Preventing Landlord-Tenant Disputes—Before They Happen

Posted by Teresa on October 6, 2010 under Landlord Paperwork and Forms, Landlord Tips | icon: commentBe the First to Comment

tenantscreeningblog, tenant screening, tenant background checkCommon gripes between landlords and tenants can often be prevented through clear communication. And by “clear,” we mean “absolutely, crystal clear.” Murky, misunderstood or meaningless agreements almost never work in the rental property business.

Four simple steps to clear communication:

  1. Say exactly what you mean.
  2. Put it in writing.
  3. Make sure the tenant understands.
  4. Get the tenant’s buy-in.

Say exactly what you mean: If you require pet deposits for the privilege of housing a pet in your rental property, specify if they are refundable with no damages or non-refundable and not intended to cover damages. The vague term “pet deposit” could be interpreted to mean “refundable if my pet does no damage.” The day a pet-owning tenant moves out and expects that deposit back is not the time to explain that you really meant it’s non-refundable, damage or no damage.

Put it in writing: We’re not lawyers, and of course you should always consult with yours before proceeding along the path to any agreement, but do remember that when it comes to landlords and tenants, the “he said, she said” argument rarely wins over a signed, dated agreement. When it comes to the landlord business, the more signatures, lists, photos and pieces of paper you have, the better.

Make sure the tenant understands: Never assume a tenant knows what you’re talking about. This doesn’t mean you should patronize or talk down to a tenant—or treat them like they’re in kindergarten. It does mean to take the time to explain every detail of the lease agreement, tenant rules, pet policy, causes for eviction, quiet hours and even appliance operation. Whatever it takes to establish a respectful, mutually agreeable relationship in the beginning will pay off through the time of the lease. It takes time and effort to look a tenant in the eye, ask if they understand, explain if they don’t, and obtain a signature saying they do. But it can save a lot of hassle down the road.

Get the tenant’s buy-in: Don’t dictate to your tenants. Help them understand that every rule, every procedure, and every effort on your part is to make their rental home a place they and their neighbors want to live. Ask for their cooperation in making it so.

Sounds simple, right? As with anything that’s worth doing, establishing clear communication with tenants may take time and practice. But it can’t hurt to try and see if it makes the landlord/tenant relationship a little smoother and more pleasant!

5 Landlord Mistakes to Avoid

Posted by Teresa on September 14, 2010 under Landlord Paperwork and Forms, Landlord Tips, Tenant Screening & Background Checks | icon: commentBe the First to Comment

tenant screening, tenant background check1. Not approaching your rental business like a business. To be successful, all businesses need to follow a plan. They need to be capitalized. And they need to be run professionally. This takes time, energy and money. Some landlords are not willing to invest all of these resources into their businesses. Some don’t have a plan. Some don’t have enough capital to keep their businesses going when rent income falls below projections (if they even have projections). Being unable or unwilling to do all of these things will almost guarantee a rental property business that is not as successful as it should be.

2. Conducting less-than-professional relationships with tenants. Landlords vulnerable to becoming too personal with tenants are often sucked into giving extensions on paying rent, reducing security deposit requirements or otherwise allowing tenants to ignore the established rules. Tenants who suffer no consequences will usually continue to bend or break the rules. It may seem harsh, but just as you can’t walk out of store without paying for a gallon of milk, a tenant should not be allowed to live for free in your rental property—even for a day.

3. Treating tenants differently. Letting certain tenants slide on the rent, steering certain tenants toward certain units, and otherwise showing deferential treatment to an individual or group of tenants can land you in trouble quickly. Landlords are constantly taken to court on charges of discrimination for actions like these. You don’t want to be one of them.

4. Failing to document. Keeping excellent records is a habit that can save your business. It’s vital to make copies of everything from driver’s licenses (if legal in your area), move-in/move-out inspections, applications, tenant screening authorizations and lease documents. But consider making notes of phone and text messages, emails and snail mail communications, too. Even a simple spreadsheet can prove to a judge that you treat all tenants equally and  follow the law.

5. Not knowing when to call in the professionals. A licensed electrician and plumber, landscaper, lawyer, accountant, tenant screening service and possibly a property management company should be on every landlord’s list of resources. You may not need all of them all of the time, but you will likely need them at some point in running a rental property business. Trying to do it all has been the downfall of many a real estate investor. Knowing when help is needed in managing rentals can save your sanity—and maybe even some of your profit!

