Landlord’s Fees Illegal

by Chris on June 3, 2019

A landlord in Pennsylvania has agreed to pay $30,000 in restitution after the state’s attorney general found the landlord was charging illegal fees.

Tenants complained that the landlord was deducting a 15% “administrative fee” from each tenant’s security deposit, amounting to about $80 per lease. The Office of Attorney General’s Bureau of Consumer Protection determined that this fee was illegal under both the state’s rental regulations and its consumer protection statutes.

“Collecting an administrative fee to handle security deposits is illegal in Pennsylvania,” says Attorney General Josh Shapiro who announced the settlement.

The company has agreed to pay $30,000 to tenants and to stop charging the fees going forward. Cases brought under consumer protection statutes are particularly problematic for landlords because these laws generally allow for compounded damages, in some cases as much as three times the actual losses incurred by tenants, as well as costs of prosecution.

In this case, the landlord chose to cooperate in the investigation, and likely benefited financially. The attorney general publicly commended the company for not disputing the charges and agreeing to settle the case.

Illegal fees are a common source of income loss for landlords. Recent examples include a major landlord who paid nearly $2 million to settle a lawsuit over illegal fees including cumulative late fees, and another landlord is subject to a class-action lawsuit over padded security deposit deductions. Excessive application fees, stacked late fees, amenity fees, and fees for basics like heating or air conditioning are common examples of charges that prosecutors say cross the line.

Rental fees often are regulated by individual states, and these laws vary greatly. Where no rental restrictions exist, courts step in to determine whether a fee is onerous or violates consumer protections. Tenants who have no other option than to pay illegal fees to gain housing or inexperienced renters such as students are the most likely to file complaints and to win a dispute over fees. The more tenants who have been affected, the higher the penalties.

To prevent this income loss, landlords should:

Review state and local rental ordinances that define the specific fees that are allowed and those that are expressly prohibited;

Avoid treating fees as a profit center. Tenant fees should bear a reasonable connection to actual costs. That is the standard that courts apply when determining if a fee is illegal;

Consider the overall cost of the lease. Courts look at the whole package when determining if charges are excessive or violate consumer protection laws — and how that compares to market rent; and,

Stay away from tiered leases where some tenants can pay for amenities while others cannot afford it. That doesn’t go over well with tenant advocates — or judges.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

{ 0 comments }

3 Common Tenant Screening Mistakes

by Chris on June 3, 2019

Technology is a double-edged sword: it allows lightning-fast communications and unparalleled efficiency. But when it comes to screening tenants, technology also creates special problems that landlords cannot ignore:

Online Rental Applications Promote Tenant Fraud

The use of online rental applications is a significant factor in the recent increase in tenant fraud. Rental applicants routinely fake qualifications or create fictional identities. Landlords seldom discover the fraud until long after the tenant moves in and typically only after the tenant stops paying rent.

A rental applicant must be prequalified and provide proof of identity with a photo ID in person before being allowed access to a rental application form.

Social Media is Not for Screening Tenants

Social media platforms are proving an unreliable resource for tenant screening. It is difficult to verify if information found on these pages is true and obtaining personal information about an applicant — family status, group associations, potential disabilities — can be discriminatory. Using social media searches to vet tenants is equivalent to asking prohibited questions on the rental application.

It also is problematic to advertise on social media platforms where not all prospective tenants will have access to the information.

Traditional tenant screening reports, including tenant credit checks, criminal background and eviction history are not subject to manipulation and relate directly to tenant qualifications.

Tenant Information at Risk

Storing sensitive tenant data is risky business and must be handled with great care. Portable devices make it easier to expose tenants to identify theft and other forms of fraud.

Taking precautions to protect personal and financial info goes beyond choosing a good password:

Avoid storing information on portable devices carried into public places;
Enable the lock and tracking functions on devices in the event of theft;
Change passwords frequently or use recognition features;
Maintain anti-virus protections;
Research apps before loading on work devices; and
Avoid using free Wi-Fi connections in public — the “network” could be a hacker sitting at another table.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

{ 0 comments }

Landlord’s Misstep Repeated 14 Times

June 3, 2019

A Vermont landlord has been charged with housing discrimination after rejecting an applicant with small children. According to the complaint lodged with the Vermont Human Rights Commission, which reviewed a voicemail message and a recorded phone conversation, the landlord made 14 statements that the Commission concluded were direct evidence of discrimination. Those statements, which are […]

Read the full article →

Minneapolis Mulls Far-Reaching Restrictions on Tenant Screening

June 3, 2019

Minneapolis lawmakers are considering a proposal that would force landlords there to accept tenants with criminal backgrounds, bad credit, and prior eviction history, and limit both general and pet deposits. Landlords are fighting back. The proposed rental ordinance would prohibit landlords from rejecting tenants for felony convictions after five years, and misdemeanor convictions after two […]

Read the full article →

Landlord Regrets Not Screening Tenant

May 20, 2019

A landlord in Ontario told the news that if he had run a background check on his nightmare tenant, he wouldn’t be in the situation he’s in today. At least three landlords say they were victimized by the same tenant who moved in, stopped paying rent, and called in bylaw officers and police as often […]

Read the full article →

4 Reasons to Avoid Renting to People You Know

May 20, 2019

Generally, it is best to avoid renting to people you know. The most obvious reason is that doing business with a family member or friend can damage the relationship. But it’s a small world, and at some point, you are bound to be approached by someone you know who wants to rent your property. There […]

Read the full article →

5 Winning Property Management Strategies

May 20, 2019

Half the battle of managing rental properties is having good systems in place. Even if a landlord only fills vacancies occasionally, it’s important to have solid processes to rely on to avoid recreating the wheel with every new tenancy. Landlords who stick with these basics can avoid bad tenants and reduce liabilities: 1. Credit is […]

Read the full article →

Phase 1: How British Columbia Plans to Change the Rental Landscape

May 20, 2019

The British Columbia government announced that it has begun implementing the recommendations of the Rental Housing Task Force released last December. (See our post British Columbia to Revamp Rental Regulations.) These changes will be adopted in three stages. Phase 1, according to the Ministry of Municipal Affairs and Housing, includes a new enforcement agency that […]

Read the full article →

3 Things Landlords Need to Know About Tenant Screening

May 6, 2019

Tenant screening may the most important part of property management, but it doesn’t need to be the most difficult. Don’t make it harder than it has to be. Avoid these mistakes and keep your properties profitable for years to come: Your Rental Ad Could Be Your Undoing Wouldn’t it be frustrating to lose all the […]

Read the full article →

Property Manager Settles Claim Over Secondhand Smoke

May 6, 2019

A property manager in San Diego agreed to pay damages to a tenant to settle a claim over secondhand smoke. The tenant has a child with a respiratory disability, and the neighboring tenants were heavy smokers. The tenant claims that the secondhand smoke was aggravating her son’s condition and asked to be moved to another […]

Read the full article →