A key part of running a rental property business is maintaining complete, accurate, and organized rental documents. Having important records on hand, such as tenant lease agreements and repair and maintenance records, is essential to keep yourself protected against lawsuits and disputes. However, this begs the question of how long should landlords keep rental records?
To help you with this, we’ll provide you with a comprehensive guide on rental property recordkeeping. We’ll review the importance of rental records, the key types of tenant documents that you should keep, and more.
3 Key Takeaways
- Landlords must keep key rental records and documents for at least 3 to 6 years.
- Having accurate and up-to-date rental records is essential for legal and financial protection.
- Key documents, such as lease agreements, tenant screening reports, and maintenance records, must be retained long-term in case of disputes.
Why Keeping Rental Records Matters
In our experience as an Austin property management company, we know the importance of keeping rental records. Let’s say that you have an applicant come and dispute that you rejected their application in violation of the Fair Housing Laws. However, you know that it was actually because they do not meet the financial requirements. In this case, you can use the financial records to back up your claim. Another potential scenario is when the IRS wants to audit your rental property business.
Landlords need to keep rental records because these can be their first line of defense against financial and legal matters. Rental records serve as supporting documents to make sure that your processes and operations follow legal standards and regulations, keeping you safe and secure.
Key Types of Rental Records Landlords Should Keep
Rental property businesses involve several types of documents – from legal paperwork to tenant records. But which ones exactly do you need to keep long term? Here’s a brief rundown of the most important rental property paperwork that you need as a landlord:
Tenant Applications and Screening Reports
Applicants submit a series of documents when they want to apply for a rental application - from their personal details to credit history and financial records. Even if they get denied, you should keep their rental application in case of Fair Housing complaints.
Lease Agreements
Once you’ve accepted an applicant as a tenant, you’re going to sign a lease agreement that details the guidelines and requirements of living in your rental property. This also outlines specific rules that you have for your rental (pet policies, occupancy limits, repair, and maintenance conditions) that your tenants must follow. In case of disputes, you can refer to your lease agreement. If there are any addendums or modifications, make sure to include these in your record.
Rent Payment Receipts
Rent payments are one of the most important transactions that you have with your tenants. To keep your records straight, it’s important that you keep an accurate and updated list of all tenant payments. Note where and when they made their rent payment, and include a specific note if ever they missed deadlines.
Maintenance and Repair Records
Property maintenance and repair are one of the most common causes of dispute between landlords and tenants. Whether it’s determining who is responsible for the repair or how much the repair costs will be, landlords need to keep a comprehensive record reporting all the relevant expenses as proof. On top of that, ensure that each repair conducted on your property is well-documented to serve as a reference for future repairs.
Move-in and Move-out Inspection Checklist
Another common point of contention in rental property businesses, it’s also important to have a comprehensive move-in and move-out checklist on hand. Keeping a detailed record is key when discussing deductions on the tenant’s security deposit.
How Long Should You Keep Each Type of Record?
Now, into the main question, how long should you keep each type of rental record? According to Texas policy on records retention, agencies must keep records for a minimum of at least three fiscal years after the sale of a property. Similarly, the IRS suggests keeping records for 3 years from the date of filing. However, rental property recordkeeping best practices often suggest maintaining key documents, such as lease agreements, rent payment records, maintenance receipts, and legal notices for around 4 to 6 years.
Best Practices for Recordkeeping
Keeping your rental property records is one thing. However, maintaining an organized filing system is equally important. As part of effective property management, you need to know how to effectively and efficiently manage all the documents and paperwork involved in your rental property business. To help you with this, here are some practical tips and best practices in proper recordkeeping:
- Have essential documents and paperwork digitized as soon as possible to keep a safer and secure record.
- Establish a system that organizes files based on property, location, and type of document.
- If you have digital copies of your rental records, make sure to back up everything periodically – ideally, using multiple secure storage locations.
- Keep labels consistent across all document types and platforms.
What Happens If You Don’t Keep Records Long Enough?
One of the biggest dangers of disposing of rental property records too early is that you may find yourself in a difficult position to defend yourself in case of a dispute or lawsuit. Going back to the example we mentioned above, it can be a struggle to prove the reason behind the rejection was legal if you didn’t keep the tenant screening report even after their application was denied.
Take Recordkeeping To The Next Level
As a landlord, you’re primarily responsible for maintaining and organizing all relevant documents and paperwork. But as more and more tenants come and go, so as the piles of files you have in your office. Even if you plan to clear out some space, how do you know which ones to let go and keep? Following suggested guidelines, it is best to keep key rental records for 3 to 6 years. For older documents, it is also ideal to have them digitized for long-term safekeeping.
Now, if your rental records have become a little too much to handle, we at Stone Oak Property Management are ready to help! With more than two decades of rental industry experience, we offer an array of tools and support services to make recordkeeping manageable. Come visit our website and connect with us to find out more!
