Owning residential property in Oklahoma comes with many legal responsibilities that can be tricky to navigate, particularly for those who manage their properties without proper legal knowledge. As a property owner, you risk facing expensive lawsuits, penalties, or substantial financial losses.
According to a survey by Prnewswire, a staggering 90% of residential property owners have experienced financial losses, with more than half reporting losses exceeding $100,000 on a single deal. Indeed, these real estate legal complexities can be hard and challenging to navigate on your own, especially for property owners who are not familiar with the details of local laws and regulations.
To deal with these legal disputes and avoid costly mistakes, it’s essential to be proactive and understand the most common legal issues that arise in property ownership.
In this blog, I discuss 9 critical legal pitfalls that Oklahoma property owners commonly encounter and provide practical strategies to avoid them. By understanding these issues and ways to handle them, you’ll be better prepared to protect your property and investments in Oklahoma City.
Common Legal Pitfalls For Property Owners in Oklahoma’s Real Estate (+ How to Avoid Them)
1. Insufficient Due Diligence
One of the most critical legal pitfalls to avoid for property owners is not conducting thorough due diligence. Thoroughly investigating, reviewing, and verifying information about the property should be your top priority if you are considering buying, selling, or renting a property.
Why? Because this critical process helps you to uncover potential risks, liabilities, or issues and ensure that all aspects align with your expectations and objectives. If you neglect this process now, this can result in expensive surprises later.
Pitfalls:
- Failing to verify the “Property Titles” can result in legal disputes. Undisclosed liens, easements, or encroachments may hinder your ability to use or sell the property in the future.
- Overlooking issues such as structural damage, pest infestations, or outdated systems (plumbing, electrical, HVAC) can lead to costly repairs after the purchase.
- Not checking overall financial aspects other than the property price can result in unexpected costs, like high property taxes, insurance, or repairs.
How to Avoid It:
- Check to ensure the property’s title is clear, and there are no liens, easements, or encroachments that could affect ownership.
- Plan and create a checklist to inspect to stay organized.
- Hire a licensed property inspector to identify structural, mechanical, or environmental issues before finalizing the purchase.
- Analyze all associated costs upfront, including property taxes, insurance, maintenance, etc.
- Consult with a local real estate attorney to review the legal documents.
2. Improper Lease Agreements
A lease agreement is a critical document that legally binds or shows the mutual rights and responsibilities of landlords and tenants. An improper lease agreement can lead to conflicts, financial problems, legal issues, and damaged relationships between you and your tenants.
For e.g., Oklahoma does not have state-wide rent control laws; thus, rent increases depend on your lease terms and negotiations with your tenants. If the lease agreement lacks clear terms regarding rent adjustments, it could lead to confusion, disputes, or claims of unfair practices, resulting in potential legal and financial challenges.
Pitfalls:
- Using vague, incomplete, or outdated lease templates that don’t reflect specific property needs and terms.
- Not complying with Oklahoma’s Local law and Federal Laws.
- Not consulting with a local real estate attorney before finalizing the lease agreement.
How to Avoid:
- Clearly outline the terms, responsibilities, and policies in the lease, and if necessary, recite them verbally for better understanding.
- Ensure it complies with Local and Federal laws to avoid legal complications later.
- Properly consult and review your lease with a housing-related attorney to ensure it’s legally sound and complies with relevant laws.
- Periodically review and update leases to ensure compliance with changing regulations in the Oklahoma housing market.
3. Violating the Fair Housing Act
Fair Housing Act(FHA) is a part of federal law that protects people’s rights in housing-related transactions. Under this act, you cannot discriminate against prospective tenants based on race, color, national origin, religious status, or disability. Instead, you are required to treat all tenants equally and respectfully.
Violating this act can cause pretty severe legal complications. In Oklahoma City, the penalty for violating FHA can range from $16,000 to $65,000, with imprisonment time depending on the severity of the violation. In case of physical aggression, use of weapons, or life-threatening harm to the tenants, you may even have to face imprisonment for up to 10 years.
For example, if you reject an applicant because he is black or Chinese, your actions go against the FHA.
Pitfalls:
- Discriminating against prospective tenants, even unintentionally, during tenant screening.
- Rejecting a prospective tenant without making reasonable accommodation.
- Involving physically or threatening verbally, causing physical or mental harm to the tenants.
How to Avoid:
- Educate yourself with the Fair Housing Act and state-specific anti-discrimination laws.
- Respect tenant’s rights and make reasonable accommodations within reason for those with specific needs.
- Use consistent screening criteria for all applicants.
- If anything wrong happens, always take the legal path. Avoid any physical or verbal abuse.
4. Ignoring Local Zoning and Land Use Laws
Local governments set zoning laws that decide how land in a specific area can be used and developed. Ignoring or misunderstanding these laws can result in expensive legal issues, such as fines, delayed work, inability to use a property for its intended purpose, or even having to undo the work. This can drain you financially and mentally.
