Here’s a handy list of terms landlords should be familiar with.
Abandonment: When a tenant defaults in the payment of rent and indicates by words or actions that they have vacated the premise.
Americans With Disabilities Act: A law passed by Congress in 1990 requiring any business or public facility to be accessible to everyone, including those with disabilities.
Arbitration: Using a neutral third party to resolve a dispute instead of going to court.
Certified Mail: A written verification from the Postal Service that the letter you mailed was delivered to its address. It requires a signature.
Common Area: Areas generally accessible to all residents or users, such as hallways, stairways, laundry rooms, recreational rooms and playgrounds.
Co-Signer: A person or persons in addition to the tenant, who agree to be responsible to pay rent and uphold conditions of the lease.
Consumer Report: A detailed report that provides personally identifiable information relating to one’s credit, character or lifestyle. The FCRA only covers reports prepared by a consumer reporting agency.
Consumer Reporting Agency: An entity that collects and disseminates information about consumers to be used for credit evaluation.
Credit Report: A report prepared by a credit reporting service that describes a person’s credit history for the last seven years.
Credit Score: A numerical value or a categorization derived from a statistical tool or modeling system used by a person who makes or arranges a loan to predict the likelihood of certain credit behaviors, including default.
Default: a tenant’s failure to do something that the law requires.
Default Judgment: A judgment issued by the court, without a hearing, when the tenant has failed to file a response to the landlord’s complaint.
Discrimination: Denying a person housing or stating that housing is not available because of a person’s race, color, religion, sex, sexual orientation, national origin, ancestry, age, disability, marital or familial status. Treating people differently could also be considered discrimination.
Equal Housing Opportunity: Laws that prohibit discrimination in housing on the basis of race, color, religion, sex, national origin, age, disability or familial status.
Eviction: A court proceeding for removing a tenant from a rental unit because the tenant violated the rental agreement or did not comply with a notice ending the tenancy.
Fair Credit Reporting Act: The Fair Credit Reporting Act (FCRA), as amended September 30, 1997, regulates consumer credit information gathering and dissemination. It dictates seven and ten year limits on how long negative information can be reported. The Act also provides a method for correcting erroneous information in a credit file. The 1997 amendment covers landlord tenant relationships and requires landlords to notify tenants if they have been rejected because of information in their credit file or references from previous landlords.
Fair Housing Act: The Fair Housing Act, as amended in 1988, prohibits discrimination in housing based on race, color, religion, national origin, sex, physical or mental handicap, or living with children, expect that housing for older persons may exclude children.
Fees: Money collected from tenants that will not be returned at the end of the tenancy, such as for applicant screening, cleaning, pets, etc.
Guest: a person who does not have the rights of a tenant but stays in/on the premises for a set period.
Inspection Checklist: A written checklist or statement specifically describing the condition and cleanliness of or existing damages to the premises and furnishings, such as walls, floors, countertops, carpets, drapes, furniture and appliances. The statement should be signed by both the landlord and the tenant.
Lead-based Paint Disclosure: A document that must be provided to all tenants before they enter into a rental agreement on properties built before 1978.
Lease: A written or oral contract between a landlord and a tenant that transfers the right to exclusive possession and the use of the landlord’s real property to the tenant for a specified period of time and for a stated consideration (rent).
Lessee: The tenant.
Lessor: The landlord.
Market Rent: The prevailing monthly rent for comparable units in a specific area.
Mediation: A way to resolve disputes by sitting down with an impartial person to reach a voluntary settlement. Medication involves no formal court procedures, and the mediator does not have the power to render a binding decision or force an agreement on the parties.
Month-to-Month: When premises are rented for an indefinite time, with monthly or other periodic rent reserved; or from period to period on which rent is payable and shall be terminated by written notice in accordance with the lease and law.
Normal Wear and Tear: Deterioration which occurs as a results of intended use, without negligence, carelessness, accident, misuse or abuse.
