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When You Should Compensate Your Tenants

Blackfoot Woman Calling Landlord about Roof Leakage ProblemIn most cases, tenants are the ones paying for the right to live in your rental property. However, there are occasions when a Blackfoot property manager may wish or be obliged to compensate a tenant. When specific problems come up, you may find yourself in the strange position of paying your tenants instead of the other way around. To be as prepared as possible, it is vital to comprehend 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 almost entirely from landlord/tenant laws. As a property owner, you are in charge of guaranteeing that your rental house is in a habitable condition. On the whole, this indicates that your rental home is clean and livable. It also means that your roof keeps the house dry and that the appliances and other elements work as they do. When the property isn’t habitable for any reason, it can create circumstances where a tenant may be compensated.

Reasons to Compensate a Tenant

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

Repairs. One of the most common grounds a property owner would need to compensate a tenant is because of repairs. Sometimes, a property owner may not be able to undertake necessary repairs immediately. 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 resolve the problem. If you can’t, your tenant may be able to get the repairs done within the confines of state law. It’s great if the tenant gets your permission first, but even if they don’t, the chances are that you’ll need to reimburse your tenant for the cost of repairs if they follow the state requirements.

Broken appliances. Sometimes compensation comes up in disagreements concerning the condition and functionality of appliances. Unwillingness to take responsibility for broken appliances is one of the most common reasons a property owner gets sued by their tenants. Some 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. Similarly, a damaged oven or refrigerator is viewed as a bigger problem, and tenants may argue that the home is uninhabitable. Assume you’ve provided appliances with the rental house. If one of them breaks and you can’t repair or replace it right away, your tenant may be justified in repairing the machine and deducting the amount from the rent, as prescribed in your state’s landlord/tenant law. This is particularly the case 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 need a tenant to vacate a property before the lease ends. In such instances, 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.

While the most common, these are not the only reasons you may need to compensate a tenant. However, if you do find yourself in a position where payment is requested, it is critical to document everything accurately and then issue the funds as soon as possible. If you are pro-rating a rent payment, ensure that you record it and notify your tenant in writing. If you are demanded to send payment to your tenant directly, pick a method that delivers 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 keeping healthy tenant relations. As a Blackfoot property owner, you’ll need a detailed understanding of the landlord/tenant laws that oversee compensation to guarantee that you are in full compliance. Real Property Management Pocatello 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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