When Tenants Cancel Required Renter’s Insurance

Posted by Teresa on June 28, 2010 under Landlord Tips | icon: commentBe the First to Comment

tenantscreeningblog.comLots of landlords and property management companies require tenants to hold renter’s insurance. It’s a good idea for these reasons:

  • Fewer hassles for landlords if disaster strikes
  • Provides a layer of protection for the rental property owner
  • Peace of mind that tenants are protected in case of fire or other accidental loss
  • Often, only renter’s insurance covers a tenant’s dog

But what if a tenant’s policy is cancelled or allowed to lapse through non-payment of premiums. What about tenants who drop policies to save money—unbeknownst to you, the landlord?

Landlord Protection Begins with the Lease
When your lease is written properly, the tenant knows exactly what is required. Make certain that all tenants’ rental insurance policies name the property owner as an additional insured. Then, if the policy is cancelled by either the tenant or the insurance company, you should receive an alert.

Your lease should state the details for what is required of tenants and the consequences (including eviction) if they allow renter’s insurance policies to be cancelled or lapse. Certainly, you should expect gaps in tenant coverage when payments are late or forgotten. But as a landlord, you must be prepared to enforce the terms of the lease. What action does your lease require?

Be Consistent with Lease Requirements
When enforcing leases, it is most important that landlords and property managers are consistent. Allowing some tenants to slide on rental insurance coverage while evicting others for the same offense could lead to charges of discrimination. You don’t want to encourage any such accusations by uneven enforcement of your rules.

When requiring renter’s insurance in your rental property, treat it like any other lease requirement. When tenants break the lease, take your usual enforcement steps. Luckily, renter’s insurance is often available for low monthly payments—and after all, if a tenant can’t afford it, they might not be the ideal tenant for your rental property!

Using Mediation to Solve Landlord/Tenant Problems

Posted by Teresa on June 24, 2010 under Landlord Tenant Lawsuits, Landlord Tips | icon: commentBe the First to Comment

tenantscreeningblogLandlords and tenants are in a business relationship. But unlike typical business transactions, the emotions of landlord/tenant disputes tend to run higher. When a tenant is abusing your property, ignoring your rules, or just not paying you to live in your rental house, it’s natural to feel angry. It’s not always conducive to solving the problem—but it is natural.

And on the tenant’s side, an angry landlord can be a little scary. Unreasonable landlords lock tenants out of their homes, put their belonging on the curb, or cut off the utilities in order to prove a point. These actions might be illegal, but they do happen.

A better solution to diffusing anger in a business situation is mediation. Through mediation, a trained, neutral professional can help landlords and tenants resolve their differences. Whether the result is an agreement that works for both parties, or a compromise where each gives a little to the other, mediation can be an inexpensive and effective alternative to going through legal channels. In some areas, mediation can even be free of charge.

According to Mediate.com, there are 6 steps to formal mediation:
1. Introductory remarks: With both landlord and tenant present, the mediatior makes an opening statemtent outlining the role of each participant and neutrality of the mediator. The process and ground rules are defined.
2. Statement of the problem by the parties: The landlord and tenant each give their version of the story, uninterrupted.
3. Information gathering: The mediator askes open-ended questions to discover the emotions underneath the surface.
4. Identifying the problems: Common goals are brought out, in an effort to figure out which issues can be settled first.
5. Bargaining and generating options: The mediator puts a settlement on the table and the landlord and tenant take turns modifying it. Brainstorming sessions may help in discovering more solutions
6. Reaching an agreement. The landlord and tenant agree to the terms of the agreement.

In mediation, there are many paths to a final agreement. Mediation is a voluntary, non-binding process—so each participant has the option to walk away at any time. No one can force a participant to accept a solution. It’s private and completely confidential. But most important is that over 85% of all mediations result in a settlement.

Instead of heading to litigation next time you have a dispute with a tenant, perhaps you’ll consider mediation. It works!

Pre-screen all tenants as part of your standard application process. Background and credit checks will help ensure you rent to qualified tenants. For more landlord resources, including forms and information on tenant screening, turn to E-Renter.com.

5 Reasons to Always Use Rental Applications

Posted by Teresa on June 22, 2010 under Landlord Paperwork and Forms, Landlord Tips, Tenant Credit Checks | icon: commentBe the First to Comment

Tenant Screening Blog.comIf you’re a landlord who is not using written rental applications 100% of the time, here are 5 reasons why you should!