Rental Criteria: A set of criteria than an applicant must meet in order to qualify for tenancy. Landlords should apply criterion consistently and fairly from applicant to applicant to avoid Fair Housing issues.
Renter’s Insurance: Insurance protecting the tenant against property losses, and liability for claims or lawsuits filed by the landlord or others alleging that the tenant negligently injured another person or property.
Security Deposit: Monies paid to the landlord by a tenant as a deposit or security for performance of the tenant’s obligations in a lease or rental agreement. Each state enforces laws that must be followed if a landlord accepts a security deposit.
Sublet: An agreement between the original tenant and a new tenant by which the new tenant takes over the lease of a rental unit. Both the original tenant and the new tenant are still responsible to the landlord
Ten Day Notice to Comply with the Rental Agreement or Vacate: A form used when a tenant breaches the lease or rental agreement in ways other than failing to pay rent.
Three Day Notice to Pay Rent or Vacate: In most state, if a tenant defaults in payment of rent, this notice needs to be served to the tenant to begin eviction proceedings.
Tenant Screening: A process used primarily by landlords and property managers to evaluate prospective tenants to assess the likelihood the tenant will fulfill the terms of the lease or rental agreement. The process culminates in a decision as to whether to approve the applicant, approve the applicant conditionally (such as requiring an increased deposit or cosigner) or deny tenancy.
Start your tenant relationship off right by knowing who you’re leasing to. Protect your rental property and assets with tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.
Between the Fair Housing Act and the Americans With Disabilities Act, it’s clear that landlords must accommodate tenants with disabilities. If your rental property is of a certain size and age, it’s probably already built to accommodate wheelchairs. And if a unit is to be leased by a person with disabilities, you must allow them to make reasonable modifications to accommodate their needs. And of course, if a tenant requires a service animal, you must allow it, even if you have a “no pets” policy. You’re entitled to ask for documentation from your tenant’s healthcare provider outlining the need for the service animal.
But what about your tenants’ guests? One landlord experienced this situation recently. A tenant had a long-term visitor who brought his dog along. When reminded of the no-pets rule, the tenant stated the dog was a service animal.
In this case, is the landlord obligated to accommodate the guest’s animal? And is the landlord allowed to request documentation?
The answer to both questions is “yes.” Under the Fair Housing Act, persons who are associated with tenants are a protected class if they have a disability. If that disability is not obvious, the landlord may request verifying information. Note, however, that a landlord may not ask that the verification letter include a description of the disability.
So there you have it. You may certainly ask a tenant why their guest has an animal and if it is a service animal, ask for verification. Otherwise, you could have angry tenants who wonder why you’re making an exception to the no-pets rule.
Being a landlord isn’t easy. It’s a challenging way to make a living or earn extra money. However, investing in real estate and leasing property can be quite rewarding when done right. Avoiding these common landlord errors can keep you out of legal trouble, and make things a little easier.
Using the same old lease, or someone else’s lease: Landlords who’ve been leasing properties for a long time often use the same lease for decades. And those who are new at it, often download a lease agreement off the Internet, or borrow one from a friend. It’s true that most leases contain common language, but it’s best to have yours customized for your property, your circumstances and your preferences. It could be well worth it to sit down with a landlord-tenant lawyer and have your lease reviewed.
Forgetting that time equals money: You might not mind doing repairs, cutting the grass or performing maintenance at your rental properties. If you’re an expert at these things, it could be cost-effective to do it yourself. However, if your work is sub-par, it takes longer than it should or requires follow-up repairs, you are probably wasting your time—and losing money. Hire experts to do the things you can’t do, and focus on what you do well. Fill empty units, update your website or take classes to make yourself a better businessperson.
Breaking anti-discrimination laws: You cannot refuse to rent to a prospective tenant based on race, national origin, religion, familial status, color, gender or disability. Landlords are not allowed to ask prospective tenants questions that refer to these things, either.
