Lawmakers Tinker With Late Rent Fees

by Chris on February 10, 2020

When rents spiked in Denver five years ago, lawmakers resisted the urge to overregulate. Instead, they encouraged developers and added more inventory — much more inventory. Over 12,000 new units — four times the previous average — were added last year alone. Rents have leveled off, and even dropped 3%.

So, it comes as a surprise that Colorado lawmakers now are looking to penalize landlords by pushing forward a one-size-fits-all rule to cap late fees for all tenants, whether high or low income, and force landlords to wait until rent is at least 14 days past due before acting.

After this two-week “grace” period, the landlord could charge the greater of $20, or 3% of the outstanding rent — $30 on a $1,000 rental.

The typical cash advance fee for a $1,000 withdrawal is $30 or higher, which provides incentive for tenants to use landlords as an ATM.

Conversely, the average grace period for a mortgage on a rental property is 10 days. The typical mortgage late fee is 5%. And, of course, there’s the time and expense of chasing down the rent. Under this law, Colorado landlords no longer would be allowed to recoup their actual out-of-pocket losses for late rent payments.

This proposed ordinance is intended to benefit tenants. A proponent posted on social media, “We will work together to empower tenants so that they have the support they need in order to thrive without the burden of housing insecurity.”

Colorado landlords are not alone. For instance, in Maine, landlords must wait for rent to be 15 days late before charging late fees. In Massachusetts, landlords must wait 30 days.

Laws like these force landlords to change existing leases and impact mortgages already in place, leaving landlords shortchanged.

With the number of states that now regulate late fees — either limiting the amount, extending the grace period, or both — the reality is that late fees no longer serve as sufficient motivation for tenants to pay rent on time. Protecting their credit, however, may do the trick.

In this era of overregulation, it’s more important than ever for landlords to use the tools at their disposal to ensure on-time rent payments.

The best strategy available to landlords is to Report Rent Payments to a credit bureau. This method assists good tenants by allowing them to earn credit for what is likely their largest monthly payment.

At the same time, tenants who inflate income to secure a rental they can’t afford, blow their money on other things, or fall into the habit of paying the landlord last, will need to reconsider their priorities.

Landlords can take additional steps to encourage on-time payments:

Check both rental history and credit when screening prospective tenants. Ask previous landlords about late payments, and confirm the rental history by running a tenant credit check;

When screening tenants, check the database at Landlord Credit Bureau. This list includes tenants who have paid on time each month, along with those who have paid late;

Provide as many options as possible for tenants to pay rent. Some love electronic transfers or automatic withdrawals; others like to pay in person or by check. Requiring money orders or certified funds slows the process; and

Send a reminder or invoice. Tenants are accustomed to seeing this from other creditors — and sometimes they simply forget.

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.

{ 2 comments }

6 Mistakes to Avoid When Prequalifying Renters

by Chris on February 10, 2020

The prequalification process is a crucial step in screening tenants. By asking a few questions on that first phone call, landlords can weed out unqualified renters before wasting time showing a unit to someone who won’t be living there.

Prequalification should be structured so landlords obtain the information they need — without asking for information they are not entitled to.

These are some common mistakes to avoid when prequalifying prospective tenants:

1. The call or meeting is a professional interaction, not a personal one. Avoid the chit-chat. Don’t ask the usual get-to-know-you questions like, “Where are you from?” Discrimination rules apply to verbal conversations, so landlords cannot ask the applicant anything over the phone or in person that they can’t ask on a rental application.

2. Don’t forget to ask the prospect when they are planning to move. This eliminates showings to people who may be pondering a move, but not planning to move anytime soon. This also opens a window into the applicant’s motives and reveals if the prospect is planning to leave without giving notice to their current landlord. That could be a sign of trouble.

3. Never tell someone that the unit is not available when it is. It is impossible to make judgments about an applicant’s qualifications based on the sound of their voice. Rejecting an individual because of an accent or because they sound feminine, for example, is illegal. This dubious strategy also causes landlords to turn away their best prospects.