In Oklahoma City, approximately 96% of residential land is zoned exclusively for single-family homes. This means most residential properties in Oklahoma City can only be used for single-family homes, and building anything else could lead to legal issues without proper permits. So, if you are considering developing or repurposing a property for other purposes in Oklahoma City, obtaining the necessary permits and approvals is critical before you start your work.
For example, if you invest in a plot of land in Oklahoma City and plan to build a multi-family dwelling, overlooking zoning laws, the local government can intervene in the construction, stating the land is zoned for single-family homes only and fine you.
Pitfalls:
- Failing to understand the zoning designation of a property and using it for purposes not permitted under local zoning regulation.
- Neglecting or failing to obtain necessary permits and approvals before starting construction work.
- Not disclosing zoning regulations or property restrictions to the buyer while selling the property/land.
How to Avoid:
- Research zoning laws and any restrictions specific to your property’s location before purchasing or starting any new construction or modification.
- Obtain necessary permits and authorized documents from the local zoning board before altering or repurposing a property.
- Consulting with a real estate attorney or a zoning expert can help ensure compliance with local regulations.
- If you’re selling property, disclose any zoning restrictions to the buyer so they are fully informed about its limitations and use.
- Zoning laws can change, so keep informed about any potential updates or amendments to local zoning regulations.
5. Mishandling Security Deposits
Mishandling security deposits is a common legal pitfall for property owners and landlords. A security deposit is meant to protect you against potential damages, unpaid rent, or other breaches of the lease agreement. However, failing to handle these deposits correctly can lead to disputes, financial penalties, or even legal action from tenants.
In Oklahoma, you can only deduct the security deposit amount for unpaid rent, damages beyond normal wear and tear, or other specific breaches of the lease agreement as outlined in the rental contract. You mostly have 30-45 days after the tenant moves out to return the security deposit, depending on the deposit amount. Most importantly, if you decide to deduct the security amount, you must provide an itemized deduction statement according to Oklahoma landlord-tenant law.
Pitfalls:
- Failing to return the deposit on time without valid reasons violates state law.
- Making deductions for normal wear and tear instead of actual damages, or charging for repairs that exceed the cost of the damage.
- Mixing security deposits with personal or operational funds rather than keeping them in a separate account.
- Failing to provide a written accounting may result in penalties.
How to Avoid:
- Familiarize yourself with Oklahoma’s landlord-tenant laws regarding security deposits, including limits on the amount, timelines for return, and allowable deductions.
- Always keep the security deposits in a separate account. For this, open a dedicated account for security deposits to ensure they are not accidentally used for other purposes.
- Conduct a thorough walkthrough with the tenant before move-in and after move-out, documenting the property’s condition with photos or videos.
- If deductions are made, ensure you give tenants a clear and detailed explanation, along with receipts or estimates for any repairs.
- Refund the remaining deposit within the legally required timeline(within 30-45 days) to avoid disputes or penalties.
6. Unlawful Evictions
In 2024, Oklahoma City courts saw over 5,700 eviction filings from January to April alone. By November, the state had recorded approximately 44,235 evictions. These data show that eviction is not new to Oklahoma City. However, you must understand that it is a complex process that must be handled carefully and fully compliant with Oklahoma’s landlord-tenant laws.
Any eviction attempt that goes against Oklahoma’s landlord-tenant laws can result in legal consequences, including fines, penalties, and potential lawsuits from the tenant.
For, e.g., Suppose a tenant falls behind on rent payments, and instead of issuing a proper eviction notice, you decide to lock them out of the property or shut off their water supply. This action would be considered an illegal eviction and could result in legal penalties.
Pitfalls:
- Attempting to evict tenants without filing an official eviction notice or going through the court system, such as changing locks or shutting off utilities, is illegal.
- Removing a tenant for exercising their legal rights, like reporting property issues or code violations.
- Evicting a tenant based on discriminatory reasons, such as race, gender, or disability, violates the Fair Housing Act and can result in severe penalties.
- Failing to provide the required written notice or not adhering to the correct notice period, as mandated by Oklahoma law. For example, in most cases, a five-day notice for unpaid rent or a 30-day notice to terminate a lease may be required.
How to Avoid:
- Familiarize yourself with Oklahoma’s eviction laws, including notice requirements and acceptable grounds.
- Ensure that all notices (e.g., pay-or-quit or lease termination notices) are written clearly, delivered correctly, and meet the legal timeline.
- Follow the formal eviction process by filing a case in your local court and awaiting the judge’s decision before removing the tenant.
- Keep detailed records of lease violations, unpaid rent, or other reasons for eviction in case the case goes to court.
- Do not take matters into your own hands by locking tenants out, removing their belongings, or cutting off essential services.
- Consult with a real estate or landlord-tenant attorney to ensure your eviction process complies with state and federal laws.
7. Improper Maintenance and Code Violations
A well-maintained property with a safe living environment is a fundamental right of all tenants, protected by state laws. This ensures tenants can live in safe and secure conditions without the risk of hazards or health issues. However, failing to maintain a property in compliance with local housing codes and safety standards can lead to legal troubles for property owners, such as fines, lawsuits, and potential loss of income due to vacancy.