Basing acceptance of a tenant on anything other than cold, hard facts: Look at an applicant’s previous rental history, current and former employment, income, and credit worthiness. Run a background check to weed out those with criminal records. But don’t make decisions based on how a tenant applicant looks or dresses, or the car he or she drives.
Failing to follow the same procedures with every applicant: You could be accused of discrimination if you don’t require each applicant to follow the same process.
Making decisions based on emotion: Every experienced landlord has regretted allowing a tenant to be late on rent “just this once,” or to letting a tenant move in without paying a security deposit up front because they promised to pay “next month.” Well, “just this once” is never once and “next month” never comes. It’s difficult to be tough, but landlording is a tough business. If you want to succeed, you’ve got to take a hard stance.
While renting to disabled tenants is common for many landlords and property managers, some have never had a disabled person submit a rental application. This post will clear up what might be some unknowns.
It’s important to know that disabled persons are protected by law. The Fair Housing Act (FHA) protects people with physical or mental disabilities that substantially limit one or more major life activities. These disabilities include mobility, hearing and visual impairments, chronic alcoholism, mental illness, HIV/AIDS and mental retardation. Landlords may not discriminate against these people, nor against those who have a history of such disabilities or are regarded by others as though they have such a disability (in other words, have no formal diagnosis).
- Landlords are not allowed to request medical records or ask prospective tenants if they are disabled.
- Landlords must not assume a prospective tenant cannot live in certain housing. For example, an applicant in a wheelchair cannot be told there are no vacancies if a third-floor apartment is available.
- Landlords may not turn down mentally disabled applicants on the basis of their condition alone. If they have threatened or harmed others in the past, then that could be grounds for rejection.
At their expense, landlords must accommodate disabled tenants within reason. This means adjusting rules such as where garbage must be placed or allowing a close-by parking space. Each of these would fall under the “reasonable” category. Installing an elevator so a tenant who uses crutches can reach an upstairs unit would not.
Disabled tenants must be allowed to make reasonable modifications to their rental units or common areas in order to live comfortably and safely. For example, a tenant with a wheelchair-bound child must be allowed to widen the doorway to the bathroom and install bars around the tub and toilet at their own expense. Furthermore, the landlord may not require the tenant to return the doorway to its original condition (since it does not interfere with the next tenant’s use and enjoyment of the premises) but may require the tenant to remove the grab bars and return the walls to their original condition.
Other examples of reasonable accommodations include lowering countertops in the kitchen for a tenant using wheelchairs, installing an extra-loud doorbell for a hearing-impaired tenant or altering appliances so a visually impaired tenant can use them. All of these modifications must be requested verbally or in writing, approved by the landlord and paid for by the tenant. Landlords may ask for the unit to be returned to its original condition upon termination of the lease.
Landlords are permitted to ask for a description of proposed modifications, along with proof they will be done according to the law and in a workman-like manner.
Have questions? Learn more with the U.S. Department of Justice and Department of Housing and Urban Development’s joint statement on the subject, which can be found here.
No matter if you’re a long-time landlord or new to the business, you’ll likely encounter a wide mix of tenants. Some will be easier to deal with than others. They pay their rent on time, follow your rules and cause no problems. Other tenants can only be described as problem tenants. Most landlords would probably agree that if they could turn back the clock, they would not have agreed to lease to these tenants in the first place.
Trouble is, you can’t always know if a tenant will be a problem. Experienced landlords know that even those with good jobs, good credit scores and sparkling references can later turn out to be duds—or worse. But there are warning signs that every landlord should know.
Five Warning Signs of Problem Tenants
- They gripe about the application fee. Good tenants realize that running background checks and tenant credit checks, calling references and processing paperwork take time and money. They pay the application fee without complaint. A lease applicant who can’t pay the fee, or complains about it, is a red flag.
