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Renting out a property can be a smart way to diversify your income, but there's a lot to consider before doing so. Being a landlord comes with several legal and ethical obligations you have to meet to make sure you're complying with local, state and federal laws. Being aware of and adhering to these requirements helps protect you from potential legal disputes, keeps your property in good condition and fosters good relationships with your tenants. Whether you’re a first-time landlord or have been managing properties for years, understanding what you’re responsible for when renting out a property is key to success.

A financial advisor can help you create an investment plan for your rental property. 

7 Landlord Requirements

Landlord responsibilities go beyond simply finding a tenant and collecting rent. When you rent out a property, you must comply with several legal requirements designed to protect tenants and maintain the property. The following are some of the requirements you should be aware of:

1. Comply With Housing Codes

As a landlord, you're required to ensure your rental property meets local and state housing codes. These codes cover a range of safety and health regulations, including electrical systems, plumbing, heating and structural integrity. For example, your rental property must have functioning smoke detectors, and the building must be structurally sound. Regular inspections can help ensure your property is compliant with these regulations. Failing to comply with housing codes can lead to fines, legal action or even having your rental license revoked.

2. Maintain the Property

A landlord is responsible for maintaining the rental property to keep it safe, livable and in good repair. This includes responding to maintenance requests from tenants in a timely manner and addressing any health or safety issues. Regular maintenance tasks might include fixing leaks, repairing broken appliances or addressing pest infestations. As a landlord, you should schedule regular property inspections to catch any issues before they become bigger problems. A well-maintained property not only increases tenant satisfaction but also protects the long-term value of your investment.

3. Manage Security Deposits

In most states, landlords are required to collect and manage security deposits in a specific way. Typically, you have to keep the security deposit in a separate account. You may also need to return it to the tenant within a certain time frame after they move out, minus any deductions for damage or unpaid rent. Provide tenants with an itemized list of any deductions from their deposit, along with receipts, if necessary. Failing to follow these rules can result in penalties, including being required to return the full deposit to the tenant regardless of any damage.

4. Don't Retaliate Against Tenants

Landlords are generally prohibited from retaliating against tenants for exercising their legal rights, such as filing a complaint about unsafe living conditions or joining a tenant union. Retaliation could include raising the rent, reducing services or initiating an eviction without cause. Most states have strict laws protecting tenants from retaliatory actions, and violating these laws can lead to lawsuits or fines. As a landlord, it’s important to address tenant concerns in good faith and avoid taking any negative actions in response to tenant complaints.

5. Follow the Fair Housing Act

The Fair Housing Act is a federal law that prohibits landlords from discriminating against tenants or prospective tenants based on race, color, national origin, religion, sex, familial status or disability. This means that landlords cannot refuse to rent to someone based on these characteristics or set different terms for different tenants. Violations of the Fair Housing Act can result in hefty fines and legal consequences. Landlords should make sure they have a consistent screening process and document interactions with prospective tenants to make sure they comply with Fair Housing Act laws.

6. Provide Notice

Landlords have to provide notice to tenants before entering the property or making any changes to the lease. For example, most states require landlords to give at least 24 hours’ notice before entering a tenant’s unit for repairs or inspections. In addition, landlords generally must provide advance notice before raising rent or terminating the lease. The amount of notice required varies by state and local laws, so familiarize yourself with the regulations in your area to avoid legal disputes.

7. Follow Local Laws

In addition to state and federal regulations, landlords must also follow local ordinances that may apply to rental properties. These laws can include rent control ordinances, noise regulations and rules about how many people can live in a rental unit. Some cities also require landlords to obtain a rental license or register their property with the local government. Failing to comply with local laws can lead to fines, property violations or even loss of your ability to rent out the property.

Bottom Line

As a landlord, understanding and complying with these requirements is essential. From maintaining the property and adhering to housing codes to managing security deposits and following anti-discrimination laws, being a responsible landlord is critical for a smooth and lawful rental process. By meeting these requirements, you protect both your financial investment and your relationship with tenants.

Frequently Asked Questions

What Happens If a Landlord Doesn't Comply with Housing Codes?

If a landlord fails to comply with local housing codes, they may face fines, legal action or be required to make immediate repairs. In some cases, tenants may have the right to withhold rent or break the lease without penalty if the property is deemed unsafe or uninhabitable.

Do Landlords Have to Provide Notice Before Entering a Rental Property?

Yes, in most states, landlords are required to give tenants advance notice before entering the rental property. The notice period typically ranges from 24 to 48 hours, depending on the state. Exceptions may apply in emergencies.

Can Landlords Deduct Money from the Security Deposit?

Yes, landlords can deduct from the security deposit for legitimate expenses such as unpaid rent or damages beyond normal wear and tear. However, you have to document deductions, and you may be required to provide an itemized statement to the tenant.

Tips for Real Estate Investing

• Understanding the responsibilities of being a landlord can be complex, especially when it comes to managing your finances and ensuring your investment pays off. A financial advisor can help you determine the right investments for your portfolio and help you plan for the future. Finding a financial advisor doesn’t have to be hard. SmartAsset's free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now.

• If you’re thinking about becoming a landlord, understanding the basics of real estate investing is crucial. Start by researching different property types, calculating potential returns, and learning about financing options. Partnering with professionals, such as real estate agents and financial advisors, can help you make informed decisions.

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