  1. The practice makes everyone more comfortable. Perhaps there was a time when a handshake and a handful of cash were all landlords needed to start a lease. But in this era of liability, lawsuits, and legal obligations, proper paperwork is just a must. And tenants expect to fill out some form of application, too. It puts them at ease that you’re a legitimate business person who will handle the landlord/tenant relationship professionally.
  2. It can protect you from liability. Requiring a rental application from each prospective tenant over age 18, as well as the names of all children who will reside in your rental housing, could reduce your liability for accidents or injuries that occur on the rental property. When your rental application clearly states municipal code limits on number of residents, fire code regulations, and emergency contacts for each tenant, you are more protected in cases of emergency.
  3. It can protect your rental business from a discrimination lawsuit. Collecting the same information from every prospective tenant, then using the same criteria to choose each tenant, ensures that you are within the guidelines for discrimination laws. If you just talk to prospective tenants, and choose one based on whoever is most able to pay the rent, you could be setting yourself up for a lawsuit. A lawyer for a rejected applicant might have a great case, since you’d have no documentation as to why you chose a particular tenant. When you have paperwork like applications and credit reports to back up your decision, you’re covered.
  4. You can gather the information you need to perform a thorough tenant screening. Rental applications should contain name, address, previous addresses, employment information, social security numbers, driver’s license numbers, and all contact information. They should also contain a signature page authorizing you to pull tenant credit reports and tenant criminal background screening reports.
  5. You get a commitment from a prospective tenant. When landlords show apartments and rental houses, they too often let a great prospect get away. Presenting the prospective tenant with an application form and request for security deposit to “hold” the rental unit is a good way to get a commitment. Then, you can do a tenant screening to confirm he or she meets your criteria before signing a lease or rental agreement.

Legal disclaimer:
The contents of this article are intended for general information purposes only, and should not be relied upon as a substitute for obtaining legal advice applicable to your situation.

Limiting Tenant Background Screening to Your State Alone is Risky

Posted by Teresa on June 18, 2010 under Tenant Screening & Background Checks | icon: commentBe the First to Comment

employee-arrestThe U.S. Supreme Court issued a ruling June 1 that could affect landlords whose tenant background checks are limited to the state they reside in.

Essentially, the Court ruled that a convicted sex offender did not have to register in the state he currently lives in because his conviction pre-dated the Sex Offender Registration and Notification Act (SORNA), passed in 2006.

Background to the Decision
The case involved an Alabama man, Thomas Carr, who was arrested for a sex crime in 2003. Upon his release from prison in June 2004, he registered in Alabama as a sex offender. He moved to Indiana 5 months later, in December 2004, where he did not register with proper authorities. Two years later, he was arrested for violating the Sex Offender Registration and Notification Act (SORNA).

Carr’s lawyer argued that his client was not subject to the law because he moved to Indiana well before SORNA was passed by Congress and before the attorney general established a regulation retroactively applying the law to interstate travel by sex offenders.

Supreme Court Overrules Circuit Court Decision
A federal judge ruled that retroactive enforcement of the law did not violate the Constitution. Carr pled guilty and was sentenced to 30 months in prison. On appeal, the Seventh U.S. Circuit Court of Appeals upheld his conviction. The Supreme Court reversed the Circuit Court’s decision, taking a narrower view of SORNA than the Obama administration’s.

According to the Court decision, the law as written by Congress did not authorize retroactive enforcement. Why not? Because Congress used the word “travels,” instead of “traveled,” when referring to offenders who move state to state.

What Does This Mean for Landlords?
If you typically screen tenant criminal backgrounds only the state you live, they could be hiding a criminal past—including for sex crimes. Running a criminal background check on Carr in Indiana, for example, would show no record.

Landlords, Be Safe with Thorough Tenant Screening
Whether landlords agree with the Supreme Court’s decision or not, the prudent solution is to make sure your tenant background screening is as thorough as possible. Peace of mind is priceless!

More Tips on Renting to Tenants with Pets

Posted by Teresa on June 15, 2010 under Landlord Tips | icon: commentBe the First to Comment

Tenant Screening BlogIn this challenging market, many landlords are allowing pets in their rental units to gain a competitive advantage and fill vacancies. We’ve talked about various aspects of renting to pet-owning tenants before, but here are some additional considerations for landlords:

1. Fleas happen. In some areas, fleas are a huge problem; if animals go outside, as most do, they will bring some inside. Landlords can require that pet-owning tenants keep their pets on flea prevention. Landlords can also make tenants responsible for any treatment needed to rid a unit of fleas.

2. Check temperament: as a landlord, you have the right and responsibility to judge a tenant’s dog for acceptable behavior. No matter what the breed, if any dog that’s a candidate to live in your rental property acts aggressively, you may reject the applicant. (Same goes if the potential tenant acts aggressively!)

3. Limiting number of animals. Believe it or not, some people think if one pit bull or Siamese cat is a good thing, then 5 are even better. We’ve heard stories from landlords who’ve had tenants with multiple dogs apply to live in 1 BR apartments; or tenant applicants who are approved for one cat, sign the lease, pay the pet deposit and show up with 4 cats—and say, “what are we supposed to do with the rest?” As landlord, you get to decide if more than one animal is allowed. And of course, the lease should clearly state the arrangement.