- They ask for more time to pay the first month’s rent and security deposit. Sure, it can be tough to come up with that much money at once. But remember, you’re running a business, not a charity. If a tenant cannot pay all of the rent and security deposit up front, you may want to pass on him or her and wait for someone who can. It’s a matter of choice. Let another landlord deal with it.
- They are new at their job. This isn’t always a bad thing. Plenty of people switch jobs because they’re offered better positions that pay more, and they can afford more rent. But if a prospective tenant has had several jobs in the past two or three years, the new job might not last for long. And soon, the excuses for paying rent late will begin.
- They mention relationship problems. Keep in mind that according to the Fair Housing Act, landlords may not discriminate against applicants based on marital status. It’s illegal to refuse to rent to a divorced person, a single person or a married person because of their status alone. But if an applicant mentions boyfriend or girlfriend problems, or that he or she is trying to get away from someone, consider these red flags. Trouble typically follows people around. If you don’t want an upset estranged husband or troubled ex-girlfriend on your hands, pass on this tenant.
- They ask too many questions. There’s a fine line between having a healthy interest in your rental property and showing warning signs of being a problem tenant. Be on alert if a prospective tenant asks about things like:
- The racial makeup of your building or the neighborhood.
- Exactly what the electric, sewer or gas bills will be.
- How to file complaints or repair requests.
- Where they can smoke (if you have a non-smoking property).
- How often you’ll be inspecting the property, and how much warning you’ll be giving.
- The type of questions, the number of them, or the way they are asked can tell you a great deal about the person who’s applying to live in your property.
As a landlord, you get to decide with whom you enter into a lease agreement. Keep your eyes and ears open, trust your gut instinct and always verify everything a prospective tenant tells you.
No matter how competitive your rents are, you need to protect your rental property and assets with tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.
If you’re thinking about investing in rental property, particularly as demand for rentals is increasing and housing prices are at the low point in many markets, there is a lot you’ll need to learn. Some aspects of landlording can only be learned through experience, but others are important to understand from the very beginning, to ensure you’re in compliance with property and tenant regulations.
Even if you’ve been a landlord in the past, you’ll need to brush up on new laws. For example, in many states, certain disclosures are required to protect tenant health. You may be required to reveal exposure to floods, mold or radon. Some states require indoor air tests or other environmental testing. Federal laws require landlords to disclose lead-based paint hazards in buildings built prior to 1978. You may be required to provide smoke detectors, carbon monoxide detectors, or both.
The federal Fair Housing Act prohibits discrimination in renting property based on a person’s race, color, religion, national origin, gender, marital status or disability. Landlords may not prohibit children in rental property, unless it is a senior-only community.
Landlords are required to provide safe and habitable units for tenants, according to local and state housing and health codes. All utilities must be operational. Necessary repairs must be made promptly. Lighting, locks and grounds should be maintained to prevent crime and injuries. Landlords cannot force tenants to move by turning off heat, lights, or water, by changing locks or removing the tenant’s property. Check local statutes for the guidelines and proper process for evicting tenants.
In many states, security deposits are strictly regulated, including the amount that may be charged, where the funds are kept (such as in a separate bank account from rents or in an interest-earning account) and how they are disbursed to former tenants. You may also be limited as to what the security deposit can cover. Some states allow deposits to cover unpaid rent, while others limit their use to just damages. Landlords may be required to refund a security deposit in a certain number of days.
The proper handling of a tenant’s property is another potentially sticky area. When a tenant leaves property behind, you may be required to prepare an inventory and have a law enforcement officer sign off on it. Depending on where you live, a landlord may be prohibited from moving a tenant’s property off the premises; or they may be allowed to dispose of it after a set period of time. Check your local laws to ensure compliance.
Becoming a landlord can be a profitable venture. Just be sure you’re in compliance with local, state and federal laws, or you may have legal fees that can wipe out your potential gain.