Landlords sometimes assume that the voice on the other end of the line is a prospective tenant, when it could be an investigator checking the landlord’s record on discrimination. If the unit suddenly is available when the next tester calls, the landlord won’t be able to deny discrimination.

4. Don’t up the rent if the ad sparks a high response. The number of calls received from the ad can be deceiving. The same person or same family may have called more than once. And just because there are a lot of messages doesn’t mean all of those prospects are qualified. In fact, over-market rentals attract more desperate, unqualified renters than properties priced just below market. The best renters won’t play that game.

5. Don’t make applicants wait for a return call. Resist the temptation to give it a few days to see what there is to choose from. That list will be changing by the hour. Save the frustration of chasing down applicants who have moved on.

6. The last stage of the prequalification process is to see a photo ID that confirms the person’s identity. Ideally, this should be done off-site, in the event the names don’t match. Regardless, it is a step that never should be skipped.

By making the effort to prequalify applicants, a landlord can focus their energy where it belongs — on screening the best prospect.

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 }

New Guidance on Companion Animals

February 10, 2020

HUD has issued a new guidance paper aimed at clarifying the process for handling companion animal requests. The move comes after HUD agreed to investigate growing concern over fraudulent companion animal requests — those made by pet owners attempting to avoid a landlord’s pet policies. These fake requests are being facilitated by online services that […]

Read the full article →

Oakland Bans Criminal Background Checks on Tenants

February 10, 2020

Oakland, California City Council last month passed an ordinance that prevents virtually all landlords there from researching a rental applicant’s criminal history. The measure prohibits landlords from inquiring in any fashion about an applicant’s past criminal convictions. This prohibition includes obtaining any report from the California Department of Justice, the FBI, local law enforcement agencies, […]

Read the full article →

Landlord Asking the Wrong Questions

February 3, 2020

“You don’t have to answer that.” That’s the advice given to a tenant after she showed a landlord’s rental application to a legal services volunteer. And for good reason. The landlord asked applicants to identify if they were alcoholics. Another question asks applicants to describe their familial relationships with proposed occupants. And rather than asking […]

Read the full article →

Investigation Underway to Address Delays at Ontario’s Landlord and Tenant Board

February 3, 2020

After a spike in complaints over serious delays at the Ontario Landlord and Tenant Board, Ontario’s Ombudsman announced an investigation to address the problem. According to Ombudsman Paul DubĂ©, complaints about long wait times in obtaining hearings and decisions by the Board have increased. Last fiscal year, of the 200 complaints received, 160 centered on […]

Read the full article →

Tenant Causes $20,000 in Damage

February 3, 2020

One hundred five. That’s the total number of cats rescued from a two-bedroom apartment in Guelph last week. The tenant voluntarily surrendered the animals to the Guelph Humane Society after she was evicted from the apartment for causing an estimated $20,000 in damage, including plumbing issues caused by flushing cat litter down the toilet. According […]

Read the full article →

Canada’s Latest Rental Market Report

February 3, 2020

The rental vacancy rate continues to decline across Canada, according to CMHC’s latest Rental Market Report. The average vacancy rate for all unit sizes currently is 2.2%, the lowest figure since 2002, as demand continues to outpace supply. CMHC points to the 1.5% vacancy rate in Montreal, a 15-year low, as impacting the national average. […]

Read the full article →

Surprising Things Tenants Want in 2020

January 13, 2020

Rental leasing trends for 2020 are revealing a few surprises: Tenants Want to Report Rent Payments On average, tenants spend about 40% of their income on rent, and they want credit for it — literally. Tenants realize that paying rent on time every month can raise their credit scores, and they are looking for landlords […]

Read the full article →

4 Potential Problems with Your Lease Agreement

January 13, 2020

With all the variations in city, state, and federal rental laws, drafting the perfect lease agreement is a moving target. If your lease has never been reviewed by an attorney, or if it has been a while since it was updated, you might want to check for these potential problems: Rent Incentives A proper rent […]

Read the full article →