1.         Not Treating Your Rental Like a Business.           You bought your rental property as an income source — so you need to treat it like a business. So, just like any other business, it should not be in your individual name.  You need to establish a Limited Liability Company (LLC) for ownership of your rental property, and don’t use a corporation as this can create adverse tax consequences.  Many of my clients actually establish a separate LLC for each property.  This can help protect you personally from legal actions or claims arising from your rental.  As an example, just imagine your personal exposure if a smoke detector at your rental doesn’t work properly and one of your tenants is killed in a fire.  On a related topic, also make sure you have the proper types and amounts of liability insurance.

2.         Not Taking the Leasing Process Serious Enough. The life blood of your business is receiving regular rent from your tenants – so you need a rent paying tenant now!  However, in your rush to get a tenant, don’t get the wrong tenant (See #3 below – Evictions).  Therefore, you need to have process for marketing and renting your property to the right tenants.  That means you need to have a process for screening your tenants and checking their credit.  You can also check the local clerk of court’s websites to see if they have ever had any landlord / tenant issues in the past.  Once you have the right tenant, make them sign a written lease.  If you don’t have a written lease, the relationship is governed by state law, which is usually very tenant friendly.

3.         Not Understanding How Evictions Work. With any luck your leasing process will help you avoid having to evict a tenant.  But if you are a landlord long enough, most likely you will have to evict a tenant at some point.  An eviction, which is technically called a Forcible Entry and Detainer in Ohio, is initiated by serving your tenant with a Notice to vacate the premises, which must contain specific statutory eviction language. Once you have made the decision to evict your tenant DO NOT accept any rent payments.  If after receiving your Notice, your tenant does not vacate the premises, you will need to have your attorney files the eviction complaint with Court, as only an attorney can represent an LLC in Court.  About 3 weeks after the eviction complaint is filed, there will be a Court hearing where you and your attorney will present evidence as to why the tenant should be evicted. At that time the Court will formally evict your tenant, give the tenant a set out date, and grant you possession of the property.

Paul Kellogg is an attorney in Cincinnati with the Phillips Law Firm, Inc. Paul’s practice focuses on providing comprehensive estate planning and probate services to families and business owners, as well as serving as outside general counsel to entrepreneurs and businesses where he provides guidance and advice on a wide variety of transactions and disputes.  He can be reached at (513) 985-2500 or via email at [email protected].   Please explore Paul’s other articles on estate planning and business on the Phillips Law Firm Blog page

The article is for educational and informational purposes only and does not constitute legal advice. Anyone contemplating taking legal action is urged to obtain proper legal advice from an attorney licensed in your particular jurisdiction.

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