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When You Should Compensate Your Tenants

Morgan Woman Calling Landlord about Roof Leakage ProblemGenerally, tenants are the ones paying for the right to live in your rental property. But there are situations when a Morgan property manager may wish or need to compensate a tenant. When a certain situation happens, you may find yourself in the odd situation of paying your tenants instead of the other way around. To be as prepared as possible, it is important to determine 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 is almost entirely from landlord/tenant laws. As a property owner, you are committed to ensuring that your rental house is in a habitable condition. On the whole, this suggests that your rental home is clean and livable. It also entails that your roof keeps the house dry and that the appliances and other elements work effectively. When the property isn’t habitable, for one reason or another, it might lead to scenarios where a tenant may be compensated.

Reasons to Compensate a Tenant

Some of the most prevalent reasons that a property owner may need to compensate a tenant include the following:

Repairs. One of the most common causes a property owner would need to compensate a tenant is because of repairs. At times, a property owner may find it impossible to undertake immediate repairs. 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 need to solve it. If you are unable to do so, your tenant may have the repairs done within the confines of state law. It’s great if the tenant asks your permission first, but even if they don’t, the possibilities are that you’ll have to reimburse your tenant for the cost of repairs if they follow the state requirements.

Broken appliances. Sometimes compensation results in arguments about the condition and functionality of appliances. Failing to accept responsibility for broken appliances is one of the primary explanations why a property owner gets sued by their tenants. A portion of this is 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 instant, a defective oven or refrigerator is considered a major concern, and tenants may argue that the home is uninhabitable. Imagine you have provided appliances with the rental house. If one of them stops working, and you can’t repair or replace it instantly, 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 especially true if your lease documents assign responsibility for the appliances to you as the property owner.

Cash for keys. In some cases, a property owner may ask a tenant to vacate a property before the lease ends. In other situations, a landlord may offer to pay the tenant to move out. Property owners sometimes choose this technique 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.

Even though the most typical, these are not the only reasons you may need to compensate a tenant. Yet, if you ever find yourself on an occasion where payment is demanded, make sure to document everything carefully and issue the funds right away. If you are pro-rating a rent payment, you must record it and notify your tenant in writing. If you need to send payment to your tenant directly, utilize 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 sustaining positive tenant relations. As a Morgan property owner, you’ll need a clear understanding of the landlord/tenant laws that regulate compensation to ensure that you are in full compliance. Real Property Management Northern Utah can help you prepare a lease to cover these issues or even manage your property entirely. Contact us today to make a start.


Originally published on October 9, 2020

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