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Does Rental Compliance Require a License?

do-i-need-a-license-to-be-a-landlord

Rental property owners have many compliance items to attend to before renting their home. One of which is the rental license. In most areas across the country, landlords must obtain a rental license before advertising the property to tenants. That said, the process of getting this license may vary but generally includes an application, inspection, and applicable fees. To better understand what you need for this critical step towards rental compliance, follow along with us below.

Do I Need a Rental License?

The answer will depend on jurisdiction, but the likely answer is yes. Typically, landlords will need to obtain a license as part of their rental compliance process. The only exception is if the property qualifies for some type of special exemption. So, for the majority of owners, a license is vital.

Do I Need a Rental License?

In Baltimore County, the Council passed a bill that requires any building with one to six dwelling units to be licensed. This, meaning that landlords must register each unit and have a licensed state inspector complete an inspection sheet. Other laws and rental compliance processes may apply for properties with more than six units or large complexes.

Who is Exempt from Rental Licensing?

While most landlords will need to go through the steps to get a rental license, there are a few exceptions. So, if any of the following situations apply to you, be sure to file an Exemption Affidavit.

  • Relatives as Tenants – A dwelling is exempt if the tenant is a person related to the owner. That said, “related” refers to someone connected to the owner by blood, marriage, adoption, or legal custody. So, family members that do not fit these criteria will not qualify for an exemption. Also, the tenant/relative occupying the home may not have more than one additional adult living in the house.
  • Owner-Occupied Rentals – Dwellings that an owner occupies may be exempt if – the owner rents to family members or no more than one other unrelated adult who occupies the unit. However, keep in mind that in Baltimore County, laws prohibit more than two unrelated adults from living together unless the property is a boarding house.

Licensing and Rental Compliance

Registering and licensing the property is an integral part of rental compliance. However, doing so creates additional processes to ensure properties adhere to all codes and regulations that protect tenants and the community. Therefore, rental owners should ensure their property is in good habitable condition before beginning the rental compliance process. This includes making sure that the plumbing, electrical, and furnace are in good working order. In addition, there should be no visible leaks, and the roof should be in good condition.

Licensing and Rental Compliance

Like any other business, rental owners must follow all applicable laws and obtain any required licenses. By following these laws, owners help protect themselves, the tenant, and their assets. Depending on an owner’s specific property, they may be required to get the following before legally renting their unit –

Types of Rental Licenses

  • Certificate of Occupancy – A Certificate of Occupancy verifies that, according to local building authorities, the property is prepared and maintained to accommodate tenants. This goes hand in hand with a building permit but signifies that a licensed inspector has ensured the property complies with all local codes.
  • Housing Business License – Housing or Rental License requirements may vary depending on the type and specifics of the rental property. However, landlords with one to six units must complete this rental compliance process for each unit.

It is vital for rental owners to remember that the legal requirements may vary at the state, county, city, or local level. Therefore, it is essential to thoroughly research all rental laws in your area before trying to rent the unit to tenants.

The Penalties for Not Getting a Rental License

Owners who do not comply or choose to disobey the law are subject to penalties and fines. That said, these can include denial, suspension, non-renewal, or revocation of a rental license. In addition, owners can face a greater risk of legal ramifications along with civil penalties, which include –

  • $25 per day for each day a violation occurs
  • $200 per day for each day a correction notice is not complied with
  • $1,000 fine for not complying with the Rental Registration Law

What is a Rental Compliance Inspection?

Once owners have registered their property, they must go through an inspection process. The inspection form is an essential step in the rental compliance process and must accompany the license application. So, if the property does not qualify for an exemption, make sure you know what an inspector will look for below.

What is a Rental Compliance Inspection?What Does a Rental Inspector Look for?

  1. Smoke Detectors – New standards require hardwired and possibly interconnected smoke detectors with battery backup to be throughout the building based on the type of rental housing. For example, outside sleeping areas, in common corridors, or on every level of the unit.
  2. Carbon Monoxide Detectors – These vital detectors are essential to tenant safety. Therefore, inspectors will ensure that they are outside of sleeping quarters.
  3. Electrical Systems – This includes working receptacles and no exposed wires throughout the home.
  4. Water – There should be no leaks throughout, and plumbing should function properly, including cold and hot water.
  5. Furnace – The furnace must be in working order or unable to be tested due to the outside temperature.
  6. Stairway Safety – If an interior or exterior stairway has more than three risers, it must have a secure railing.
  7. Egress – If any sleeping areas are in the basement, they must have a secondary escape. That said, this could be a window with a minimum of 5.5 ft opening and a sill height below 44 inches or another basement door with a thumb-turn deadbolt.

How to Prepare for an Inspection?

Rental compliance is a necessary part of being a landlord. While the process is relatively rigid, there are many things landlords can do to ensure the process goes smoothly. This involves collecting all necessary information, thoroughly completing all documents, paying essential fees, and preparing for the inspection. That said, owners can do a quick self-assessment to ensure they pass inspection the first time. Check out these tips below –

  • Walk through and do a visual inspection of the property. Pay close attention to any signs of leaks, chipping paint, or potential safety hazards such as loose or missing railings, evidence of mold, or broken fixtures.
  • Test all of the smoke detectors throughout the property. The detectors should be interconnected for residential properties, meaning when one sounds, they should all sound. If not, speak to an electrician to ensure they are interconnected, hardwired, and functioning correctly. Also, do not forget to verify you have enough carbon monoxide detectors as well.
  • Check for any issues with proper egress if there are sleeping spaces in the basement. This means there must be a secondary form of exit, such as a window or exterior door.
  • Ensure all major systems are in working order which includes electric, water, plumbing, and HVAC.

Stress-Free Rental Compliance with Professional Management

Completing the rental compliance process can be a tedious and time-consuming endeavor that requires landlords to know all applicable laws. After all, not complying can result in legal or financial ramifications no owner wants to deal with. That said, not every owner has the time or desire to fulfill and coordinate all of these compliance obligations.

Bay Property Management Group is a full-service rental management firm that makes the entire rental process a breeze. Our expert staff handles the process every step of the way, from compliance to leasing and ongoing maintenance. If you have a rental property in Baltimore County or beyond, give us a call today to learn more about our comprehensive services.