What Happens When You Fail to Monitor the Tenants' Activities?

Tenants who engage in illegal activity on your property—such as drug dealing, storing stolen property, engaging in prostitution, or participating in gang-related activity—can cause you great trouble.

In recent years, many states have responded aggressively to the drug trade in residential areas, making it easier for landlords evict based on these or other illegal activities. In this section, we focus on the most common problem (drug trafficking), but our discussion also applies to other illegal activities.

Over the past decade, a growing number of laws and court decisions have held landlords liable for failing to adequately monitor their tenants' activities, especially if they are caught engaging in persistent illegal activities such as drug dealing. In addition, your failure to act quickly to resolve the situation could lead to these practical and legal problems:

• A good tenant who pays their rent on time and maintains the property may be hard to find and keep, and the value of your property may plummet;

• Using the "constructive eviction" theory, good tenants, suc as those trying to avoid the drug trade, can legally move out without notice and before their leases expire. They will argue that the existence of illegal activities has effectively driven them out of their homes because problems related to the drug trade prevent them from "quietly enjoying" their homes.

• Tenants injured or bothered by drug dealers, both in the building and neighborhood, may withhold rent or sue you for violating anti-nuisance laws and building codes;

• Local, State, or Federal authorities may levy stiff fines—as high as $10,000—against you for allowing the illegal activity to continue;

• Law enforcement authorities may choose to impose criminal penalties on both the tenants and you for knowing about these activities and tacitly approving by doing nothing.

• As an extreme but relatively rare consequence, the presence of drug dealers can lead to the confiscation of your rental property, based on one of two powerful tools society has developed to deal with crime: nuisance mitigation laws and confiscation laws. A judge can even order an owner to live on the property until the nuisance—the drug dealing—has stopped.