For example, in Oklahoma City, improper property maintenance and housing code violations can lead to significant legal and financial consequences. The city enforces rules against poorly maintained exteriors, illegal outdoor storage, unauthorized businesses in residential areas, and grass or weeds over 12 inches tall.
Pitfalls:
- Delaying or neglecting essential repairs, such as fixing leaks, electrical issues, or broken HVAC systems, can lead to tenant complaints or legal action.
- Overlooking mandatory safety standards, such as functional smoke detectors, proper ventilation, or pest control, may result in fines or citations from local authorities.
- Ignoring maintenance requests or taking adverse action against tenants who report code violations is illegal and could result in penalties.
- Not complying with housing quality standards(HQS) set by Oklahoma’s local authorities.
How to Avoid:
- Research and comply with Oklahoma City’s property maintenance and safety codes to ensure your property meets all requirements.
- Address tenant-reported issues quickly and efficiently, at least within 14 days after receiving notice from tenants.
- Perform routine inspections to identify potential issues before and invest in preventative maintenance to prevent any unexpected breakdowns.
- Keep a record of all maintenance activities for liability protection.
8. Failing to Disclose Property Issues
In Oklahoma City, you, as a residential owner, must provide a written disclaimer or disclosure statement about the physical condition of your property before selling or renting under the Residential Property Condition Disclosure Act or the RPCDA. Oklahoma state law protects it, requiring you to be transparent about material defects or hazards that may affect the property’s value, safety, or usability.
Failing to do so can lead to legal disputes, financial losses, and damage to your reputation.
For e.g., Suppose you sell a home in Oklahoma with a leaking roof but fail to mention the issue on the Property Condition Disclosure Statement. After the buyer discovers the problem, they could sue you for fraud or misrepresentation, forcing you to cover the repair costs and possibly additional damages.
Pitfalls:
- Deliberately or unintentionally failing to inform buyers or tenants about issues such as structural damage, plumbing problems, or environmental hazards.
- Not providing any written disclaimer or disclosure statement about the known issues of the property.
- Misjudging what constitutes a “material defect” and leaving out critical information that the buyer or tenant has a right to know.
- Federal law requires sellers to disclose potential lead-based paint hazards in homes built before 1978. Failure to do so can lead to hefty fines.
How to Avoid:
- Before selling or renting, hire a professional inspector to assess the property for potential issues.
- Fill out all legally required disclosure forms honestly and thoroughly, including Oklahoma’s Property Condition Disclosure Statement.
- Proactively share known defects and hazards, even if they may discourage a sale or lease. Transparency builds trust and reduces legal risks.
- Keep a record of all disclosed information, including signed acknowledgment forms from buyers or tenants, to protect yourself against future disputes.
- If your property is subject to federal disclosure laws, such as the Lead-Based Paint Disclosure Rule, ensure you comply fully.
- Consult with a real estate attorney or agent to ensure all disclosures are accurate and comply with local, state, and federal regulations.
9. Not Consulting With Professionals
Many property owners attempt to manage all aspects of property ownership, which can lead to costly mistakes.
According to a recent survey by Prnewswire, 90% of residential property investors have faced losses, with over half losing $100,000 or more on a single deal. Many of these losses stem from the complexities of property management, legal compliance, and real estate transactions—areas best handled by professionals.
Pitfalls:
- Attempting to navigate landlord-tenant laws, tax codes, or zoning regulations without professional guidance.
- Failing to have contracts, leases, or other legal documents reviewed by an attorney.
- Errors in accounting, tax filings, or financial planning caused by a lack of professional assistance can lead to audits, fines, or financial instability.
- Misjudging property value during purchases, sales, or refinancing without consulting an appraiser or real estate agent can result in financial loss.
How to Avoid:
- Consult an attorney to review contracts, leases, and other legal documents to ensure they comply with state and federal laws.
- Consider hiring a property management company to handle day-to-day operations, tenant relations, and maintenance.
- When buying or selling property, use a licensed agent to gain insights into market trends, pricing, and negotiation strategies.
- Work with a CPA or tax advisor familiar with real estate to optimize tax filings, deductions, and planning.
- Hire licensed professionals to assess property condition and value to avoid surprises during transactions.
- Consult with local zoning experts or government officials when developing or repurposing a property to ensure compliance with regulations.
How OKC Realty Home Services Can Help You
The Oklahoma real estate landscape is complex. Knowing and complying with all the legal complexities of real estate can be overwhelming for property owners, especially for you handling multiple properties at once. It can be a time-consuming and stressful responsibility, often requiring expertise in various legal areas, from tenant laws to zoning regulations.
And you can get that legal expertise and professionalism with OKC Realty Home Services–the best and most trustworthy property management company in Oklahoma City!
With 20+ years of experience in property management, OKC Realty Home Services has helped thousands of property owners successfully manage their properties and easily navigate the legal complexities of real estate. Our team of experts is here to assist you in handling these complexities, allowing you to focus on growing your investments while we take care of the details. Let us help you make the most of your real estate opportunities in Oklahoma City.