4. Should you require tenants to keep dogs outside? On the surface, this might seem like the ideal fix. As long as the dogs are outside, they can’t tear up the carpet or wood floors, chew the wood work, have indoor accidents, or bring dirt, hair, and fleas inside. Unfortunately, it’s just a bad idea. Most dogs don’t do well outside by themselves (or in pairs, or in groups). They get bored and lonely. They want to be with their owners. They need something to do. So they dig holes, get into garbage, jump or tear down fences, and run away. And it’s just cruel to chain a dog up in an attempt to prevent all of that behavior. If you’re going to allow pets in rental units, you should not allow your tenants to leave them outside. Responsible pet owners wouldn’t dream of it, anyway. And don’t you want to rent to responsible pet owners?

5. Do require pet-owning tenants to keep their dogs under control at all times. And, that doesn’t mean voice control! It’s a good idea to require dogs to be on leashes whenever they leave the rental unit. Keeping your other tenants and neighborhood residents safe is an important part of your pet policies.

Rental Housing Advertising Tips

Posted by Teresa on June 12, 2010 under General | icon: commentBe the First to Comment

iStock_000009636788XSmall2-300x199When it comes to advertising your vacant rental units, there is only one way to measure an ad’s effectiveness—it’s making your phone ring! If your attempts to promote your rental property aren’t doing that, then you need to change tactics—and fast.

Tracking where your inquiries come from is an important side note here. If you’re not tracking sources, you don’t know which of your advertising dollars are working hard and deserve to keep going, and which you should retire.

Here are some advertising methods that work for the landlords we talk to. And keep in mind that in different areas, costs and effectiveness vary greatly. All you can do is keep track of what works for you.

Banners: There’s nothing like a large, colorful banner to grab the attention of drivers and pedestrians. No matter what size building it’s on, a proportionately-sized banner can really work. Make sure you word it in a generic way—today’s tough vinyl materials are meant to last, so don’t advertise any short-term rental deals, unless you plan to repeat them and re-use the banner.

Signs: Inexpensive plastic “For Rent” signs can be scattered throughout your property, or just placed in front near the sidewalk. But just don’t expect these to last—they tend to “walk away” and are meant to be temporary. Still, they do a good job of garnering attention. You can also place them in the windows of vacant units—so they cannot be stolen or blown away. Visibility could be less, but you’ll keep the signs longer! Some rental managers place “for rent” arrow signs at intersections; you should check the legality of this practice in your city.

Referral fees: offer your staff and current tenants a token of your appreciation for bringing in solid tenants. Knowing your minimum requirements is important, so be clear on your expectations. And of course, keep the Fair Housing Act in mind at all times, and don’t ever indicate a preference for one group over another.

“For Rent” publications: These specialized publications are typically used by multi-family complexes. They tend to be pricier than other advertising methods. But since calls can be directed to special numbers, you can easily track how well these ads are doing. The rental publications also give you the advantage of high production values, photos, and wide distribution.

Advertising can be cheap, free, or very expensive. Tracking ads is vital to keeping your rental property business profitable.

I’m Tired of My Noisy Tenant!

Posted by Teresa on June 8, 2010 under Eviction, Tenant Screening & Background Checks | icon: commentBe the First to Comment

landlord-collecting-rent1-204x300Elaine is a responsible, no-nonsense landlord. Her leases are clear and thorough, and her tenants generally live by her rules. Every now and then, however, Elaine signs a lease with a tenant who unexpectedly starts causing trouble—despite her checking the tenant’s rental history, criminal background, and credit.

This time it’s a young woman who is simply too loud. She plays her TV at top volume, listens to bass-busting music late at night, and has way too many parties with her also-loud friends.

Elaine has reminded the young tenant about her rules on disturbing the peace. She’s asked her to discontinue the behavior. And now, other tenants are complaining. Elaine is ready to issue a Three-Day Notice to Quit. Is that her best option?

According to our sources, no. This non-conditional notice is generally used when whatever is happening to breach the lease cannot be corrected. Examples include illegal behavior like selling drugs, irreparable damage to the property, or subleasing the property without permission. The notice tells the tenant that if they are not out in three days, eviction proceedings will begin.

In this case, Elaine’s tenant could still correct her problem—just by quitting the loud parties and turning down her stereo equipment. Therefore, a Three-Day Notice to Perform Covenant or Quit is the better recourse. It must specifically state the behavior that breaches the lease so the tenant can correct it.

Then if the problem continues over the three-day period, Elaine can start eviction proceedings. But what if the tenant quiets down for three days, and turns up the volume again? Hopefully, the threat of eviction is enough to inspire behavior modification in this tenant. If not, another Three-Day Notice to Perform Covenant can be issued. After a few of these, it might be time for the Three Day Notice to Quit!