Landlords, how closely do you monitor your property managers? Do you allow them to run your properties however they see fit, or do you run a tighter ship? When you realize that a property owner is often liable for the actions taken by those acting on his or her behalf, you may want to consider keeping a closer eye on your manager.
For example, one rental property owner was surprised to hear that her long-time property manager had been “protecting the property” by rejecting lease applicants with children. This action is in violation of federal fair housing laws, which prohibit discrimination against applicants on the basis of race, color, national origin, religion, sex, familial status or handicap. Even through the property manager was acting on her own, the building owner still has the responsibility to supervise her staff and prevent any discriminatory actions from taking place.
In a related case, an apartment property manager was found to be turning on the lawn sprinklers whenever children who lived in the complex were playing outside. By his actions, he was creating a hostile environment for the families with children, who were forced to keep the kids inside. If a tenant complained to the local fair housing agency, the landlord could end up as the target of an investigation.
A third example is the property owner who received a letter from a tenant, complaining about the resident manager. The tenant said the male manager was too friendly with her teenage daughter, and was frequently seen near the apartment when the girl was home alone. This behavior, which also creates a hostile environment is often classified as sexual harassment—and is also illegal under the federal Fair Housing Act. Even though no actual inappropriate actions had yet been taken, the daughter’s discomfort is significant enough to warrant action by the property owner.
In many cases, rental property owners are just a complaint away from a discrimination lawsuit—whether or not they are aware of the illegal activities of their property managers. The best bet is to keep a close eye on what’s going on at your properties. Remember, you are ultimately responsible for every decision or action by a property manager that affects your tenants.
The Fair Housing Act (FHA) requires owners of rental properties to make reasonable exceptions in policies and operations to provide equal housing opportunities to persons with disabilities. If you don’t normally allow pets, you may be required to make an exception to accommodate a service or companion animal for any tenants with disabilities.
But what if the companion animal poses a threat to your other tenants—or to you? Do you have to accommodate an aggressive animal under the FHA?
Probably not. While you must make reasonable accommodations for tenants with disabilities, they have responsibilities, too. If you request it, tenants with disabilities must provide documentation that the service animal is required from a physician or other healthcare professional. However, as a landlord, you are within your rights to require that every service animal be vaccinated, trained and non-threatening to other residents and the public.
The FHA does not protect tenants who create a nuisance or direct threat to the health and safety of others. If a tenant’s aggressive dog creates a direct threat, then you could be justified in requiring the tenant to take corrective action or remove it.
However, taking action based on speculation about a dog’s breed or appearance is not advisable. Rather, make an objective evaluation based on observation and available data. Does the dog have a history of aggression? Has it ever bitten or harmed anyone? Does it bark excessively? Could putting a muzzle on the dog when it’s outside the rental unit solve the problem?
If you have a tenant with disabilities who has a companion or service animal that is noisy, aggressive or a nuisance, keep the communication open and look for ways to come to a solution.
If you’re landlord who has just closed on your first rental property, you may be wondering if this is a good time of year to find good tenants. After all, Thanksgiving is a few weeks away, and that means the winter holidays can’t be far behind. We often hear new landlords ask, “Do people move this time of year?” or, “Will my rental property be sitting vacant until after the New Year?”
Of course, every situation is different, but the short answers to the above questions are “yes” and “not necessarily.” Tenants move at all times of the year, and depending on their circumstances, plenty of people move just before or after Thanksgiving, or the week of Christmas, or even on New Year’s Eve.
If you have a rental property ready for your first tenant, you should create a plan for marketing the property right away. Here are a few tips for filling a vacant rental property fast, no matter what time of year it is:
Remember you may not screen out any tenants on the basis of race, color, religion, marital or family status, gender, or disability. New landlords should become very familiar with the Fair Housing Act and all state and local rental ordinances.
Define your best-fit tenant: Who do you want living in your rental unit (staying within the FHA, of course)? Is it a high-end property with a higher rent, or is it middle- or low-income? Will you seek out Section 8 tenants? Is it perfect for students? What is the income requirement to rent your property? Who can afford it?
