A professional property manager missed a litany of red flags that should have prevented her from choosing a bad tenant, according to a judge with the Provincial Court in British Columbia.
The court case was brought by the rental property owner against his management company after he discovered catastrophic damage to his unit from his very first tenant.
In order to win his case, the owner needed to prove that the property manager he entrusted to oversee the rental home committed gross negligence in the management of the property. The judge presiding over the case indicated that threshold was met.
In the course of a year, the tenant moved in unregistered occupants, sublet several rooms in the property to transients, accumulated so much debris in the yard that local health authorities had to step in, and failed to pay the rent.
In a written decision, the judge details the many mistakes that the manager made in the tenant screening process:
The rental application was not fully completed, and many gaps raised questions about the tenant’s actual identity and history. For example, there is no information given about any present or previous employment, either for the tenant or her unnamed spouse. A bank was named, but no account information provided. There were no credit references. The tenant’s previous rent was less than half of the stated rent for the property. The judge points out that this left the manager with no means of verification that the tenant could afford to pay.
Only cryptic details of the conversations with references were recorded. There was no record of the questions asked, and very little information about the responses. One reference was never contacted.
The manager gave extraordinary weight to the landlord references, including the current landlord who may have had great incentive to get the tenant out of his property. Another contact was given deference because he was a real estate agent. The manager failed to key into the fact that the tenant’s references each knew her by another name. This raises the question of whether the landlords were referring to a different individual.
If the manager ran a credit check — a claim that the judge questioned — the report allegedly was destroyed.
The judge also points out that the woman had been involved in a child protection case stemming from a dog mauling, and that this history was public knowledge. Having been profiled in the news, this information was detected through a simple Google search.
In addition to these tenant screening mistakes, the judge points out that the day-to-day management fell far short of standards. At one point, the trash, tires, metal parts and unlicensed vehicles in the yard prompted an order from the city that the items be removed within a two week period. Even with notice of potential breaches of the lease agreement, the manager did little to protect the property. The judge suggested that an appropriate action would have been to step up the inspection schedule at that time.
It’s also important to note that, when it came time to assess damages that the owner incurred, the court had little documentation to go on; the owner produced only a “rough assessment” to verify his losses. The judge indicated a preference for estimates and receipts over photos of the condition of the property. This could have been a serious issue for the landlord, whose legal battle concluded after nine years.
However, in this particular case, the owner and manager had both participated in dispute resolution against the tenant, and the manager agreed at that time that the owner had lost $25,000. The judge in this case took that figure as undisputed when the owner then sued the manager for reimbursement.
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).
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Disclaimer: The information provided in this post in 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.