Do You Need a Landlord Tenant Lawyer?

Posted by Teresa on July 20, 2010 under Landlord Paperwork and Forms, Landlord Tenant Lawsuits | icon: commentBe the First to Comment

tenant screening blogWhen Does a Landlord Need a Lawyer?
In short, landlords need expert assistance from landlord/tenant lawyers when a legal issue becomes serious or has the potential to be expensive. Here are several such scenarios:

When you’re starting out. It could be worth the extra expense to have your lease agreements, pet policies, security deposits and other legal documents prepared by a a law professional. You don’t want to discover during a tenant dispute that the lease you downloaded from the Internet is illegal in your state. And you don’t want to be sued for having discriminatory language on your lease. If you prepare your own lease documents or use publicly-available documents, you should at least have a lawyer review them before you use them.

When you experience your first eviction. Having an experienced attorney prepare all the required documentation the first time you evict a tenant is an investment in your landlord education.

When a tenant files a complaint. Sure, you can represent yourself. And if a tenant files a baseless complaint, you might just need to present the attorney-prepared documents with the tenant’s signature as proof of your innocence. But if things get sticky, if the complaint is regarding something serious like discrimination, or your tenant hires a lawyer, you might want to do the same for yourself.

When you want to reinforce a policy with a tenant. If you’ve done the phone call, email, letter routine to a tenant in violation of the lease, a quick letter from an attorney will often produce a quick result.

If you’re going into mediation or arbitration with a tenant or former tenant. It’s good to know your options, your legal standing, and what you can choose to compromise on when you go into the arbitration process.

If your tenant files a lawsuit for damages. You don’t want to take a lawsuit too lightly. Tenants who have been injured on your rental property, who have suffered losses due to your alleged negligence, or who have banded with their neighbors to file discrimination or other charges probably mean business. You probably don’t want to face serious charges without an attorney by your side.

Whenever things get dicey between you and your tenants, it could be worth the expense to hire a good landlord/tenant attorney.

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.

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

Be Careful when Rejecting a Tenant Application

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

bad-employee2Our last post contained a warning to landlords that what you say can come back to haunt you. In other every day activities, like accepting or rejecting new tenants, landlords must also take care to know and follow all applicable laws—because it protects you and your business from liability.

Take discrimination. The Fair Housing Act is very clear on what constitutes discrimination: denying housing to an applicant based on race, gender, family status, country of origin, religion, age, sexual orientation, or disability. Still, depending on how a rejection is handled, there is always a chance that a discrimination claim could be filed by a rejected tenant.

How can landlords avoid such claims? First, make absolutely sure that you have a rock-solid reason for the rejection—and back it up with paperwork. Second, communicate the reason to the applicant. Don’t just say, “I found a better tenant,” or “I rejected your application.” The tenant could make up his own reasons for the rejection, including his race or religion.

Establish your minimum standards for approving tenant applications, and apply them to every single applicant. Treating everyone equally is a cornerstone of good landlord practices. Accept the first qualified applicant for a rental unit, after applying your standards to each interested party.

Full disclosure to all applicants up front is a good idea. Your lease application should convey your standards, as in the following examples:

  • That each adult who will live in the rental unit must fill out an application and be approved.
  • That a minimum income level is required to rent the unit.
  • Employment history will be checked, and a minimum of six months at the applicant’s employer is required.
  • That previous rental history will be taken into consideration, including timely rent payments, keeping property in good condition, and fulfillment of previous leases.
  • That a tenant credit check and criminal background screening will be conducted on all applicants.

If you have additional requirements, add them to the list. And of course, your application should state that you do not deny the right to rent or lease property based on race, gender, family status, country of origin, religion, age, sexual orientation, or disability.

With this information up front, applicants will know what basis they can be rejected on. When you do reject a tenant applicant, be sure to explain your reasons in writing, and supply a copy of the credit report, as required by law.

Garnishing a Tenant’s Wages for Back Rent or Damages

Posted by Teresa on February 18, 2010 under Eviction, Landlord Paperwork and Forms, Landlord Tips | icon: commentBe the First to Comment

Gavel-300x211Depending on the state in which your property sits, you can probably collect back rent and damages from former tenants through wage garnishment.

Garnishment of wages is done through the courts, after a judgment is made against the debtor. The debtor’s employer is ordered to withhold a portion of his or her wages, and turn them over to the court, to be disbursed to the creditor.