Post plenty of signs: Place “Now Leasing” or “For Rent” signs in the windows and on the lawn. If possible, put “For Rent” directional signs at intersections, pointing the way to your rental property. Your signs should include the number of bedrooms and bathrooms and your phone number, along with a website where prospective tenants can view photos.
Put up a few fliers: Post fliers where your best-fit tenant will see them. This could be a coffee shop in the neighborhood, a Laundromat, a grocery store, or a community center bulletin board. Include a thorough, well-written description of the unit, and provide tear-off tabs with your contact info. Highlight any features that will sell the tenant on living there. Is it bright and sunny? Are there details like a fireplace or hardwood floors? A patio? A view? Close to trails, the grocery store or library?
Advertise: CraigsList.org is probably the most popular rental advertising site, although you can also post on Rentals.com, ForRent.com and ApartmentFinder.com. The more you advertise, the more exposure you’ll get and the faster you can fill the unit. Write a good ad that appeals to your best-fit tenant.
Incentivize: When you get closer to the holidays, you may find it tougher to get prospective tenants to agree to move. You can always offer an incentive, such as half off the first month’s rent, waiving the application fee, or offering an appliance upgrade if they sign a one-year lease before Thanksgiving.
Pre-screen tenants: Don’t get so antsy about filling the rental unit that you skip the tenant screening process. Background checks and tenant credit checks are vital to starting the landlord-tenant relationship off well. Protect yourself, your property and any other tenants you may have by properly screening each prospective tenant.
The rental market is going strong in most areas of the country, as more folks are renting instead of buying. While many landlords are enjoying high vacancy rates, they still need to be cautious; the economy has really hurt the credit scores and bill-paying ability of millions of Americans.
Every landlord has a different standard for accepting new tenants, but the importance of conducting thorough credit checks and tenant background checks is clear. This is the one area that experienced landlords will tell you not to skimp on, because if you do, you will more than likely regret it!
Tenant credit checks and background screening doesn’t take long, and can be inexpensive. Most landlords pass the fee on to the prospective tenant, and most tenants are accustomed to paying the fee. If you have an applicant who has a problem with paying the fee or signing the authorization to conduct a background screening, then you probably don’t want them as a tenant, do you?
The screening process begins with the lease application, where you may ask questions about the applicant’s address history, work history and credit history, and obtain contact information for previous landlords and personal references. You may ask if the applicant has ever broken a lease, if they paid rent on time, why they are moving now, and about their income.
You may not ask a potential tenant about race, religion, family status, disability, or any other information that might indicate a breach of the Fair Housing Act.
Be sure to obtain the applicant’s signature on a separate notice that informs him or her that you will be running a credit check and background screening, based on their name, date of birth and Social Security Number.
Most experienced landlords will also phone references and previous landlords. Be careful how you phrase your conversation, because too many tenant applicants will provide the phone numbers of friends who have agreed to pose as a landlord or employer. Simply identify yourself and ask the person on the other line, “How do you know Joe?” The correct answer may be “I’m his landlord,” or “He used to work for me.” If Joe gave you Tom’s name as a previous landlord, and Tom answers, “Joe and I are on a bowling team together,” you may have spotted an inconsistency in Joe’s story. Be on the lookout for more of them!
Finally, you should run a thorough tenant screening credit check to find out how the applicant pays bills, if they’ve filed for bankruptcy, and what their credit score is. A criminal background screening will reveal whether or not you have a convicted felon or sex offender applying to live in your rental property.
Don’t forget to trust your gut when screening tenants. You don’t have to give a reason for rejecting a tenant in most areas (check your state and local laws)—but do be careful and apply the same criteria to every applicant, or you could be accused of discrimination. You can’t reject an applicant solely for the color of their skin, but you can reject one because their credit score did not meet your minimum requirements—along with the bad feeling they gave you when you met them!