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When You Should Compensate Your Tenants

Jerome Woman Calling Landlord about Roof Leakage ProblemTypically, tenants are the ones paying for the right to live in your rental property. Nevertheless, there are moments when a Jerome property manager wishes or is required to compensate a tenant. When such problems arise, you may find yourself in the strange position of paying your tenants instead of the other way around. To be as prepared as possible, it is necessary to recognize what circumstances may demand tenant compensation and when and where you should offer it.

Tenant Compensation and the Law

The question of tenant compensation is almost entirely governed by landlord/tenant laws. As a property owner, you are tasked with ensuring that your rental house is in a habitable condition. This generally implies that your rental home is clean and livable. It also means that your roof keeps the house dry and that the appliances and other elements work correctly. When the property isn’t habitable, for one reason or another, that can leave circumstances 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 common explanations why a property owner would need to compensate a tenant is due to repairs. In some situations, a property owner might be unable to conduct critical repairs on time. Whether you are out of town or otherwise unavailable, if anything breaks and causes your tenants to lose the quiet enjoyment of the rental house, you must fix it. If you cannot do so, your tenant may have the repairs completed within the confines of state law. It’s ideal if the tenant gets your permission beforehand, but even if they don’t, you’re almost certainly required to reimburse your tenant for the cost of repairs if they follow the state requirements.

Broken appliances. Sometimes compensation leads to disagreements regarding the condition and functionality of appliances. Refusal to accept responsibility for broken appliances is one of the most common reasons a property owner gets sued by their tenants. This is partly because the issue 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 damaged oven or refrigerator is viewed as a significant issue, and tenants may argue that the home is uninhabitable. Assume you have provided appliances with the rental house. If one breaks down and you cannot repair or replace it immediately, your tenant may be warranted 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. Sometimes, a property owner may require a tenant to vacate a property before the lease ends. In some occasions, a landlord may agree to pay the tenant to move out. Property owners sometimes adopt this method 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, attempting to pay them to move may save you money in the long run.

Even though the most typical, these are not the only reasons you may need to compensate a tenant. Yet, if you find yourself in a situation where payment is required, it is critical to document everything comprehensively and issue the funds asap. If you are pro-rating a rent payment, don’t forget to record it and notify your tenant in writing. If you must send payment to your tenant directly, prefer a method that gives 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 establishing excellent tenant relations. As a Jerome property owner, you’ll need a full understanding of the landlord/tenant laws that regulate compensation to guarantee that you are in full compliance. Real Property Management Magic Valley 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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