Arizona is a landlord-friendly state, which is good news when you want to invest in properties without worrying about rent control and other strict provisions found in other states.
There are laws that must be followed, however.
The Arizona rental laws that you need to know when you’re renting out property can be found in the Residential Landlord and Tenant Act. This law pertains to standard rental housing (not mobile homes), and it references the rights and responsibilities of both landlords and tenants.
If you’d like to familiarize yourself with the entire Residential Landlord and Tenant Act, you can download the full text of the law from the Arizona Department of Housing.
The laws are in place but there’s no state agency that enforces them. Any disputes that arise between landlords and tenants are considered private and civil matters.
That doesn’t mean you won’t be held accountable if you’re found violating a housing law while renting out your property. You have to remember that there are also federal laws in place that govern things like fair housing and disabilities, and those are enforced rather strictly.
As property managers in Mesa, Phoenix, Chandler, Gilbert, and around the East Valley, we stay up to date on all the most important federal, state, and local laws. Today, we want to share some highlights that are especially important for you to understand.
We are not attorneys, and we always recommend you consult a legal expert if you’re struggling with a lawsuit or unsure about a specific law. The information we’re providing is from the standpoint of how to manage your investment property in a way that keeps you compliant with all the necessary laws.
Security Deposit Laws in Phoenix and Arizona
The security deposit is the amount of money you collect before a tenant moves into your property. It protects you in case the tenant doesn’t pay rent, leaves before the end of the lease term, or damages your property.
Arizona puts some restrictions on how much can be collected, what the deposit can be used for, and how quickly you must return it to your tenants at the end of the lease term.
Here are the security deposit law basics in Arizona:
- Security deposits must be refundable. If you collect any nonrefundable fees, such as pet fees, you have to put that in writing in the rental agreement.
- There is a limit to how much you can collect as a security deposit. The amount cannot exceed more than one and one-half month’s rent. If the rent is $1,600 per month, the security deposit cannot be more than $2,400.
- You are required to return either part or all of the security deposit to the tenant 14 business days after the termination of the lease. If you are withholding any part of the deposit, you must provide the tenant with a written and itemized list of deductions.
Making a security deposit mistake can be expensive. If you don’t return the balance of the security deposit within the 14 days, with the itemized list of what was deducted and why, the tenant may be able to sue you to recover the money, with damages that equal twice the amount that you wrongfully withheld.
Here’s what you don’t have to do:
- You do not need to pay interest on the security deposit you hold.
- You do not need to keep the security deposit separate from other funds (although most landlords and investors do).
- You do not have to hold the deposit in any specific accounts.
You do need to know what can be charged to the deposit and what cannot be charged.
In Arizona, you may withhold some or all of the security deposit for:
- Unpaid rent.
- Breach of lease.
- Property damage that exceeds normal wear and tear standards.
If you’re going to make deductions against your tenant’s security deposit for damage, make sure you have documentation that supports the reason for withholding the money. You want to have your condition reports ready with photos that clearly show the property damage.
Habitability Laws in Arizona
Arizona rental property owners are legally required to provide a rental unit that meets basic structural, health, and safety standards. When you sign a residential lease agreement with your tenants, you are providing an implied warranty of habitability.
An implied warranty of habitability means that the landlord has a duty to maintain the rental unit and keep the home fit for residential purposes throughout the entire term of the lease. It puts the responsibility on you - the owner - to repair any damage to vital facilities and systems. The implied warranty of habitability is implied in every written and oral lease in Arizona.
Under the implied warranty of habitability law, the tenant has an obligation to pay rent and the landlord has an obligation to maintain a safe, sanitary, and habitable home. If the landlord breaks the agreement to provide a rental home that’s in a habitable condition, the tenant may be entitled to withhold rent until the necessary repairs are made.
When vital repairs are needed but the property owner has not made them, tenants in Arizona are empowered to make the repairs on their own, and then deduct the cost from rent. This is not a situation you want to find yourself in as a landlord or a property owner. Here’s how the process works:
- The tenant must give the landlord 10 days written notice to repair the defect.
- When the landlord does not make the repair within those 10 days, and the reasonable cost of repair is less than $300 or an amount equal to one-half of the monthly rent, whichever amount is greater, the tenant may fix the problem and deduct the amount of the repair from rent.
Always make the required repairs so you aren’t missing rent from your tenant. You also don’t want tenants making their own repairs. This can put your property in danger. Protect its condition and follow the implied warranty of habitability laws.
Eviction Laws in Arizona
Eviction actions in Arizona are legally referred to as “special detainer” actions. Under the Arizona Residential Landlord and Tenant Act, landlords can evict tenants for several reasons. The most common reasons that an owner will want to evict a tenant are:
- Nonpayment of rent
- Lease violations
- Illegal activity at the property
Before you can begin eviction proceedings, you’ll need to provide the appropriate notice. For nonpayment of rent evictions, you’ll have to provide your tenant with a 5 Day Written Notice. The tenant will have five days to pay the amount that’s due, leave the property, or face eviction proceedings.
The special detainer process occurs like this:
- Notice is served.
- A complaint is filed with the justice court or superior court in the county where your rental property is located.
- A summons is sent to the tenant, informing them of the eviction hearing date.
- The hearing occurs, where both the landlord and tenant can make their case to the judge. Then, the judge decides on whether the tenant will be evicted.
Always get legal help when you’re facing eviction. Even the slightest mistake can get your case thrown out and you’ll be back to step one.
Fair Housing Laws and Arizona Rental Homes
You’ll also need to know a few federal laws when you rent out property in Arizona. The most notable law, of course, is the federal Fair Housing Law, which protects the following classes of people against discrimination in rental housing. You cannot discriminate or deny housing based on:
- Skin color
- Religion or creed
- National origin or ancestry
- Physical or mental disability
- Familial status
It’s easy to discriminate without intending to. The way you advertise your rental property or screen your tenants can have inherent bias that you don’t even see. This is why it’s so important for you to have consistent and documented procedures for how to attract and place tenants.
Service and support animals are also protected by fair housing. This is often a tricky area for landlords to navigate. If a tenant or an applicant has a service animal, you are required to allow that animal in your property - even if you don’t allow pets. You cannot charge a pet fee, a pet deposit, or pet rent on a service animal or an emotional support animal.
While service animals are trained to do a specific task, emotional support animals are not. They offer companionship and support to a tenant who needs it. You are permitted to ask for documentation from a medical professional that the support animal is needed, but you are not allowed to deny the animal or treat it like a pet.
We work hard to stay on top of all the laws that pertain to your rental property in Arizona. We know you don’t have the time or the resources to know what changes are coming and how you can best prepare yourself to comply with them.
This is why working with a professional property management company makes so much sense. We keep you compliant and we stay one step ahead of every new law that impacts your rental property.
If you have any questions, please don’t hesitate to contact us at TCT Property Management Services. We manage homes in the East and West Valley, including Mesa, Gilbert, Chandler, Scottsdale, and Phoenix.