Disputes happen. Issues with rents, deposits, repairs, maintenance, privacy, and lease violations can quickly flare into full blown disputes between landlord and tenant. Some disputes can be avoided, some cannot. Even then, not every dispute is a call to battle. However disputes could be considered a call to action. How you handle the dispute – the action you take – is important.
Landlord tenant disputes are disruptive and stressful and bleed time, energy, and money away from business and private life. Some landlords view tenant disputes as inherent to their business. Others seem to have relatively stress-free tenant relationships. The difference may relate to your business policies, in particular the importance you place on communication.
Disputes often arise as a result of a breakdown in communication. Disputes may be resolved by engaging in communication to determine the underlying issues and either negotiating a settlement, entering into mediation, arbitration, or litigation.
The best way to handle disputes is to avoid them. Avoiding disputes is not done so by ignoring the issues. Doing nothing to resolve conflicts is rarely a good business policy. Similarly, jumping into legal action as a first response to a dispute may also be ill advised. However there are situations that do call for legal action, such as an eviction to terminate a tenancy. Before you make the legal call consider all available options. There are alternative methods of resolving a dispute without having to consult a lawyer. Your job is to select the option that allows you to control and resolve the issue ppropriately and in a professional manner.
To minimize the chance of disputes, it helps to know and follow the law. Landlords and tenants have certain rights and responsibilities under a myriad of federal, state, and local laws. Knowledge of the law provides the foundation for your lease agreement. A strong lease agreement that is compliant with statutory requirements and emphasizes the rental issues important to your business helps to minimize problems later on. A tenant move-in orientation meeting allows landlord and tenant to discuss rental issues and clarify what’s expected from both parties. Ongoing communication about your policies helps to remind the tenant what his duties and responsibilities are. All communication, oral and written, should be documented to help defend against tenant claims of landlord default. In a perfect world, both landlord and tenant would conduct themselves in good faith and fair dealing during their relationship. However misunderstanding, misremembering, or manipulation of the facts can lead to disagreements. The willingness to listen and work toward satisfactory resolution is important to keep communication open and honest.
It makes sense to start by talking with the tenant to determine if negotiation and settlement is possible, particularly if your tenant has been a good tenant to this point. Even though you might think you have “right” on your side by going to court, you will spend a good deal of time and money to win on principle. If you actively listen to the tenant you may discover the tenant has a valid point, perhaps information you can use to avoid future disputes. In reaching a successful compromise both parties want to feel they’ve won, or at least not lost as much. While money is usually the chief motivator to solve problems, not everyone puts a premium on the dollar. Determine what might motivate your tenant to accept a settlement. When settlement is reached, all details should be documented and acknowledged in writing by each both parties.
If you are unsuccessful in your negotiation and settlement talks, you may want to consider mediation. A mediator is an independent, neutral third party trained to help facilitate communication. The goal of mediation is to help parties work out their own solution to disputes. A mediator does not have authority to bind either landlord or tenant to an agreement. Either party is free to proceed with legal action if no compromise can be reached. Studies have shown however that those who agree to mediate their differences are more likely to be satisfied with the resolution that those who proceeded directly to court.
Arbitration is another non-judicial method of resolving disputes. An arbitrator is a neutral third party who reviews the case evidence and makes a final decision. Unlike mediation the arbitrator has the authority to bind the parties to an enforceable decision. If the arbitration decision involves a money award and the losing party does not pay as required, the money award can be converted to a court judgment.
Many business contracts include language specifying that any disputes under the contract are to be settled by binding arbitration. If you are using a generic rental agreement you may want
to read it thoroughly for such language and act accordingly.
Alternatively, you may file a lawsuit against the tenant or find yourself served by his lawsuit. Most lawsuits involving a relatively small amount of money are handled through the state’s small claims courts. Small claims courts have a maximum limit on the amount of money that can be awarded with the majority of states limiting the amount to less than $15,000. A few states have a higher maximum limit, but information such as this should be verified with the appropriate court of jurisdiction before bringing a lawsuit. Small claims court procedures are relatively simple and most landlords can easily represent themselves in court. However, it is usually advisable to be represented by an attorney if the tenant is. In some states, lawyers are not allowed in small claims courts.
There is another consideration that could arise in landlord tenant disputes. If the tenant has exercised a legal right – complained to a government agency such as a building or housing agency regarding code violations for health or safety or has organized or become a member of a tenants’ union organization – and the landlord takes an action against the tenant which is or is presumed to be retaliatory, the landlord is in violation of state law. Retaliatory landlord action may take the form of raising the rent, reducing services to the tenant, or threatening to bring legal action for possession of the unit (eviction). Some states have an automatic presumption timeframe, ranging from 90 days to one year from the time of the tenant’s legal activity, during which a landlord’s action would be considered retaliatory. However it may be that if the landlord can prove his action for possession is due to the tenant being in arrears for rent or that code violations are the tenant’s fault due to lack of reasonable care of the property, presumptive retaliation may not be applicable. To help avoid charges of retaliation you must accurately document the interactions you have with the tenant (e.g., repairs, complaints, or inspections), the type of action taken, and the date and time received/resolved. Any time you terminate a tenancy or change terms of the tenancy you should have a legitimate business reason that is unrelated to any exercise of tenant rights.
In summary, key to efficient and minimum-stress property management are avoiding disputes to the degree possible and resolving as early as possible those that are unavoidable.