The question most landlords ask is if the amount of money in question is worth the time, trouble and expense of the court proceedings required. The best way to determine this is to obtain an accounting of the fees involved: usually there are court costs, process server fees, filing fees, and attorney’s fees—unless no attorney is involved.

As with eviction proceedings, many landlords hire a landlord/tenant law specialist to file garnishment papers the first time, and then decide whether or not they can handle the process themselves. And that’s a personal decision, just like deciding what dollar amount makes the court action “worth it.” Every landlord is different in this respect. Once you determine the out-of-pocket costs, you can then make your decision.

Obtaining a judgment is one thing, but if the tenant has no means to pay it, you may never see the funds owed to you—and working hard to collect them could be a huge waste of your time. And it should go without saying that your former tenant needs to be employed in order for his or her wages to be garnished.

There are other factors to consider in making a decision to garnish a tenant’s wages:

  • Do you have the tenant’s new address? If not, filing will be very difficult.
  • Have they moved out of state? Again, filing becomes more complicated.
  • Do they have other garnishments, such as for child support payments? Other garnishments must be satisfied first.
  • Is the tenant’s income below the poverty line? If so, they are exempt.

If you decide to file for a Writ of Garnishment, you’ll need to gather all the tenant paperwork, including the lease application, the lease or rental agreement, proof of rent payment, proof of any notices to Pay or Quit, eviction papers, and notes from conversations and electronic communications.

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.

Common Legal Mistakes Landlords Make

Posted by Teresa on February 9, 2010 under Landlord Paperwork and Forms, Landlord Tips | icon: commentBe the First to Comment

gardening-blog-header21-300x200While most landlords appropriately treat their rental property businesses like a business, there are always ways to improve practices and in turn, cash flow. If you’re making any of these common legal mistakes, you could be putting your business and finances at risk.

Lackluster leases and rental agreements: The most important legal document in a landlord’s toolbox is the lease. You must be sure yours stay within the limits of new federal and local laws. If your lease has paragraphs scratched out and rewritten lines, do yourself a favor and revamp it. Then have a landlord/tenant attorney take a look at it—it’s worth it to be sure you’re in compliance.

2. Not having a lawyer: Sure, legal guidance can be expensive. But acting as your own attorney, or relying on friends or the Internet for your legal advice can end up costing much more than sound, professional advice from a licensed attorney. For routine procedures, like evictions, hire an attorney for your first one and then you can possibly file subsequent paperwork yourself.

3. Ignorance of Rental Laws: Landlords are expected to familiarize themselves with federal, state, and local laws. The Fair Credit Reporting Act outlines proper credit check procedures. The Fair Housing Act prohibits discrimination against potential tenants on the basis of race, color, religion, sex, family status, or national origin. The Americans with Disabilities Act prohibits discrimination against persons with disabilities, and can require landlords to modify their leases (such as no-pet rules) or their properties to accommodate them.

4. Ignorance of Employee Laws: Landlords need to know how employees are defined by state and federal government. Whether you consider someone an employee or a contractor might not match the government’s definition—which determines whether or not you must pay taxes and offer any mandated employee insurance coverage. Be careful when paying independent service people, like handymen or lawn care people—don’t pay in cash, and establish contractor status by recording their EIN or Social Security Numbers so you can issue 1099s at the end of the year, if needed. Of course, ask your lawyer for specifics.

5. Insufficient Record Keeping: Ideally, you asked your tax professional or CPA how to set up your records before you purchased your first rental property. Keeping track of mileage, rental income, security deposits, expenses and other deductions is not the most enjoyable part of being a landlord. But it’s the most important part of running your business. Careful records and receipts for all of your expenses are vital to the health of your rental business.

Keeping legal matters tidy is one way to ease the stress of being a landlord.

Rent Collection: All the Options

Posted by Teresa on February 3, 2010 under Landlord Paperwork and Forms, Landlord Tips, Rents and Deposits | icon: commentBe the First to Comment

iStock_000002872280XSmall-208x300Landlords have many options for collecting rent from tenantssome more secure than others. Take a look at our readers’ tips and decide which is best for you.

1. In person:
A dicey choice, for sure, and one of the more old-fashioned methods for rent collecting. Some landlords physically visit tenants and pick up rent, or tenants drop it by their office.

