Posted by Teresa on January 11, 2011 under Landlord Tenant Lawsuits, Tenant Screening & Background Checks | 
You’re probably familiar with the news story about a house in Escondido, CA, where the resident is accused of making bombs and plotting bank robberies. Because of danger to neighbors, the decision was made to burn the house completely to the ground.
Now the question is, “Who’s responsible for the compensating the property owners?” While the county made the decision to destroy the house in the interest of public safety, where did that leave the owners of the home, who rented it to the accused bomb maker? Should the owners’ insurance company reimburse them for the loss? Or is this a necessary expense of the taxpayers of San Diego County, who are already burdened with the expenses of removing the hazard and the resulting cleanup?
Obviously, the accused man, George Jakubec, bears the full responsibility for his actions. But it’s doubtful he’ll have the ability to repay the homeowner. Some say the landlords should be responsible for their loss and to the county for all expenses because of negligence—that they should have known of this tenant’s activities. Questions have arisen about whether proper tenant pre-screening and periodic inspections were conducted.
However, there is no proof that the landlords didn’t screen the tenant prior to signing a lease. Even if they had, the suspect’s crime record has not been released, so we don’t know whether or not he had a criminal record that would have prevented the landlord from renting the property to him.
Most landlords know that their tenants have the right to peaceful habitation, without harassment or unnecessary inspections. However, landlords who care about their properties schedule periodic maintenance to not only protect the property value, but to ensure that illegal or dangerous activity is not taking place.
In the Escondido case, the landlord’s attorney has filed a claim with San Diego County, asserting that no legal justification existed to burn the house. Further, the claim states the eminent domain procedures that would have compensated the property owners were not followed. We’ll keep watching for updates.
In the meantime, a word to the wise: keep conducting thorough tenant screening and background checks, and schedule periodic inspections of your rental properties. It’s so much better to be safe than sorry!
Posted by Teresa on January 4, 2011 under Landlord Tips, Tenant Screening & Background Checks |
We recently heard from Jason, a fairly new landlord, regarding a common problem: a tenant who calls the police—a lot. “I did my due diligence and ran a tenant background check and criminal screening on her, and she came through with flying colors. Unfortunately, I can’t say the same about some of her former friends,” Jason said.
After the tenant moved in, her former boyfriend started showing up, uninvited. She felt harassed and seemed to be unable to get him to leave on her own. “She calls the cops at least once a week,” said Jason. “It looks bad to the neighborhood and it concerns my other tenants. I’m thinking about evicting her.”
Jason was rightly concerned that he could be in violation of the law if he proceeded with eviction. He planned to contact his attorney to be sure. But what should a landlord do when an otherwise perfect tenant makes his or her personal problems a larger issue? If the tenant has done nothing wrong, is it fair to force her out?
One landlord said the best course is to encourage the tenant to seek a restraining order, or to refer the tenant to a domestic violence prevention center. Another mentioned that if the tenant is not an innocent victim, but rather calls the police for minor issues that the landlord or property manager should be handling, it could be more of a nuisance issue. In this case, eviction could be the proper recourse to allow other tenants quiet enjoyment of their homes.
Landlords cannot generally evict tenants when they are exercising their rights. And, it is certainly up to the management to control tenant actions when they affect others. Most landlords we talked to about Jason’s case indicated they would get involved in the situation in order to prevent a possible escalation of harassment. Obviously, confronting the ex-boyfriend is not a good idea, but helping the tenant seek a restraining order is much better than doing nothing. Evicting her would only compound the problem.
When you are a rental property owner, it is in your best interest and that of your tenants to provide a safe environment. This tenant’s calls to the police could be a wake-up call for the landlord to get involved. Remember, when it comes to bullies like this tenant’s ex-boyfriend, stay safe and let the police do their jobs!
Posted by Teresa on December 7, 2010 under Tenant Credit Checks, Tenant Screening & Background Checks |
Why Pre-Screen Tenant Applicants?
There are several advantages to screening tenants prior to signing a lease. One is that you can avoid discrimination issues by applying the same approval standards to every lease applicant—including a standard background and credit check. Another advantage is the reduction of risk. Why take a chance on a tenant who could have a history of evictions or an income that cannot support the rent? Mitigate risk by conducting a thorough credit check on every tenant.
What Will I Learn From a Tenant Credit Check?
You can learn at a glance if your prospective tenant pays credit card bills and loans promptly, as well as if there are any outstanding judgments against him or her. Previous bankruptcies are also typically reported. or bankruptcy filings. You can determine the minimum level of approval for your applicants, based on a good record of responsible finances and living within their means.
