While real estate investing offers most owners a great platform from which to build wealth and financial security, it also comes with challenges, some of which you may not be thinking about when you buy that first property. For example, it’s easy to make a legal mistake without even realizing it. When you rent out a property in Roseville, you take on a lot of risk and legal liability.
It’s important to understand the state, federal, and local laws that govern how you rent your home and relate to your tenants. This is not always easy because the laws change frequently and unless you have the time and resources to stay updated and educated, you might violate a new law without understanding the requirements or the consequences.
Professional Roseville property management can help. Property managers spend a lot of their time staying up to date on laws that have been passed and those that may be coming around the corner in the future. Your property manager can protect you from mistakes and liability and ensure you and your property remain in compliance. Good property managers also hold tenants accountable to their requirements and responsibilities.
Today, we’re taking a look at some of the most important federal and state laws that you’ll need to know when you’re lawfully renting out property in Roseville. We’ll share some additional blogs that dive deeper into many of these topics, so be on the lookout for those.
FEDERAL LAWS YOU NEED TO FOLLOW
In many instances, California’s state laws are stricter than the federal laws in place. Two examples that come to mind are the eviction moratorium, which went further during the height of the pandemic to protect California renters from eviction than the federal moratorium did, and the fair housing laws. In California, we have a longer list of protected classes than the seven identified by federal laws. However, it’s important that you know what these federal laws are and how they impact your rental property in Roseville.
Federal Fair Housing Act
The federal Fair Housing Act applies to all Roseville landlords and their rental properties. You are not permitted to discriminate based on race, color, national origin, religion, sex, familial status, or disability. Most landlords don’t intentionally violate these laws, but if you say the wrong thing in your marketing materials or you screen one applicant differently than another applicant, you could run into trouble.
Here are some examples of how this law can be broken unintentionally:
- Your listing that advertises your home for rent says something like “perfect for single professionals” or “ideal for older adults.”
- You deny one applicant a property because of a 570 credit score but approve another applicant with identical credentials who has a lower credit score.
Establish some standard qualifying rental criteria and put it in writing. Make sure your advertising focuses on the property and not the type of tenant you’d like to find.
In California, you’ll have additional protected classes. You cannot discriminate based on additional factors including citizenship, immigration status, primary language, sexual orientation, or military status.
Americans with Disabilities Act
The Americans with Disabilities Act is also an important federal law to know. It requires you to make reasonable accommodations for tenants who have disabilities. Today, this is most commonly applied to service animals and companion animals. You have to know the difference between a pet and a service animal. You have to know the difference between a service animal and an emotional support animal. If you don’t, there could be legal consequences and huge financial penalties. A tenant who needs a service animal cannot be treated like a tenant who wants to move in with a pet. You have to understand the difference, or you can find yourself in some expensive legal trouble.
These accommodations also apply to parking spaces that are accessible for people with disabilities and modifications that may need to be made to your home in order to allow a tenant with a disability to live there comfortable. For example, you may need to allow grab bars to be installed in the shower. A ramp may be necessary into the house if a tenant is in a wheelchair. Be prepared for these legally required accommodations.
Fair Credit Reporting Act
The Fair Credit Reporting Act is important because you’re collecting a lot of personal and financial information about tenants and applicants. You have to keep that secure and private. If you deny a tenant based on credit, you have to send a letter with specific wording about why, and instruct them how to access their free credit report.
With some of the latest property management software and technology that’s available, complying with the privacy and reporting laws that are required is easy. If you’re not already using great technology or working with a Roseville property manager who can access those tools and resources, consider prioritizing this. It will help protect you against mistakes that are easily made when you accumulate so much data on your tenants and applicants.
STATE LAWS IN CALIFORNIA
The state of California is known to be tenant-friendly. We have some of the strictest rental laws in the country. That doesn’t mean it’s not a good idea to invest in Roseville and throughout California. It simply means you need to be vigilant about keeping up with the laws that protect your tenants. Mistakes will be costly.
The Tenant Protection Act: Rent Control and Eviction
Statewide rent control went into effect on January 1, 2020, and while some rental properties are exempt, many will have to comply with the rent control restrictions. This law limits the amount that landlords can raise rent from year to year. If your rental property in Roseville, Rocklin, Loomis, Lincoln, Granite Bay, or one of the surrounding communities is bound by the rent control law, you’ll need to limit your rental increases to five percent plus the cost of living increase set by the Consumer Price Index.
There are a lot of nuances and whether your property is covered by the rent control law or not. First, make sure you know whether you have to comply with this law or not. Then, make sure it’s communicated to your tenants in your lease agreement. You need to include specific verbiage in your lease to reflect whether you are bound to the rent control laws or exempted from them.
Evictions have also changed. You can still evict tenants with cause, meaning if they stop paying rent or violate the terms of your lease agreement, you should go ahead and evict them. But, if you simply don’t want to renew the lease or you have other plans for the property that requires you to remove them from the home, you’ll be required to pay a relocation fee that’s equivalent to one month’s rent.
California is also still recovering from the eviction moratorium. A number of rental assistance programs are in place to help tenants catch up with overdue rent. In some cases, landlords can apply for that aid on behalf of the tenants. Make sure you know where you stand before you evict.
Section 8 Tenants and Your Roseville Rental Home
Another new law that Roseville landlords need to understand pertains to how you market your home and screen your tenants. In the past, you could actively advertise that you did not accept Section 8 tenants for a property. You cannot do that anymore.
When you’re screening tenants, you need to consider Section 8 applicants. All of your screening criteria can remain the same, but when it comes to your income standards, you have to consider a housing voucher as part of an applicant’s income. You cannot deny a Section 8 tenant if all their other qualifications meet your criteria.
Following California Security Deposit Laws
Security deposit laws are also important, mostly because it’s one area where landlords make a lot of mistakes. In fact, most tenant disputes occur because of conflicts over the security deposit. There are limits to how much you can collect in a security deposit, but the real trouble seems to come with the way a security deposit is returned.
In California, you can collect the equivalent of two months’ rent for an unfurnished property and three months’ rent for a furnished property. At the end of the lease term, you have 21 days after a tenant moves out to return the security deposit and/or an itemized accounting of why money was withheld and what it’s being used for.
There are frequent disputes between what should be considered tenant damage and what should be considered normal wear and tear. Your move-in inspections and move-out inspections need to be well-documented. You are legally required to offer your tenants a walk through before they move out to give them an indication of what you might deduct. If you lose a security deposit lawsuit, you can be accountable for paying the tenants three times the amount of the initial deposit.
These are only a few of the most important laws to understand when you’re renting out property in Roseville, Rocklin, Loomis, Lincoln, Granite Bay, and other California communities. If you need some help sorting through these legal requirements, please contact us at Action Properties.