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When You Should Compensate Your Tenants

Warwick Woman Calling Landlord about Roof Leakage ProblemUsually, tenants are the ones paying for the right to live in your rental property. Notwithstanding, there are times when a Warwick property manager may wish or need to compensate a tenant. When certain problems emerge, you may find yourself in the surprising circumstances of paying your tenants instead of the other way around. To be as prepared as possible, you should 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 stems essentially from landlord/tenant laws. As a property owner, you are liable for guaranteeing that your rental house is in a habitable condition. At large, this implies that your rental home is clean and livable. Additionally, it indicates that your roof keeps the house dry and that the appliances and other elements work correctly. When the property isn’t habitable, for whatever reasons, that can result in instances where a tenant may be compensated.

Reasons to Compensate a Tenant

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

Repairs. One of the most common reasons a property owner would need to compensate a tenant is because of repairs. In specific circumstances, a property owner may not be able to make essential repairs right away. 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 should fix it. If you can’t, your tenant may have the repairs performed within the confines of state law. It’s desirable if the tenant has your permission first, but even if they don’t, you’ll almost certainly be required to reimburse your tenant for the cost of repairs if they follow the state requirements.

Broken appliances. Sometimes compensation comes up in disagreements about the condition and functionality of appliances. Neglecting to accept responsibility for broken appliances is one of the main causes a property owner gets sued by their tenants. Part of this is because the situation is more complex than it first appears. Landlords sometimes argue that a broken dishwasher, while inconvenient, does not make the entire property uninhabitable. Simultaneously, a busted oven or refrigerator is regarded as a major concern, and tenants may argue that the home is uninhabitable. For example, you have provided appliances with the rental house. If one of them fails, and you can’t repair or replace it straightaway, your tenant may be legitimate in repairing the machine and deducting the amount from the rent, as prescribed in your state’s landlord/tenant law. This applies especially if your lease documents assign responsibility for the appliances to you as the property owner.

Cash for keys. Sometimes, a property owner may need a tenant to vacate a property before the lease ends. In such cases, a landlord may offer to pay the tenant to move out. Property owners sometimes use this strategy 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.

Although the most typical, these are not the only reasons you may need to compensate a tenant. However, if you ever find yourself in a position where payment is necessary, it is critical that you thoroughly document everything and then issue the funds as soon as possible. If you are pro-rating a rent payment, keep in mind to record it and notify your tenant in writing. If you have to send payment to your tenant directly, choose a method that generates 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 Warwick property owner, you’ll need a deep understanding of the landlord/tenant laws that oversee compensation to ensure that you are in full compliance. Real Property Management Providence 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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