord fails to perform certain required duties which leaves a residential rental property in such disrepair that a Tenant can no longer live there.
In other words, the property is considered to be "uninhabitable" and the Tenant is forced to leave.
Conditions like these can give the Tenant the right to break their Lease with no penalties, as well as receive reparations (i.e. moola).
What am I required to do for Tenants in my Indianapolis rental property?
According to Indiana Ordinance IC 32-31-8-5, Landlords, at a minimum, are required to perform the following duties:
1) Deliver the rental premises to a Tenant in compliance with the rental agreement, and in a safe, clean, and habitable condition.
2) Comply with all health and housing codes applicable to the rental premises.
3) Make all reasonable efforts to keep common areas of a rental premises in a clean and proper condition (not a consideration for most single family housing).
4) Provide and maintain the following items in a rental premises in good and safe working condition, if provided on the premises at the time the rental agreement is entered into:
- Electrical systems.
- Plumbing systems sufficient to accommodate a reasonable supply of hot and cold running water at all times.
- Sanitary systems.
- Heating, ventilating, and air conditioning systems. A heating system must be sufficient to adequately supply heat at all times.
- Elevators, if provided.
- Appliances supplied as an inducement to the rental agreement.
Practically speaking, you have to provide the basic necessities and ensure your rental properties are fit to live in.
Heat, functioning plumbing, no mold... these are all things that seem to be pretty basic. But Landlords sometimes find themselves in Constructive Eviction legal battles.
How does a Constructive Eviction Work?
As a Landlord, you can be legally held responsible once you have notice or knowledge of noncompliance, if you refuse to remedy the noncompliance, or if you fail to remedy it within a reasonable amount of time.
Luckily, a Tenant can’t just complain about a creaky floor or leaking faucet and break their Lease. This is only for serious offenses and there is a process and procedure that must be followed.
However, if you fail to carry out your legal obligations as a Landlord, as stated in the ordinance above, a Tenant may bring an action in a court with jurisdiction to enforce an obligation after the following conditions are met:
1) The Tenant gives the Landlord notice of their noncompliance.
2) The Landlord has been given a reasonable amount of time to make repairs or provide a remedy of the condition described in the Tenant's notice. The Tenant may not prevent the Landlord from having access to the rental premises to make repairs or provide a remedy to the condition described in the Tenant's notice.
3) The Landlord fails or refuses to repair or remedy the condition described in the Tenant's notice.
If a judge finds the Tenant’s accusations to be valid, the Landlord could be required to pay Actual and Consequential Damages, attorneys fees and court costs, Injunctive Relief, or any other remedy appropriate under the circumstance.
Worst of all, by not providing habitable housing under local and state health codes or failing to remedy one of these issues, the Tenant no longer has the responsibility of paying rent or carrying out the Lease Agreement.
This leaves you with a vacant rental unit and out who knows how much money from reparations.
So, let's use this as an example...
The Tenant calls and notifies you that the heat no longer works. It's cold outside and repair is needed.
As the Landlord, you procrastinate. You just had the furnace serviced and there were no issues. "The Tenant must have done something to cause the furnace to fail," you think to yourself.
So, you decide to do nothing and inform the Tenant to purchase space heaters or, better yet, open the oven door.
You are a candidate for a Constructive Eviction case.
And you should be.
Now, here's another example.
Tenant calls and reports no heat. It's a Saturday night. You call your HVAC Vendor, who indicates they can get to the property shortly after noon on Sunday to make the repair.
You inform the Tenant, who blows up at you and threatens legal action, which could include a Constructive Eviction.
They have no case. You have provided a solution in a reasonable amount of time. Sure, it might be cold in the property for a while, but sometimes, that's going to happen.
Don’t be a Lazy Landlord
We take on a lot of properties - I mean a whole lot of properties - from other management companies.
Some of these companies are very professional and have very professional leases.
Some are not.
In both cases, I’ve seen specific lease language that requires the Tenant to maintain any appliances at the property, as well as deal with all maintenance associated with the home.
Doesn’t work. In fact, clauses like this may be illegal.
We all know and understand, as Landlords, that we have obligations to maintain a property to a basic standard.
If you force the Tenant to take on this burden, you’ll likely not only be disappointed with the result in that the home will not be maintained, but your Tenant will likely bolt at the first chance possible.
Tenants rent for a reason. One of the reasons is to avoid paying for maintenance, much less paying to upgrade someone else's property.
So, don’t be lazy and do the right thing.
How hiring an Indianapolis Property Management company can protect you
There is no question about it, being a Landlord is tough.
Self-managing can be difficult and we commend those of you who take on that challenge.
You could learn everything there is to know, and still find yourself in tricky situations, because, you’re dealing with human beings. Not everything is cut and dry in this industry.
This is just one area where hiring a property management company can have a tremendous benefit. Handling legal situations is hard for lawyers who know the law backwards and forwards, so for someone who doesn’t fully understand every aspect, it can be a major challenge.
A good PM will take this burden off of you fully. In fact, if your PM is doing their job, you should never have to worry about a Constructive Eviction in the first place because they will be taking care of every detail of your property and go above and beyond to service your customer, the Tenant.
If you’re even slightly worried about having to deal with legal issues now or in the future, it’s worth at least speaking with some companies to see how they could protect both you and your assets.
With or without a property manager, you have a responsibility to be a good Landlord.
Providing a rental unit in good condition and maintaining it is vital to a successful tenancy and avoiding costly legal battles, such as Constructive Evictions.