How to Make Online Leasing Safer for Landlords

by Chris on May 25, 2020

The COVID-19 pandemic and the resulting social distancing guidelines have impacted the way landlords manage rental properties, including how they find and screen tenants.

Companies that offer turnkey leasing services are touting the benefits of online leasing, such as user-friendly video tour uploads and a ready pool of rental applicants. However, landlords need to be aware of the pitfalls of online leasing.

Online Shouldn’t Be Anonymous
Tenant fraud is a real concern, and online tenant vetting, particularly when that is based on tenant-generated or social media profiles, is a problem for landlords.

The greatest risk in using a leasing platform for tenant screening is that the profile or score generated is not based on authentic information. As easy as it is to fake or exaggerate information on social media, those profiles are useless when it comes to verifying the identity of the person applying or the person’s qualifications.

If the credit history provided is, in fact, for the right person, there still is an issue of how old the credit information might be.

On the other hand, some services ask tenants to provide detailed financial information, such as bank statements, which not only won’t show actual income, but goes so far as to violate an applicant’s privacy.

What’s more, by exploring social media profiles, including photos or likes and dislikes, the landlord is exposed to a claim of discrimination.

Tenant screening needs to be targeted to specific information. A person’s preferences don’t matter; their income, previous addresses, and rental history do.

Don’t turn over all control of the tenant screening process to an online leasing service. Tenant screening reports are easy to obtain online, but the rental application and the verification process should remain in the landlord’s control.

Standard Forms Don’t Cut It
Online leasing platforms offer tenancy agreements that can be signed remotely. While this streamlines the leasing process, landlords need to consider the final product. If a lease is too broad, it won’t serve as a roadmap for the day-to-day management of the property.

The goal of an online platform is to stretch the product into as many situations as possible. Unfortunately, these generic leases may not comply with provincial or city requirements. These leases also may not be tailored for the specific property.

The tenancy agreement is too important to leave to chance. Work with a landlord association or attorney to draft the tenancy agreement that protects your rights.

But Is It Safe?
Landlords who turn over the leasing process to an online service often choose the option of self-guided property tours. What appears to be a benefit — not spending time on property tours — presents some potential hazards.

In one example, a major California property management company allowed tenants to go online and set their own appointments to tour properties. Tenants were given a reserved appointment time and a key code to enter the unit. A scammer set up a number of tours, and each time posed as the landlord while he showed the property to unsuspecting rental applicants. Many of these applicants handed over deposits and signed leases. The scam was not exposed until move-in day.

Automated property tours can work, but only if the applicant has been prequalified.

The online leasing platform that takes the tenant from smartphone to apartment keys without any contact seems like the perfect solution to prevent COVID-19 transmission. But do these services comply with social distancing rules?

One popular online leasing platform provides tenants with an instructional video that runs through finding an ad on a smartphone, applying with a ready-made profile complete with photo and pre-ordered credit report, to a self-guided tour where the tenant is free to touch anything. The tenant then signs a lease online.

Ironically, the last screen of this video shows the tenant and landlord standing close together shaking hands. Sure, that may have been intended to be symbolic of closing the deal, but if that step hasn’t been updated, what else is out of sync with social distancing?

An online leasing platform creates a sense of ease for tenants, but it does not instill a sense of accountability, and that’s bound to cause problems down the road. Use online technology to your advantage, but don’t allow it to gloss over the need for diligent tenant screening.

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.

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