Landlord disclosures are an important part of any rental process. Each state has specific things that landlords must disclose to tenants prior to renting the property. Disclosures are generally described as events or issues that will play a role in the tenant’s ultimate decision when choosing to rent the property.
Put simply anything that has an effect on the tenant’s choice to rent the property may, by law need to be disclosed to them prior to taking occupancy of the property. In this article we will discuss some of the more common disclosures required by law.
Prior to marketing your property ensure you discuss any issues that you are aware of with your broker and ascertain whether your state requires this information to be disclosed to tenants.
Types of Disclosure
Disclosures can be broken down into a few categories, each of which has different subsections for you to be aware of. In every state the law surrounding these subsections is different and it is your responsibility to ensure that you are aware of these laws and the possible penalties you may face for failure to comply with any disclosure laws.
Discuss any issues with your broker and take their advice. Following the rules is a must as the potential punishments can affect the tenancy and you directly in the form of fines or prison time.
There are lots of health related disclosures that you need to be aware of. Most states will have specific rules over what you need to disclose and the reasons for doing so. Health related disclosures will have a very strong bearing on tenants as they will need to be aware that their health may be at risk should they move into the property.
Properties located in flood zones often come with disclosure orders and states that suffer from frequent localised flooding will often have laws that relate to flood zone disclosures.
There are obvious reasons why this will be a problem to tenants and presents both a health risk and a potential damage issue due to loss of personal belongings. It is also important for insurance reasons that tenants are informed of any flood zoning that includes their property as should a tenant not be aware of potential flood problems their insurance company may not offer them the required amount of cover.
A number of states will require landlords to disclose to tenants whether or not their property has suffered from previous pest infestations. This is important as should tenants be aware of previous issues they will be better placed to prevent pest problems in the future.
In my opinion, this shouldn’t present a huge issue to incoming tenants as they will be able able to avoid any future problems if they are made aware at the beginning of the tenancy. Often states have rules that are specific to more aggressive pests such as bed bugs or rodents. These are often viewed as problems that come back frequently. Check if your state has a pest disclosure law and if the pest your property suffered from is included in that law.
Radon is a harmful gas that some states require you to disclose. Radon is a naturally occurring radioactive gas that is common in some states and can be very dangerous. You will need to check what gases are prevalent in your area and whether or not you need to disclose the presence of these gases.
This is a serious matter for tenants and could potentially endanger their lives so you must check if gas occurs in your area and my advice would be to disclose such a dangerous problem regardless of whether mandated to do so by law or not. However your state not require disclosure in relation to dangerous gas problems of course you are within your legal rights not to inform tenants.
Lead paint is of course toxic and can present a very real threat to your tenant’s health. A large number of states have rules that relate to lead paint so it is fairly likely that your state will require you to disclose this information.
When you purchase the property ensure you have a survey carried out so that you are aware of the presence of lead paint and are able to disclose this to your broker and any potential tenants.
Crimes or Deaths
Some states will have rules in relation to crimes that have occurred at the property and deaths that have taken place at the property. Some tenants may have issues living at the site of a murder or in a property that was previously used a drug house.
Not all states, but some will require the disclosure of such crimes so it pays to understand your state’s rules in relation to informing tenants of previous issues that have occurred at the property.
States often consider nature deaths and things like suicides or murders differently. Try to find out as much as you can about the history of your property and make sure you are aware of any potentially negative history that involves your property.
Some states will not consider it necessary to inform tenants of natural deaths at the address, but a large number will require murders or suicides to be disclosed. Speak with your broker to ensure you comply with the rules.
A number of states have brought in rules relating to sex offenders that live in the area of your rental property. Landlords are often required to inform potential tenants if any registered sex offenders live in their neighbourhood.
This is something that may be a deciding factor for tenants, particularly those with children who will wish to avoiding living in close proximity to registered sex offenders who may endanger their children.
Drugs and Prostitution
Some properties that are located in high crime areas may have rules that require landlords to disclose the crime rates of a given area or whether or not any arrests have occurred at the property that tenants are considering renting.
If you are conscious that your property is located in a particularly high crime area do a little digging to find out if there has been a history of disturbance or arrests at your property that you may need to disclose. Similar to death disclosure, some tenants may not feel comfortable living in a property that suffers from a history of crime.
In a number of areas you are required by law to inform tenants if you are aware of any up and coming major construction works that will affect their access to light or cause noise pollution or congestion in their area.
There is normally a statute of limitation on your ability to be aware of works and the timeframe into the future that you can be expected to be aware of. A simple check with you city’s planning department should give you a keener understanding of construction works that are proposed in your area.
It is of course only fair for you to disclose this kind of information to your tenants as this would certainly have a serious bearing over their decision to rent your property. Tenants that often only live at a property for a year or two could find their quality of life seriously impeded by construction close to the property.
Late Night Works
In a number of states any properties located close to late night entertainment areas, next to late running train lines or close to businesses that operate late into the night have disclosure orders on them meaning that tenants need to be made aware of the possibility of noise running long into the night which may hamper their quality of life.
It is likely that you as a landlord will be aware of any such activities that occur close to your property. If you are conscious that noise may be an issue at your property it is worth discussing the problems with your broker so that you understand what you are required to disclose to tenants.
Intention to Sell/Change of Owner
Landlords will normally be required to inform tenants if they intend to sell the property that they are living in or if there is a possibility that their landlord will change during the tenancy.
This is important for tenants for a number of reasons as it may change the relationship they have with their landlord. It may mean that they are dealing with someone who is not as accommodating as you are and may simply be something that lowers the enjoyment of their living situation.
States will often make you disclose your intention to sell as this may affect the tenants enjoyment of the property as they will have to suffer a number of viewings during their tenure which may prove to be intrusive for tenants.
Mortgage or Outright Ownership
Some states will require you to disclose in the contract the way your purchase was financed. The obvious reason for this is that the tenants will need to be made aware if there is a chance that you may default on any loan agreements and therefore risk their tenancy at the property.
Should you default on any mortgage payments your property may be repossessed and tenants may suffer eviction through no fault of their own. Check your state’s rules relating to finance disclosures as you may need to make allowances for this in any contract you have with your tenants.
It is fairly common sense to realise that some issues at your property may be considered so big by tenants that they may wish to not proceed with renting the property. You must understand if you have any issues at your property that could be viewed negatively by incoming tenants and if your state requires you to inform your tenants of these issues.
Some landlords will stick to what the law states they must disclose and some landlords will feel more comfortable making their tenants aware of all previous problems at the property and then letting the tenants decide whether to move forward or not.
The very minimum you must do is what you are required to by law, but from a relationship perspective it may get you off on the wrong foot with your tenants if you willfully hide negatives you are aware of from them. It can also be viewed negatively by any brokers you employ if you do not inform them of potential problems at the property.
Most tenants will handle issues you present them with care and will make a logical decision as to whether to proceed or not, you should not be scared of being truthful. Every property has an ideal tenant, so it is better to be honest and find a different tenant rather than lie, not disclose the issues and deal with the consequences after move in.
Worth mentioning is that Arkansas, Colorado, Idaho, Louisiana, Mississippi, Missouri and Vermont currently have no disclosure laws and therefore do not require you to disclose anything to your incoming tenants.