Skip to Content

Get a FREE assessment of your rental property. Start here!

Get a FREE assessment of your rental property. Start here!

When You Should Compensate Your Tenants

Cupertino Woman Calling Landlord about Roof Leakage ProblemIn most instances, tenants are accountable for paying for the right to live in your rental property. However, there are moments when a Cupertino property manager might want or be compelled to compensate a tenant. When certain issues arise, you may find yourself in the unusual situation of paying your tenants instead of the other way around. To be as prepared as possible, you need to know what circumstances may result in tenant compensation and when and where you should offer it.

Tenant Compensation and the Law

The question of tenant compensation arises almost exclusively from landlord/tenant laws. As a property owner, you have to ensure that your rental house is in a habitable condition. Generally, this suggests that your rental home is clean and livable. It also means that your roof keeps the house dry and that the appliances and other elements work the way they should. When the property isn’t habitable, for one reason or another, that can lead to scenarios where a tenant may be compensated.

Reasons to Compensate a Tenant

Some of the most common reasons that a property owner may need to compensate a tenant include the following:

Repairs. One of the most common causes a property owner would need to compensate a tenant is because of repairs. Under certain circumstances, a property owner may not be able to make important repairs on time. Whether you are out of town or otherwise unavailable, if something breaks and causes your tenants to lose the quiet enjoyment of the rental house, you have to fix it. If you can’t, your tenant may have the repairs fixed within the confines of state law. It’s ideal if the tenant obtains your permission first, but even if they don’t, the possibilities are that you’ll need to reimburse your tenant for the cost of repairs if they follow the state requirements.

Broken appliances. Sometimes compensation leads to arguments concerning the condition and functionality of appliances. Failing to accept responsibility for broken appliances is one of the most common explanations for why a property owner gets sued by their tenants. Part of the reason is that the issue is more complex than it first appears. Landlords sometimes argue that a broken dishwasher, while inconvenient, does not make the entire property uninhabitable. At the same time, a damaged oven or refrigerator is perceived as a major concern, and tenants may argue that the home is uninhabitable. Assume you have provided appliances with the rental house. If one of them malfunctions, and you can’t repair or replace it promptly, your tenant may be justified in repairing the machine and deducting the amount from the rent, as prescribed in your state’s landlord/tenant law. This is especially valid if your lease documents assign responsibility for the appliances to you as the property owner.

Cash for keys. Sometimes, a property owner may need a tenant to vacate a property before the lease ends. In such instances, a landlord may offer to pay the tenant to move out. Property owners sometimes utilize this tactic to avoid a drawn-out eviction process and encourage a problematic tenant to move on sooner than later. Considering how long it takes to evict a tenant and that you probably won’t be collecting rent during eviction proceedings, offering to pay them to move may save you money in the long run.

Although the most typical, these are not the only reasons you may have to compensate a tenant. But if you find yourself in a situation where payment is needed, you must make sure that you document everything properly and issue the funds right away. If you are pro-rating a rent payment, remember to record it and notify your tenant in writing. If you have to send payment to your tenant directly, use a method that leaves a paper trail, such as a business check.

While landlord/tenant laws vary from place to place, staying on top of tenant compensation is important in keeping strong tenant relations. As a Cupertino property owner, you’ll need a complete understanding of the landlord/tenant laws that regulate compensation to safeguard that you are in full compliance. Real Property Management Silicon Valley can help you prepare a lease to cover these issues or even manage your property entirely. Contact us today to find out more.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.