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  • Marc Halpern, Part Time Investors LLC

Read Landlord-Tenant Law


There are a lot of laws and ordinances with which real estate investors must comply. We get a lot of questions on our local REIA’s message board about how the law works for evictions, security deposits, construction liens and more.

I would like to suggest a “novel” idea.

Read the state statutes relevant to your question. Sometimes they are written in English!

I’m not a lawyer so anything I write or say that relates to the law is non-qualified and non-actionable. At the same time, I and most of you happen to be at least semi-literate in the English language. So yes, you can read the law and you will probably understand some of it.

In our state of New Jersey, landlord-tenant law is obsessively tenant-friendly. Each landlord needs to know how to be compliant with the law. Whenever an attorney speaks at our local REIA who is active in landlord-tenant court, I attend to learn as much as I can. When attorneys speak at our meetings, they often also talk about Federal Fair Housing Law and you need to know that too.

In addition to that, I have found that some of the property statutes are easily readable and straightforward. In particular, I was able to fully absorb, during the first read, our state statutes for tenant security deposit, abandoned property after tenants vacate, construction liens, landlord registration requirements, lease renewal and other topics. These statutes were surprisingly readable.

In contrast, I tried reading the foreclosure laws written in the statutes in my state of New Jersey and I must admit that they were so complicated that I had a hard time charting out the process in a way that would give me confidence that I could learn the foreclosure process in a single read.

So, in many cases, we really do need an attorney to explain the law to us. In addition, there is case law that determines the outcome of cases that require interpretation and as non-attorneys, we are not likely to be aware of that. We really do need attorneys. At the same time, we are capable of reading the law and we should do so, even if only for background purposes.

Our state publishes a "Truth In Renting" (tenant’s rights handbook) which some people think should be retitled “101 Ways to Beat Eviction.” If you’re a landlord in our state, you have no excuse for not reading that booklet. I give a copy to every tenant upon lease signing and I have them sign a copy of the first page and initial a clause in the lease acknowledging that they received this entire handbook.

Again, I don’t pretend to be a lawyer or play one on TV. I certainly don’t give legal advice. But that doesn’t mean that I am incapable of reading laws that are straightforward.

I do not rely on my reading of the state statutes and federal Fair Housing Law as an authoritative understanding since not everything is as straightforward as it may seem. That’s why we have judges. There is case law. Laws can be interpreted by judges when there is ambiguity. But that doesn’t mean that I shouldn’t read the law to get an idea about what I must do to be compliant.

Here are other tips.

VISIT LANDLORD-TENANT COURT

If you are considering becoming a landlord and the notion of the eviction process scares you, find out when your local landlord-tenant court meets and attend a full session or two from beginning to end. It’s public. You will get a feel for how many cases are dismissed, get a default judgment, go to mediation, how many return with a consent agreement and how many actually get tried before the judge. You will also learn about the quirks of that judge and how tenant-friendly he/she is. Attending a session or two of landlord-tenant court before becoming a landlord will demystify the process for you, at least to some extent.

That’s what I did before I bought my first rental property.

BUY THE LEASE FROM THE TOP LANDLORD-TENANT ATTORNEY IN YOUR COUNTY

I bought the lease of the #1 landlord-tenant attorney in our 5-county area then I met with him to understand every clause in the lease. It is very preferable to buy the lease from the attorney who will be prosecuting your evictions.

Buying a state-compliant lease from an attorney who specializes in landlord-tenant law in your county costs some money. That is an INVESTMENT of your money. When a landlord makes hundreds of dollars per month per door over a few decades, then it is worth it to invest a few hundred dollars in the best state-compliant lease and a dozen hours reading state statutes and a handbook about landlord-tenant law. Think about it. If you make only $250 per month for each of 5 rental units over 10 years, that’s a total of $150,000 of profit. Don’t tell me you can’t invest $200 one time to buy the lease of the #1 landlord-tenant attorney in your county and maybe another $500 in a private session to become an expert in that lease.

In my early years of landlording, I was not as good as I am today in tenant screening and tenant management. In my first 7 years of landlording, I filed for eviction more than I care to remember. I’m glad I prepared myself by learning the law and getting the top landlord-tenant attorney in our area.

Today, I’m much better at screening, choosing and managing tenants and I have not filed for eviction in 5 years. Learn about my best practices in screening, managing and selecting the best tenants in my 1.5-hour lecture dedicated to this specific topic in the Smarter Investing home study course shown at https://vimeo.com/ondemand/smarterinvesting/230707970.

In summary, if you’re making money in real estate investing, especially as a landlord generating a few thousand dollars per year from every unit, it is slam-dunk worthwhile to read the relevant laws in your state and federal Fair Housing Law, invest in legal documents from the best local attorney and invest in training to maximize your profits and performance.


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About Part Time Investors LLC

Marc Halpern started Part Time Investors LLC after being tired of the hype promoted by most real estate gurus. Marc presents valuable technical content with zero-hype in all of his presentations and blog posts, including the advantages AND disadvantages of every investment strategy discussed. Marc Halpern has a Ph.D. in organic chemistry and makes decisions based on in-depth due diligence. Marc achieved financial freedom through part time investing, excellent strategic planning, data analysis and a fiscally conservative approach.

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