Legal disclaimer:
The contents of this article are intended for general information purposes only, and should not be relied upon as a substitute for obtaining legal advice applicable to your situation. Always consult your legal advisor for your particular situation.

A List of Landlord “Don’ts”

Posted by Teresa on June 4, 2010 under Landlord and Tenant FAQs, Landlord Tenant Lawsuits, Landlord Tips | icon: commentBe the First to Comment

to-do-list2Take a look at these true landlord stories—and avoid repeating their mistakes. These are definite landlord don’ts!

  1. George informed his landlord that he lost his job and can’t afford the apartment any longer, so he needed to break the lease and move. The landlord told George he’d be responsible for the rest of the rent until the lease is up— unless he’s able to rent the apartment first. George knows the landlord is having a hard time filling vacancies, so he was surprised to see the apartment on Craigslist for $500 more per month than George was paying. George knows the landlord will never rent it at that rate. He thinks the landlord is deliberately avoiding re-leasing the apartment.

    Don’t be unreasonable—if you’re a landlord who is not trying to find a replacement tenant, or rejects a qualified tenant, your current tenant could have a case against you. If rents are declining, advertising a higher rent is not going to look legitimate. George knows the market. Your tenants probably do, too.

  2. Carrie was informed by her landlord that she’d be responsible for the cost of refinishing the hardwood floors after she moved out. Carrie didn’t think it was fair, because the floors were nearly a hundred years old, and she didn’t damage them beyond a few scratches. She thought her landlord was trying to bully Carrie into financing her new floors. Her suspicions were confirmed when she did some online sleuthing and saw that her landlord had a Twitter account—and found her tweet saying, “thanks to my tenant for beautiful new floors!”

    Don’t repeat any tenant business online. If they don’t see it, their friends will. Word travels fast online!

  3. Sharon and Joe applied to rent an apartment. The property manager informed Sharon that because they are unmarried, each of their incomes would need to be three times the rent in order to qualify for the rental unit. Sharon thought this was unfair, so she asked the local Housing Authority to look into it. She was right—it’s illegal to require higher incomes from unmarried couples.

    Don’t be ignorant of Federal and state Fair Housing Laws in any tenant interactions. Discriminating against applicants on the basis of family status, race, country of origin, religion, disability, sex, or color is illegal.

A Landlord’s Guide to Subleasing

Posted by Teresa on June 2, 2010 under Landlord and Tenant FAQs, Landlord Paperwork and Forms, Tenant Screening & Background Checks | icon: commentBe the First to Comment

Leases begin and end; tenants come and go. Often, life interferes with details like legal documents (leases) and a tenant comes to you with an announcement: “I’m moving, but don’t worry—I found someone to take over my lease!”

For some landlords, this is when the worrying begins. For others, it’s not a big deal—having a new tenant without advertising and showing the rental unit is the best part about subleasing.

Subleasing is when a tenant assigns his or her lease to a third party; in effect, they are renting the unit from you, while renting it out to someone else.

To protect yourself, you should be aware of the following when considering whether or not to allow a sublease situation in your rental property:

1. Make sure the original tenant knows that a sublease itself does not release them from the original lease. If the sublease renter defaults on the terms, the original lessee is still responsible.

2. If you as landlord choose to release the tenant from the lease, then the sublease renter becomes responsible for rent and other obligations of the lease, and you become responsible for responding to the sublease renter’s needs under the lease.

3. In many cases, landlords do not release the original tenant from the lease, so the original tenant collects the rent from the sublease renter, and pays the landlord per the terms of the lease. The original tenant is also responsible for any damages to the property caused by the sublease renter.

4. You are still in control—not only can you approve or deny the applicant who wishes to sublease, but you can refuse to participate at all in a sublease situation. You then handle the tenant’s breaking of the lease agreement the way you normally do, whether it’s collecting the balance of the lease period’s rent, keeping the security deposit, or agreeing to let them out of the lease providing you find a new tenant.

5. Keep in mind that tenants don’t always inform landlords of their plans. Sometimes they move out and let their sublease renter move in—and you’re none the wiser. You are under no obligation to accept the situation, and after checking with your legal advisor, may be able to start eviction proceedings against the sublease tenant and the original tenant, too.

If your tenant asks about subleasing your rental property, check with your legal advisor first. To ensure you’re protecting your best interests, as well as your other tenants’, insist on full application procedures and tenant screening on the sublease renter.

Legal disclaimer:
The contents of this article are intended for general information purposes only, and should not be relied upon as a substitute for obtaining legal advice applicable to your situation.

Pre-screen all tenants as part of your standard application process. Background and credit checks will help ensure you rent to qualified tenants. For more landlord resources, including forms and information on tenant screening, turn to E-Renter.com.