A property management company plays a pivotal role in the rental market, ensuring the smooth operation of rental properties and the satisfaction of both landlords and tenants throughout the lease period.

However, addressing illegal property management practices that jeopardize tenant rights and violate fair housing laws is essential.

This article will explore illegal landlord actions that should be avoided, highlighting the importance of compliance, tenant safety, and fair treatment.

What Is the Fair Housing Act?

Almost all landlords and tenants have basic knowledge of the Fair Housing Act. Federal housing and urban zoning laws protect people from discriminatory treatment for housing purchases, rent, mortgage, and rent assistance.

The FHA protects individuals from discrimination based on the following:

  • Race
  • Color
  • Religion
  • Sex
  • Familial status
  • Disability

The U.S. Department of Housing and Urban Development (HUD) is the federal agency responsible for enforcing the Fair Housing Act. HUD investigates housing discrimination complaints, educates the public about fair housing rights, and provides resources to help individuals understand their rights and responsibilities under the law.

Illegal Property Management Practices

We'll describe a few examples of illegal practices that landlords and property manager should avoid taking below.

Taking Retaliatory Actions Due to a Tenant Complaint

A tenant exercises their legal rights by filing a complaint or reporting violations against their landlord or property manager. The landlord or property management company then (wrongfully) takes negative actions against that tenant. This is retaliation.

Such actions against complaints undermine the tenant's rights and protections and are generally considered illegal property management practices.

Examples of retaliation against tenant complaints include the following:

  • Increasing rent
  • Terminating the lease or filing an eviction
  • Reducing services offered
  • Harassing or intimidating the tenant

If a tenant believes they are experiencing retaliatory actions from their property manager, they should gather evidence and consider reporting the retaliation to local housing authorities or tenant advocacy organizations.

Illegal landlord actions that a real estate investor or management company should avoid

Forcefully Removing Tenants without an Eviction Order

In most jurisdictions, a property manager must follow legal procedures to evict current tenants. Raking matters into their own hands by forcefully removing or locking out tenants is considered a "self-help" eviction, which is unlawful.

Forceful removal or lockouts can include illegal property management practices, such as changing locks, removing personal belongings, denying access to the rental unit, or physically removing tenants without going through the proper legal channels. These actions can cause significant harm to tenants and can lead to legal consequences for the property manager.

Avoiding or Refusing Maintenance

The law requires landlords to provide timely repairs to their current tenant.

When a part of a house breaks down, the property owner handles repairs, not the tenants. Tenants have the right to live in a rental property that meets the required health and safety standards.

If a property manager consistently avoids or refuses necessary repairs, tenants may have legal recourse to address the issue. However, the specific remedies available to tenants will depend on their jurisdiction's laws and regulations governing landlord-tenant relationships.

Entering the Rental Property without Notice

Entering a rental unit without prior notice is generally considered one of the illegal property management practices by property managers or landlords. Tenants have the right to privacy and the peaceful enjoyment of their rent-stabilized apartments. The property manager must respect these rights by providing proper notice before entering the premises.

The specific requirements for the property manager to enter a rental property vary by jurisdiction, but they typically involve providing advance written notice to the tenant. The notice period can range from 24 hours to several days, depending on local laws and the reason for entry.

There are limited exceptions when property owners may enter a rental property without reasonable notice, such as emergencies that require immediate action to prevent injury or property damage. However, even in such cases, it is generally expected that property managers will inform the tenant as soon as possible after entering the premises.

Making Illegal Deductions from the Security Deposit

Sometimes property management companies try to keep the tenant's security deposit for something not related to its purpose. They may be interested in this security deposit for monetary reasons.

Illegal deductions may include fake repairs, false branch locations in the leasing agreement, or a fabricated reason for using the property.

Make sure to refrain from using the funds in the security deposit in a manner that does not resemble the intended purpose of the property.

Increasing Rent Beyond Legal Limits

This unlawful action is often taken on rent-control properties or rent stability based on a local ordinance. There may be a state law that restricts the maximum amount the landlord may increase rent. Always speak with a legal expert if you have questions about rental laws.

Failing to Perform Required Property Inspections

The required inspections for rental properties vary by jurisdiction, but there is generally a habitability inspection that a property manager must perform or facilitate. Here are a few examples:

Safety Inspections

These may include a fire inspection, as well as checking smoke detectors, carbon monoxide detectors, electrical systems, and other safety features to ensure they are in proper working condition.

Maintenance Inspections

These inspections may cover plumbing, heating and cooling systems, structural elements, and common areas.

Health Inspections

Depending on local regulations, the property manager may need to facilitate health inspections to ensure the rental property meets health and sanitation standards. These inspections may focus on cleanliness, pest control, ventilation, and mold prevention.

Move-In/Move-Out Inspections

Property managers typically conduct move-in and move-out inspections to document the property’s condition and assess any damages or needed repairs. They perform these when a new tenant moves in or moves out to facilitate communication, set a standard for the security deposit and property care, and maintain property value.

Failure to conduct a required property inspection can lead to various issues. It can result in delayed repairs, unaddressed safety or health hazards, violations of local housing codes or regulations, and potential liability for the property manager.

Increasing Rent in the Middle of a Lease Period

Charging more monthly rent in the middle of a lease is generally only allowed if a specific provision in the rental agreement allows for rent increases during the lease term. Lease agreements are legally binding contracts that outline the terms and conditions of the tenancy, including the agreed-upon rent amount.

