New Jersey is a maze of trips and traps for inexperienced landlords. The regulations are strict and if not followed, the inexperienced landlord may have a tenant with no rental income.
There are any number of things to keep in mind when renting out a property to a tenant. Below we have detailed several possible complications to keep in mind when you call an attorney to advise you on your landlord duties.
The lease you sign with your tenant will be your main line of defense against any future conflicts between landlord and tenant. New Jersey law requires all leases be written in plain language so they can be easily read and understood. The lease will set out the term that your tenant agrees to rent the property. This term allows you to protect against your tenant leaving without notice and leaving you with an empty property. However, your tenant does not have to vacate at the end of a lease’s term. Your lease should also include details about late payment charges. You can also include a provision that requires a tenant to pay for any court and attorney’s fees that may arise if you need to take your tenant to court for eviction or disagreements. Without a clear and protective lease, as a landlord you will forfeit the protections offered by the law.
The Security Deposit:
When you do find a tenant and sign a lease you are entitled to no more than first month’s rent before the tenant moves in as well as a security deposit (one and one-half times the monthly rent) which is designed to cover any possible damages after the tenant moves out. The security deposit is very important, but it also has to be dealt with very specifically. The deposit is not the property of the landlord- it is the property of the tenant held in trust by the landlord until the end of the tenancy. By law, the lease should state where the money will be held and New Jersey law makes the security deposit untouchable until the tenant has actually vacated the property. These are only a few of the rules and regulations surrounding the security deposit, but the law is constantly changing and you should always consult a lawyer. Improper handling of the security deposit leaves you open to lawsuits and potential significant damages.
Keeping up your Property:
As a landlord you are bound by common sense requirements of habitability and safety for your tenants. If you fail to make proper repairs and keep the property in acceptable shape, the tenant can withhold rent. Landlords are not allowed to collect rent charges on rent properly withheld because of lack of repairs until the dispute is resolved. There are state, municipal and local property codes for rented establishments and they must all be followed and adhered to. An experienced lawyer can keep you abreast of any changes and help you navigate the numerous requirements.
Increasing the Rent:
Say you have a tenant you like, pays their rent on time, and seems comfortable but you need to raise the rent in order to keep making a profit. This is a reasonable request, but there are a number of rules to keep in mind before doing so. You cannot raise the rent during a lease term, you have to wait until you start a new term. A tenant also does not have to accept new lease terms. You can evict a tenant who refuses a new lease term, but you will have to go to court and prove you gave a tenant proper notice of rent increase. You also have to abide by rules and regulations of what constitutes a fair rent increase.
Overall being a landlord in New Jersey can be very profitable- or it can be a headache, a liability, and a drain on your resources. Without an experienced attorney to advise you on all of your landlord/ tenant matters from lease to eviction you could end up paying dearly- and wishing you had invested in an alpaca farm instead of a single family unit. And by the way, there are some fairly profitable alpaca farms in New Jersey as well. We can help you with the proper business formation if you decide to go that route instead.