Your Guide to Property Management Laws, Regulations, & Rules

What Are Some Important Property Management Rules and Regulations?

Property management laws encompass various areas, ensuring the safety, rights, and responsibilities of both property managers and tenants. Key areas include:

• Anti-discriminatory laws: Fair housing laws such as the Federal Fair Housing Amendments Act (FHAA) prevent discrimination based on race, color, national origin, religion, sex, familial status, or disability.
• Lease paperwork: Legally binding lease agreements must include specific terms and comply with local regulations.
• Safety, maintenance, and repairs: Property managers must ensure properties meet habitability standards, including weatherproofing, heating, water, and electricity.
• Financial management: Proper handling of security deposits, monthly rent collection, and financial records is essential to comply with regulations and avoid disputes.

Property management laws by state

Each state has specific property management laws that property managers must adhere to. For instance, in many (but not all) jurisdictions, property managers must obtain a real estate broker license to operate.

These laws are typically drafted and enforced by various regulatory bodies such as the state's Department of Real Estate or similar agencies. 

For instance, the California Department of Real Estate is responsible for regulating real estate activities, brokers, and salespersons, including those who work in property management, while the Texas Real Estate Commission handles these responsibilities in Texas. These agencies ensure compliance with state licensing laws and often provide resources and guidelines for property managers of both residential properties and commercial properties.

Below is a table linking to the respective government sites for state-specific regulations:

Tenant screenings

Tenant screenings are a critical step in property management, involving background checks, credit checks, income verification, employment verification, rental history, and proof of ID to assess prospective tenants. 

This process helps ensure that potential renters are reliable and financially responsible. It's important to obtain signed consent before running credit checks, as required by the Fair Credit Reporting Act (FCRA), to comply with legal standards and protect tenant privacy.

Another important guidance is provided by the Fair Housing Act, which prohibits discrimination in housing-related activities based on race, color, national origin, religion, sex, familial status, and disability, ensuring equal access to housing for all individuals.

Learn more about Tenant Screening Tips for PMs

Lease agreements

A lease agreement is a legally binding contract between the landlord and tenant, outlining the terms of the tenancy. Key components of rental agreements include lease terms, rent amount, security deposit regulations, and common clauses such as maintenance responsibilities and lease renewal terms. Regulations governing lease agreements can vary by state, so it's essential to ensure that leases comply with local laws.

For instance, state laws often contain security deposit limits, provisions for the return of unused portions, as well as a clear accounting for any deductions.

Consulting with a lawyer is crucial to ensure your agreement is legally sound and reflects your specific circumstances. 

We’ve shared some relevant resources below:

• Learn more about property management agreements, featuring a free template
• Learn about security deposit insurance, and its pros and cons

Financial management

Effective financial management in property management involves establishing clear rent collection procedures and maintaining organized financial records. This includes tracking rent payments, managing tenants’ security deposits, and adhering to landlord-tenant laws to avoid legal disputes and financial penalties. 

Keeping detailed records can help property managers resolve issues efficiently and ensure transparency with tenants and property owners.

Solutions such as property management software can streamline financial operations, automate routine tasks, and perhaps most importantly - ensure accuracy and regulatory compliance with respect to various accounting regulations and legal requirements. 

Evictions

Evictions are a legal process to remove a tenant from a property. Common reasons for eviction from rental units include nonpayment of rent, property damage, lease violations, and criminal activity. 

Property managers must follow their state's rules for eviction notices, such as unconditional quit terminations and termination for lease violations, to ensure the process is lawful and fair.

State laws regarding unconditional quit terminations and terminations for violation of a lease vary widely. Unconditional quit notices typically demand that tenants move out immediately without an opportunity to remedy the violation. States like Indiana and Mississippi allow landlords to issue these notices for serious or repeated violations, with Mississippi requiring 14 days to move out​.

For lease violations, the notice period and the opportunity for tenants to remedy the breach also differ by state. For example, in Kentucky, tenants generally have 15 days of written notice to cure a violation, but if the same violation occurs within six months, landlords can issue a 14-day unconditional quit notice​​. In contrast, states like Iowa and Maine require a seven-day notice period for tenants to address lease violations before eviction proceedings can begin​. In California, on the other hand, tenants must be given three days or more to cure the violation before landlords can file for eviction (source).

These legal nuances emphasize the importance of PMs and tenants understanding their specific state regulations to navigate eviction processes appropriately.

Property maintenance and repairs

Maintaining rental properties is a legal obligation for landlords, ensuring that properties are safe, habitable, and free from hazards like lead, asbestos, and mold. This includes weatherproofing, providing adequate heating and water, and ensuring electrical systems are functional. You can find out more about these issues in our Property Maintenance Guide for PMs. 

Landlords must also give notice to tenants before entering the property for repairs, as required by most state laws. When in doubt, consult a legal advisor to ascertain the specific laws that apply to you in your state. 

Tenants have the right to a habitable living environment, and failure to meet these standards can lead to legal consequences as well as issues with occupancy rates.

Indeed, when landlords fail to make required repairs, tenants have several options depending on their state's laws. Tenants may withhold rent, make the necessary repairs themselves and deduct the cost from the rent, pay a reduced rent, report the issue to local building inspectors who can order repairs, or even break the lease and move out. Additionally, tenants can sue the landlord for a partial refund of past rent or for damages caused by the substandard conditions, including discomfort and emotional distress.

• Get our preventative maintenance checklist for property management
• Learn about the importance of pest control to maintain a pest-free environment

Second Nature's Guidance

Staying informed about state-specific regulations, maintaining organized records, and ensuring compliance with federal laws such as the Fair Housing Amendments Act is key to successful property management. 

On a practical level, understanding and adhering to property management laws and regulations is crucial for property managers to ensure smooth operations, maintain property value, and foster positive tenant relationships. 

Learn more about property management company best practices, marketing, and more in our Second Nature Community.