Investing in real estate can be a great way to secure your financial future. Not only will you gain access to physical properties that you can sell if you need a little extra cash, but you will have the opportunity to generate rental income from your properties as well. Ensuring that you protect yourself against potential lawsuits is imperative if you choose to rent out your investment properties.
Here are two potential types of lawsuits that you might face as a real estate investor, and some suggestions to help you avoid these lawsuits in the future.
1. Security Deposit Lawsuits
Requiring your tenants to pay a security deposit is a common practice among landlords in today's market. The security deposit ensures that you will not have to pay for major repairs out of your own pocket should the tenant leave your property in less-than-perfect condition after moving out. Unfortunately, some tenants choose to try and take advantage of their landlords by filing a security deposit lawsuit. These lawsuits, if lost, could require you to pay your former tenant thousands of dollars.
To avoid a security deposit lawsuit, be sure that you have the tenant sign written terms of the deposit. Outline the exact circumstances under which a security deposit will be returned in full, and keep track of any expenses that you pay out of the deposit before returning the balance to the tenant. These precautions will help protect you against security deposit lawsuits in the future.
2. Personal Injury Lawsuits
As a landlord, you have a responsibility to provide a safe environment in which your tenants can reside. If you fail to maintain your property, and a tenant is injured as a result of your negligence, you could be held legally liable for the injury. Personal injury claims often require the losing party to pay out a significant amount of money, so it is best to take every precaution possible to avoid these lawsuits.
Be sure that you address any tenant maintenance requests immediately, and perform frequent condition checks of your investment properties to ensure they are in working order. Take photographs of any repairs that you make, and keep documentation provided by professional repair companies outlining the work done on each property. Having this information will allow you to prove that you are not at fault for any injuries your tenants may sustain while living in one of your properties.
Avoiding real estate lawsuits as a landlord will help you achieve greater financial returns from the residential properties you invest in. Be sure to have your tenants sign the written security deposit terms, and keep your properties in good repair to avoid the hassle of a court appearance.