Be sure to compare the report’s list of an applicant’s previous addresses with those provided on the lease application. Are there inconsistencies? If so, the tenant is hiding something, or there is a legitimate explanation. Either way, you need to know before you sign a lease.
The information you gather from a tenant credit report must be held in strictest confidence, and never shared with third parties. Your applicant may have a right to the report—check your state’s guidelines and the Fair Credit Reporting Act (FCRA) to be sure you are compliant. If you reject an applicant for credit reasons, you must advise them in writing. Your best and easiest way to screen tenants is through a reputable, professional tenant screening service.
Consistency Counts When Screening Tenants
It’s important to be consistent when it comes to pre-screening tenants.
- Screen all lease applicants, no matter how they look, dress, or what kind of car they drive.
- Use the same screening procedures for each prospective tenant. Exceptions could be interpreted as favoritism toward or discrimination against a certain group.
- Establish a clear policy of background checks on all applicants to protect your rental property business.
Remember! Use a screening service with nationwide coverage and access to all three credit bureaus.
Posted by Teresa on August 20, 2010 under Housing Trends |
The cost of tuition is bad enough at colleges and universities; but did you know room and board averages nearly $8,600 at private schools and over $7,000 at public schools? Parents are increasingly looking at purchasing investment property for their kids to live in, and then to rent when the child graduates.
There are several advantages to this option:
1. Purchasing offers tax benefits that are not available when paying college room and board. The interest paid on a mortgage is usually tax-deductible; college room and board is not.
2. Owning rental property offers parents additional tax benefits, with deductions for taxes, repairs, upkeep and depreciation. Travel to inspect, purchase and check on the property is also deductible in most cases.
3. Avoiding the housing shortages that many universities are experiencing—along with the steep fees that go with them.
4. Moving a student’s possessions back and forth can be either a time-consuming hassle or a storage nightmare. Keeping it in one place year-round is much more convenient. It can save parents time and money.
5. Whether parents purchase single-family homes, condos or duplexes, there are opportunities to collect rent from other students. A multi-bedroom house means roommates—and rents. A duplex can provide additional income while providing a student a place to live year round.
There are downsides to becoming an absentee landlord, too. All factors must be considered, but owning rental property while the kids are in college is a great choice for many families. Learning all about becoming a landlord is essential, and should include visits to a lawyer and tax advisor. Property buyers should check all the applicable leasing codes in the city and state where the property would be located, and always conduct proper tenant screening on all residents. (You may decide to exempt your own child.)
The contents of this article are intended for general information purposes only, and should not be relied upon as a substitute for obtaining tax advice applicable to your situation.
Posted by Teresa on August 17, 2010 under Landlord Tips, Tenant Screening & Background Checks |
- An incomplete tenant background check may not provide information on a lease applicant’s employment and income.
- Verifying the employer listed by a lease applicant will indicate his or her honesty—or lack of it. If you call the number provided and the telephone is not answered professionally (or at all) you might have reason to suspect the potential tenant is not being truthful. Certainly, exceptions apply—especially for small businesses.
- Long-term employment is an indicator of stability. However, recent economic difficulties have put many talented and dedicated employees out of work. Landlords may need to be flexible on their standards until the economy recovers. Requiring all tenants to have held their jobs for two years, for example, could mean a record number of vacant rental units for you.
- It can help you determine whether a potential tenant’s income source is lawful or illegal. Sure, it’s nice to have tenants who have plenty of cash to pay their rent. But if they’re not legally employed or cannot provide proof of income, like pay stubs, you could be asking for big trouble.
- Verifying employment can give you peace of mind. Renting to qualified tenants with jobs is the number one concern of most landlords. Confirming your lease applicants’ employment can keep your cash flow healthy and reduce turnover in your rental properties.
The best time to thoroughly check out a tenant’s employment situation is before the lease is signed. Following this tenant screening procedure on every applicant will ensure that you are not discriminating against any protected groups and that you will be leasing to only qualified tenants.
Posted by Teresa on August 4, 2010 under Landlord Tips, Landlord and Tenant FAQs |
When rental units sit empty and you’re starting to feel desperate, it can be tempting to lower your standards and sign a lease with the first tenant who shows you the money. Experienced landlords might remember doing just that—and living to regret it.
Rather than leasing to a tenant who doesn’t meet your qualifications, try to figure out why your units aren’t renting. Fix those issues and you might find the right tenant will come along sooner than you think!
10 Possible Reasons Your Rental Units are Vacant
1. The rent is too high. Check the market. Do your homework. In most markets, tenants have lots of choices. Reducing your rent is better than collecting zero rent.
