Want to Be a Landlord? Read the Fine Print First
Byline: M. Anthony Carr, SPECIAL TO THE WASHINGTON TIMES
If you are looking to become an investor in rental properties, you should understand there are a few rules to the game of landlording.
Besides the principles of finance, return on investment and passive cash flow, there are also laws and regulations that even the fledgling landlord must master. Unlike the landholders of centuries ago, who were "lords" of the land, and therefore could rule as benevolent or despotic dictators, the landlord or landlady of the 21st century in America is girded with a plethora of local, state and federal rules that govern the practice of dealing in real estate.
The regulations real estate landlords face include local, state and federal fair housing laws, federal disclosures on lead-based paint and state-level tenant/landlord acts that regulate the responsibilities and privileges of both the renter and the landlord.
First a warning: This column is nothing more than a word of caution to those who want to start renting out real estate as a means of generating income. The area of real estate investment is littered with the corpses of those who failed to equip themselves legally or financially for the task of investing in real estate. Not only will you have laws to deal with, but now you may be viewed differently under the federal tax code, as well.
As with any business venture - and investing in real estate is a business venture - seek proper legal and financial counseling besides clicking onto various get-rich quick Web sites.
Now to the meat.
The Fair Housing Act of 1964. Whether you are a buyer, seller, renter, landlord, neighbor or protected class - this law requires all parties to not discriminate based on race, color, sex, religion, handicap, familial status or national origin.
Even if you are not involved in the real estate transaction, if you stand in the way of someone enjoying their property ownership, you could be sued for housing discrimination. For instance, if a person starts to threaten or treat badly a neighbor because he is of a certain religion, the person being discriminated against could sue the neighbor - but the complaint could also come from a civil rights group, real estate professional or government agency - anyone who is aware of the discrimination could file the suit.
Obviously, landlords must adhere to the Fair Housing Act. In addition, states and localities may tack on even more classes for protection. In the District, for instance, it is unlawful to discriminate based on political affiliation, matriculation (students), personal appearance or even ancestry. As a landlord, you must be aware of what your locality does and does not allow in your tenant selection process. If it's missing in the local or state fair housing act, then defer to the federal rules. …