Most Common Illegal Property Management Practices
What are the Most Common Illegal Property Management Practices?
You’d think property management would be straightforward—collect rent, fix stuff, and keep people happy. But it’s a lot more complicated than it looks, and not everyone follows the rules. From discriminatory leasing practices to junk fees, these practices can get landlords and managers into serious legal trouble. Here are some of the most common illegal practices in property management and why they should be avoided at all costs.
1. Housing Discrimination
Examples
- Refusing to rent based on race, color, religion, sex, national origin, disability, or familial status (which are protected under the Fair Housing Act in the U.S.).
- Differential treatment in lease terms or rental prices based on protected class status.
- Steering prospective tenants toward or away from certain units or buildings based on protected characteristics.
Why It’s Illegal
- Under the Fair Housing Act and many state and local laws, discriminating against potential or current tenants in protected classes is prohibited. Violations can lead to lawsuits, fines, and other penalties.
2. Wrongful or Illegal Evictions
Examples
- Evicting without due notice or failing to follow required legal procedures (e.g., not providing proper written notice, skipping required court processes, or self-help evictions such as changing locks).
- Retaliatory evictions in response to tenants filing maintenance requests, reporting code violations, or exercising their legal rights.
Why It’s Illegal
- Landlords and property managers must follow federal, state, and local eviction laws, which typically require proper notice and a legal hearing or court order. Retaliatory evictions are generally prohibited by law.
3. Mishandling Security Deposits
Examples
- Failing to return deposits within the timeline mandated by state or local statutes.
- Withholding deposits without giving an itemized list of deductions.
- Charging tenants for ‘normal wear and tear’ instead of legitimate damage.
Why It’s Illegal
- Most jurisdictions have specific guidelines on how landlords or property managers must handle and return security deposits, including timelines and justifications for deductions. Violations can result in penalties such as being required to pay extra damages to the tenant.
4. Entering the Property Without Proper Notice
Examples
- Entering without notice (or permission in some jurisdictions) unless there is an emergency.
- Using master keys or codes to enter a tenant’s unit arbitrarily.
Why It’s Illegal
- Tenants have a right to privacy and "quiet enjoyment" of their rented home. Most state laws require landlords or property managers to provide notice—often 24 to 48 hours—before entering a tenant’s unit, except in cases of true emergency.
5. Failing to Maintain a Habitable Property
Examples
- Ignoring critical repairs or maintenance issues such as plumbing leaks, non-functional heating/cooling systems, or unsafe electrical systems.
- Allowing hazardous conditions like mold, vermin infestations, or structural damage to persist.
Why It’s Illegal
- Landlords are generally required to provide habitable conditions, which include safe and sanitary premises. Violation of habitability standards can be grounds for rent reduction, repair-and-deduct remedies (in some jurisdictions), fines, or legal action.
6. Charging Excessive or Unapproved Fees
Examples
- Excessive late fees that are far beyond what is legally or contractually allowed.
- Illegally inflated rent or “rent-gouging” during states of emergency, if prohibited in that jurisdiction.
- Fees not outlined in the lease, such as surprise charges for amenities that were advertised as included in rent.
Why It’s Illegal
- Many states have laws or rent control ordinances limiting fee structures or rent increases. Charging fees not mentioned in the lease or excessive amounts could violate these laws.
7. Retaliation
Examples
- Raising rent or threatening eviction after a tenant complains about unsafe conditions or housing code violations.
- Refusing to renew a lease because the tenant joined a tenants’ rights organization or asked for repairs.
Why It’s Illegal
- Laws in most jurisdictions explicitly prohibit retaliation by landlords or property managers against tenants who exercise their legal rights (e.g., filing complaints, requesting repairs).
8. Forging or Falsifying Records
Examples
- Altering financial records, such as payment histories or receipts, to claim overdue rent when there is none.
- Falsely stating contract terms or forging signatures on lease documents.
Why It’s Illegal
- Falsifying or forging documents is generally a criminal offense (fraud or forgery), which can result in severe penalties, including fines and possible imprisonment.
9. Illegal or Deceptive Lease Clauses
Examples
- Disclaimers that attempt to waive tenant rights (e.g., requiring a tenant to sign away the right to report unsafe conditions or to take legal action).
- Unclear or hidden clauses that significantly harm tenants or violate local landlord-tenant laws.
Why It’s Illegal
- Lease agreements must comply with local, state, and federal laws. Any clause that attempts to limit a tenant’s basic legal rights or contradicts landlord-tenant regulations can be deemed unenforceable and illegal.
Ultimately, success in property management boils down to trust and transparency. The practices we covered aren’t just unethical—they can land you in serious legal trouble. Whether you’re a landlord, manager, or curious tenant, staying informed and compliant can save you a world of headaches down the road. It’s not glamorous, but that’s how you build a solid reputation and a thriving real estate business.