2. The condition of the rental is not acceptable to good tenants. Does it look pristine or shabby? Are the railings solid or wobbly? Does the property need a coat of paint? New lighting fixtures? Ask yourself if you’d pay your rent to live there.
3. You are letting good tenants walk away. If you have a qualified applicant, don’t let them get away! Close the sale.
4. You’re not marketing the property enough. Expand your reach. Create appealing ads with great descriptions and get them out there. Put signs on the property (make sure they’re in good shape). Put arrow signs on the corners if it’s allowed.
5. The right tenants aren’t seeing your ads. Who is your ideal tenant? Where do they hang out? Whether it’s the laundromat down the street, a nearby coffee shop or Craigslist, put your ads where your best tenants will actually see them.
6. You’re not making it easy for potential tenants to reach you. Do you have a website, email and cell phone? Does your phone plan have texting? A lot of young people use texting over talking, and Gen Xers and Baby Boomers are more likely to email.
7. Your building or property manager has a bad reputation. If your current tenants are not happy with either, they are probably telling others. Ask them.
8. Your competition is giving tenants a better deal. Are there “free rent” signs on nearby properties? Find out what your competition is doing and match or beat them.
9. Your property management company (is it you?) is not doing its job. Take a hard look at how successful the rental management has been. Too many vacancies are not acceptable. And is you decide to replace them, make sure you put up “under new management” signs on your property!
10. The property looks unsafe. Visit your properties at night. How is the lighting? Are there people hanging around? Do shrubs and trees cover the windows? Fix these problems for your current tenants and potential tenants will feel safer, too.
If none of these factors apply, then you need to do some investigative work. Potential tenants won’t tell you why they decided not to sign your lease—they just go away. Follow up with the next interested, qualified tenant who disappears. Find out why they don’t want to live in your rental property. Poll your current tenants to find out what they like and dislike about living there. You need to know what’s wrong before you can fix it!
Posted by Teresa on May 7, 2010 under Tenant Credit Checks, Tenant Screening & Background Checks |
The Fair Credit Reporting Act (FCRA) established rules to protect privacy and guarantee report accuracy when businesses, banks, and rental property owners check consumers’ credit histories. Landlords are allowed to obtain tenant credit reports as long as they follow the FCRA’s provisions.
Specifically, when landlords obtain information about a potential tenant’s credit history, rental history, previous evictions or a variety of other pertinent personal information, and they use that information to determine what they require from the tenant, they must give the tenant an “adverse action notice.”
For example, a low credit score might mean the landlord requires a co-signer on a lease application. Or, a previous eviction may mean the tenant’s application is denied altogether. Even requiring a higher rent deposit is considered an “adverse action,” if it is based on information obtained in a consumer credit report. And really, if a landlord requires a higher deposit from Tenant B than from Tenant C, the only grounds he or she could base that decision on would be a tenant credit report—or else a discrimination claim under the Fair Housing Act could be in that landlord’s future.
When a landlord takes adverse action against a tenant applicant, the FCRA requires a notice to be supplied to the tenant. The notice must include:
- the name, address and telephone number of the Consumer Reporting Agency (CRA) from which the report was obtained;
- a statement that the CRA did not make and cannot specify the reasons for the adverse decision;
- a notice of the tenant’s right to dispute the accuracy of the information the CRA supplied;
- notice of the tenant’s right to a free credit report upon request from the CRA within 60 days.
The adverse action notice can be given verbally; however, a written notice is advised, since the landlord would then have proof of giving the notice to the tenant.
Even if the CRA is checking information that has nothing to do with the tenant’s credit, such as verifying tenant employment or income—an adverse action notice is required if that information is the basis of a denied application, higher security deposit, or other action required by the landlord.
There are serious legal ramifications for landlords who fail to supply notices required by the FCRA. Check with your attorney if your procedures are called into question, but in the meantime, educate yourself about your responsibilities under the law.
The Fair Credit Reporting Act is available online, so it’s easy to familiarize yourself with its provisions and updated requirements. And updates are done frequently, so it’s up to every rental property owner to stay informed on a regular basis.
Posted by Teresa on February 23, 2010 under Landlord Tips, Tenant Screening & Background Checks |
Mark O. is a landlord who just purchased a single family rental house on foreclosure. The neighbors have informed Mark that although the home has only 3 bedrooms and 1 bathroom, there are several cars parked at the house all the time, and seemingly a dozen adults living there.
Mark is concerned about the wear and tear on his property, with good reason. Here’s how he plans to handle this situation:
First, Mark is going to require a new lease agreement for the property. The lease will contain a clause about the number of people allowed to reside in the rental unit. His limit will be two adults per bedroom, or six adults total.