Without a provision in the lease agreement allowing for mid-lease rent increases, the property manager will usually wait until the lease renewal or the start of a new lease term to adjust the unpaid rent. They can negotiate the new rental amount with the tenant at that point. Doing so before then, however, is typically unlawful.

Increasing Property Expenses

Property managers are expected to adhere to the terms of the rental agreement, including the agreed-upon expenses and any limitations or provisions related to those expenses.

The lease agreement typically outlines the expenses associated with a rental property, and both parties are expected to fulfill their obligations as specified. The property manager should only unilaterally increase expenses during the lease term with valid reasons and follow any agreed-upon procedures for adjustments.

Other Landlord-Tenant Law Tips

Your Screening Process Must Be Consistent

Different screening processes mean applying different criteria, standards, or procedures to different individuals or groups. All prospective tenants should undergo the same screening.

Some common criteria used in a screening process include credit checks, criminal background checks, income verification, rental history, and references.

Your Security Deposit Must Be Fair

While landlords are generally allowed to collect a security deposit from a tenant, the amount they charge must be reasonable and within legal limits.

Charging an unreasonably high security deposit can disproportionately affect certain individuals or groups, potentially leading to discrimination. This is particularly true if the higher deposit is imposed based on protected characteristics like race, national origin, familial status, or disability.

You Must Give Advance Notice for Rent Increases

In most cases, landlords must provide advance notice to a tenant before implementing a rent increase, even if their expenses like property taxes increase. The notice period can vary depending on laws in the area but is typically 30-60 days. Compliance with notice requirements helps ensure transparency and gives tenants time to prepare for the change in rent.

The rent increase should be reasonable and proportionate to the actual increase in expenses. Landlords should avoid implementing excessive or unjustified rent increases that may be deemed unfair or discriminatory.

Evicting a Tenant When You're Selling a Property

When a landlord decides to sell a rental property while a tenant is still in occupancy, the lengthy process of eviction can be complex and will vary depending on the jurisdiction.

There are certain circumstances in which a landlord may be able to evict a tenant when selling the property:

  1. The lease agreement may include a specific provision allowing the landlord to terminate the lease early in the event of a sale. 
  2. If the tenant is on a month-to-month tenancy, the landlord may be able to terminate the tenancy by providing proper notice as required by local laws. 
  3. Landlords may be permitted to evict a tenant if they or a close family member intend to occupy the property as their primary residence. 

Tenant's Rights When a Landlord Sells a Property

In some jurisdictions, the sale of a property does not automatically terminate a tenant's lease. The tenant typically has the right to remain in the property until the lease agreement expires, regardless of the change in ownership.  Other rights include:

  • Lease continuation
  • Notice of sale
  • Security deposit transfer
  • Rights to privacy
  • Notice of termination
  • Relocation assistance

Tenants should review their lease agreement, consult local laws, and seek legal advice if they have concerns or questions about their rights when a property is sold.

Likewise, landlords should understand and comply with the laws and regulations governing the sale of a rental property to ensure a smooth transition and maintain positive relationships with their tenants.

Evicting a Current Tenant Because They Cause Problems

Evicting a tenant due to disruptive or problematic behavior can be a valid reason for eviction in certain circumstances.

Landlords must follow the proper legal process when evicting a tenant, regardless of the problems caused. Engaging in "self-help" measures like changing locks, removing belongings, or shutting utilities without a court order is generally illegal. It can result in legal consequences for the landlord.

To navigate the eviction process successfully, you should consult with a qualified attorney or seek legal advice specific to your jurisdiction. They can provide guidance based on local laws and regulations and help ensure the eviction is conducted lawfully and complies with all relevant requirements.

Relationship of the Property Manager and Owner

The property owner entrusts the property manager with the responsibility of managing and overseeing the property on their behalf. Here are some key responsibilities and qualities of a good property manager:

  • Actively market and advertise the property to attract potential tenants
  • Handle all aspects of lease management, including drafting and negotiating lease agreements, enforcing lease terms, collecting rent payments, and managing lease renewals or terminations
  • Oversee property maintenance and coordinate necessary repairs
  • Collect rent payments on time, handle security deposits, and keep accurate financial records
  • Provide regular financial reports to the property owner and manage financial matters such as budgeting, expense tracking, and accounting
  • Serve as the primary point of contact for new tenants, addressing their concerns and resolving disputes in a timely manner
  • Have a solid understanding of the local real estate market
  • Anticipate potential issues, take preventive measures, and respond promptly to emergencies or problems

How Bad Property Managers Can Get the Owner Sued

A bad property manager can expose property owners to potential legal liabilities and increase the risk of being sued by a tenant.

One instance would be a property manager who neglects proper maintenance and repairs, resulting in hazardous conditions that may cause injury to tenants or visitors.

Discriminatory practices, illegal evictions, or improper handling of security deposits are examples of violations that can lead to lawsuits as well.

Poor lease management can also lead to legal issues like lease violations, non-payment of rent, or unauthorized subletting.

How to File a Complaint Against Your Property Manager

If you're having issues with your property manager and need to file a complaint, follow this procedure:

  1. Review the complaint process
  2. Gather information to support complaint
  3. Contact the local housing authority or real estate regulatory agency
  4. File a written complaint with the property management company

When in doubt, you should always seek legal advice.

Frequently Asked Quesitons

David is the co-founder & CMO of DoorLoop, a best-selling author, legal CLE speaker, and real estate investor. When he's not hanging with his three children, he's writing articles here!

Legal Disclaimer

The information on this website is from public sources, for informational purposes only and not intended for legal or accounting advice. DoorLoop does not guarantee its accuracy and is not liable for any damages or inaccuracies.