Pros: You see your tenants every month and can check in with them. If you’re personally picking up the rent, you can check on your property. You’ll have the rent in your hand—no “check’s in the mail.”
Cons: If you’re collecting in cash, it’s dangerous. Depending on your schedule and number of rental units, it could be inconvenient and time-consuming (especially if tenants are away or don’t have the rent ready for you when you arrive).

2. By mail: A time-proven method.
Pros: Landlords don’t need to leave the comfort of your home or office. It’s convenient for tenants to write and mail rent checks on their own schedules.
Cons: You’ll often experience a time lag between the day rent is due and when it is received. Who makes the trips to the post office to collect envelopes? How often will all rent checks arrive at the same time? What if your bank charges per deposited item? And everyone’s favorite: How often will you hear that a check is in the mail, got lost in the mail, or was rerouted to Peru on its way to your PO Box?

3. With an online pay system:
Property owners can set up an online payment system account (such as Pay Pal) so tenants can pay online either with a credit card of through a bank account. Or, landlords have several options with online rent payment portals that are easy to set up and use.

Pros: no checks to deposit—rent funds are deposited directly to your bank account of choice. No waiting for checks to arrive in the mail. A much more secure system to receive payments—no cash involved. Some rent collection packages offer reports and other valuable information to help run your business more efficiently.
Cons: there are usually transaction fees involved—so if the rent is $1000, you could actually receive 2% to 3% less. Transfers can take a few days. If tenants pay by credit card, there is always the possibility they will dispute a charge and cause a chargeback, which ties up the funds until the dispute is settled. Not all tenants have Internet access.

4. Direct deposit/Electronics Fund Transfer (EFT):
Pros: More tenants are paying their bills online. Automatic transfer of rent is one less hassle for them. Funds are automatically deducted every month from tenant’s account and deposited to yours. Safe, secure, and no checks to wait for and then deposit.
Cons: There is the possibility that tenants will not have the funds available when rent is due. Plus, there is the small detail of another form to fill out, explain to tenants, and obtain their authorization.

Whether you collect cash, checks, money orders, or just review your bank statements online and watch your funds transfer in, the best method of rent collecting is an ongoing debate with landlords and property managers.

Keeping Good Tenants: Renewing the Lease

Posted by Teresa on November 2, 2009 under Landlord Paperwork and Forms, Landlord Tips | icon: commentBe the First to Comment

smiling-tenant-and-landlord on tenant screening blogKeeping rental units filled: it’s the number one job of any landlord or property manager. If you have tenants who want to renew their leases, then you are doing it well! Before you decide whether or not to allow a tenant to renew her lease, consider the pros and cons:

The pros:
1. There is no “break-in” period as with a new tenant;
2. Both sides know what is expected;
3. Current tenant is already agreeable to your terms;
4. No costly repairs, repainting, and advertising for a new tenant;
5. Landlord knows the tenant’s habits and behavior—so, no surprises;
6. Most important: no loss of rental income!

The cons:
1. You might be “stuck” with a less-than-ideal tenant for another year;
2. There are no guarantees that the tenant will continue to pay rent on time;
3. The tenant might become less diligent about following your rules;
4. Tenant’s job situation and/or income could change in between lease signing.

Even if you are not 100% enthusiastic about 100% of your tenants, those who pay their rent on time and cause little trouble are like gold—and never more so than in the soft rental market we’re in now. It’s usually in the best interests of both parties to renew the lease.

How to Renew Leases
Since rental agreements without renewal clauses expire automatically at the end of lease period, it’s a good idea to approach your tenant at least 60 days before that date. Ask what his intentions are, and offer to write another lease effective when the current one expires.

Research comparable rents in your area—if your rent is within the average range, you may not be able to raise the rent when the tenant renews. Inventories are very high in some areas, and tenants are more in control than in many years. Stay competitive to keep your tenants.

If you must raise the rent, offer an upgrade to your tenant: new carpeting, new paint, upgraded kitchen counters—whatever your rental unit needs. Now could be the time to invest in upgrades in order to keep the unit filled—and you could actually save money if you don’t have the expenses of turning over the rental unit to a new tenant—which could take months to find!

Renewing leases is much easier and cost-effective than finding new tenants—so keep the communication open with your tenants, find out what they want and try to accommodate them. Of course, if you have a problem renter, don’t let fear of the rental market or the economy keep you from finding a more solid tenant!