Next, Mark plans to require that each adult over the age of 18 who is living in the house complete his tenant application. Mark’s standard practice is to conduct background screening and credit checks on each potential tenant. Any potential tenant who does not meet Mark’s minimum requirements for income and credit worthiness will not be allowed to sign the lease—and will have to move out.
Mark knows that the Fair Housing Act prohibits discrimination against tenants based on family status (married, unmarried) or number of children. Therefore, he has no intention of not renting his new rental property to any adults with children who pass his application process. Mark is also familiar with his local zoning law on rental units, which says that no more than three unrelated persons may share a single dwelling unit.
Limiting your rental properties to properly screened tenants who have passed your application process is the best way to protect your investment and your liability. If non-tenant adults have moved in with your tenants, you are under no obligation to allow them to stay.
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.
Posted by Teresa on December 8, 2009 under Screening and Background Checks, Tenant Credit Checks, Tenant Screening & Background Checks |
Tenant screening involves conducting background checks on potential tenants. Typical checks include tenant credit check, criminal background check, and tenant rental history. Landlords and rental property managers also have the option to check previous addresses, identity and name validation, address validation, evictions, liens, bankruptcies, and sex offender status.
Here are some dos and don’ts to consider when making the decision to screen tenants:
- Do keep the screening process consistent: screen every applicant, every time.
- Don’t make yourself vulnerable to discrimination suits by screening applicants based on appearance or other subjective attributes.
- Don’t skip the tenant screening for an applicant who speaks well or dresses nicely, or the tenant applicant who drives a nice car—again, these are subjective observations that do not mean they will pay rent on time.
- Do protect your other tenants and the neighbors surrounding your rental property by including criminal history in your background check process.
- Do choose your screening service carefully. Are they a Better Business Bureau Accredited Business and Fair Credit Reporting Act (FCRA)-Compliant Consumer Reporting Agency? Is the staff FCRA Certified and Bonded?
- Do ensure that your screening service employs high security measures, such as fingerprint scanners, controlled access, monitored facilities, and proper disposal techniques.
- Don’t use a screening service without nationwide coverage and access to all three credit bureaus.
- Do keep all information learned from a tenant credit report in strictest confidence.
- Don’t neglect to provide a tenant applicant with a copy of the report, and to advise them in writing if you reject them for credit reasons.
Posted by Teresa on September 21, 2009 under Screening and Background Checks, Tenant Credit Checks, Tenant Screening & Background Checks |
It’s rather difficult to find anyone who has not been affected by the economic troubles of the past year. That includes people who want to be your tenants. What should you look for when running tenant credit checks these days? If everybody’s credit is bad, why bother to do a credit check? Should landlords and property managers lower their standards in light of the rise in rental vacancies? Read on for answers to these questions.
Why bother with a tenant credit check when it’s going to be bad? Besides, if I skip it, I save money, right? Actually, the money you invest by doing thorough tenant screening will more than pay for itself when you consider the long term cost of evicting and/or cleaning up after bad tenants. And believe it or not, lots of folks are making it through the down economy by spending less, saving more, and keeping their credit records clean.
Should I lower my standards? This is a tough rental market, with rents down and vacancies up. You must decide whether to keep your qualifying standards high—and face empty units—or take a chance by lowering them in order to fill your properties. Experienced landlords say that empty units are far better than renting to bad tenants. It all depends on your tolerance risk, your cash flow—and a lot of luck.
Can I ask why a prospective tenant has had a bankruptcy? Yes. There is no time like the beginning to start communicating clearly with your tenants. If there is a bankruptcy on the credit check, ask what happened. You may find out that medical bills forced the tenant into bankruptcy, or that an ex spouse was actually the cause. Of course, if the tenant has other red flags on the credit report, you must take them into consideration, too.
Take a wide-angle view of the tenant’s credit history. If a bankruptcy is several years in the past, and everything else checks out, they may be an acceptable risk. If the bankruptcy was due to a business failure, the economy could be to blame—not the tenant. Past evictions and utility judgments are a higher risk indicators to many landlords than bankruptcies.
Do not ignore your gut instinct. If someone seems untrustworthy, they very well might be. Only you can decide whether a poor credit score or bankruptcy is worth the risk. The important thing is to perform consistent tenant credit checks!
You’re probably familiar with the news story about a house in Escondido, CA, where the resident is accused of making bombs and plotting bank robberies. Because of danger to neighbors, the decision was made to burn the house completely to the ground. 
