Landlord’s $12,000 Nightmare and What Others Can Learn From It

by Chris on January 5, 2015

An admitted “newbie” landlord recently publicized her two-year long horror story — a tale of how seemingly perfect tenants left the landlord’s rental home in shambles, and then filed bankruptcy to avoid the hard-earned $12,000 judgement.

tenant screeningThe Nova Scotia landlord says that speaking publicly about the ordeal was cathartic. But, by summoning the courage to share her embarrassment over a failed tenancy, this landlord has accomplished much more than exorcizing bad feelings. She has presented other landlords with the opportunity to explore what went wrong, and how to avoid a similar situation. For instance:

Tenant Screening

The landlord explains that she accepted the tenants after receiving a “glowing” recommendation. While it is not clear whether the reference was a former landlord or an employer, the landlord had every reason to believe the tenant would care for the property.

Landlord Tip: Tenant screening is akin to conducting an investigation. Police don’t rely solely on the first witness account, because others may have had a different vantage point. Similarly, the more information obtained about a rental applicant, the clearer the picture of the new tenant. References from a previous landlord may differ from that of the current landlord, who has incentive to get rid of a bad tenant.

While references are crucial, so is a credit check. That can reveal information about the tenant that past landlords do not know. In addition, landlords must demand a completed rental application that details rental history in the applicant’s own words. Comparing all this information is the only effective way to flag habitually bad tenants.

A comprehensive tenant screening policy weeds out bad tenants, even the ones who at first blush appear to be perfect. But, there is another benefit: by holding every tenant to the same screening conditions, landlords can prove that they are not discriminating illegally. If one tenant is subject to a more stringent tenant screening process because the landlord does not trust him or her, while another tenant is able to talk his or her way into the property with little scrutiny, allegations of discrimination can surface.

Bad Tenants Look for an Easy Target

tenant screeningIn this example, the landlords says that she was attempting to keep rents low and to accommodate her tenants’ demands, including the desire to have multiple pets. It’s no coincidence that new landlords and those with small rental businesses wind up with the lion’s share of bad tenants. Professional scammers seek out those situations because these landlords often are trying to be flexible, kind, or accommodating. As a result, they get played.

Landlord Tip: Whether a new landlord or a seasoned veteran, be mindful of giving in to a new applicant’s demands. If this process starts early in the relationship, a tenant quickly becomes embolden to take even more liberties, and over time may be more likely to stop paying rent or damage the property. Be very clear about who’s in charge, what policies a tenant must follow, and most importantly, about your willingness to protect your interests and your property, starting with the very first conversation with the prospective tenant.

Keep a Handle on Sublets and Roommates

The landlord discovered that the tenants sublet the property to multiple other occupants. One of the fastest roads to income loss is allowing the rental property to become a revolving door. Landlords, as in this case, soon find themselves renting to strangers, residents who may not be aware of the existing lease requirements.

Landlord Tip: Make sure your lease agreement has appropriate language concerning subletting, assignments, new occupants and long-term guests. A landlord should have the right to consent to new occupants, and to demand a tenant background check before allowing¬†the new person to stay. It is typically best to add the new occupant to the lease agreement, but consult with your attorney before amending the lease in this fashion. A misstep here could result in relieving the original tenants from liability¬†before they’ve accounted for any damage they caused to the property.

Take a Look at the Rental Property

In this case, the landlord recovered the property after a lengthy period of time, only to find literally hundreds of bags of trash in the house and storage areas, after it had attracted rats. In addition, the property was not properly heated and sustained water damage from burst pipes. While this sort of damage is usually grounds for eviction, that process can take months. During that time, the damage only worsens. The key to minimizing property damage and the resulting income loss is catching a bad tenant early in the tenancy.

Landlord Tip: Conduct routine inspections of the rental property, and look for signs of neglect or intentional damage, new residents, and rule-breaking. If an eviction is indicated, move quickly to reduce the amount of time that the rental property is not producing.

Forward-Thinking Rental Policies

There was evidence that the tenants in this case routinely smoked indoors and extinguished cigarettes on the flooring. Tenants were disorderly, with little regard for the property.

Rules of conduct not only reduce property damage, these rules actually attract the right tenants. Good tenants, for example, tend to favour non-smoking policies and value homes where those rules have been in force. The best tenants also appreciate good service from the landlord, particularly when it comes to keeping the property in good repair. Bad tenants, on the other hand, seek apathy from a rental property owner — someone who won’t hold their feet to the fire.

Landlord Tip: Make forward-thinking decisions about how tenants should care for the property. A smoking ban is a great step toward reducing turnaround costs, minimizing liability and property damage and attracting tenants who want to keep the property in good condition. Describing house rules to prospective tenants sets the stage for a successful tenancy, and may discourage a bad tenant who won’t want the hassle.

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 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.

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