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There’s no doubt being a property manager requires patience and commitment. Communicating with tenants and staying on top of repairs takes up a lot of time, but it can also be very rewarding. Like any industry, mistakes can happen. Unfortunately, some of them can end up costing you a significant amount of time and money. Today we’ll be looking at several common mistakes that property managers make – and how they can be avoided.

  1. Scaling Without Systems in Place
    Scaling your property management business can be challenging. As managed property volume increases, it becomes even more essential to have solid systems in place. Many property managers fail once they reach a certain scale, so it’s critical to make sure you have a plan on how to deal with growth to avoid losing money. All property managers should be vetted, so you understand their ability to deal with expansion. In addition, it’s essential to create organizational systems that will be sufficient for any number of properties.

  2. Choosing the First Tenant
    The application process can feel daunting, and it may be tempting to select the first applicant who applies for the property. The problem is, you want to find the RIGHT tenant; this is more important than getting someone into the property right away. To do this, you’ll need to attract them. Make sure you take care of all repairs and maintenance on the property, so it’s in excellent shape when applicants start viewing it. By showing that you take pride in the property, you’re more likely to attract tenants that will show it respect. All tenants should be screened to make sure that they’re responsible and a good fit. Utilizing our tenant screening services will help you select the best candidate for the property, as well as save you a significant amount of time and money.

  3. Being Unaware of the Condition of the Property
    As a property manager, one of your responsibilities is to know the property you manage. This means being aware of repairs or maintenance that are needed. A general lack of awareness about the property can result in systems failures or high capital expenditures. In many cases, small repairs and regular maintenance can save a significant amount of money if dealt with early on. To keep on top of the property’s conditions, it’s recommended that you hire a third-party inspector for an annual property visit. You may also want to develop a system for reviewing work orders to see if there are any trends in what’s needing consistent repairs.

  4. Reactive, Rather than Proactive Maintenance
    Many property managers tend to be reactive about maintenance. This can cause them to neglect property maintenance until it becomes an absolute necessity. Being proactive with maintenance can save you money and ensured that your property is consistently well-maintained.

  5. Not Checking the Contractor’s References
    Many contractors look great on paper, but this doesn’t mean that you should automatically hire them. It’s recommended that you always call a minimum of two references. This will prevent wasted time, money, and frustration if the contractor isn’t qualified to handle the project effectively. It’s also not a bad idea to take a walk around a previous job site to make sure that the contractor’s work meets your expectations.

  6. Imprecise Accounting
    Owners and investors must be able to rely on accurate accounting to make informed decisions about the property. Property managers can ensure that they’re providing accurate reporting to investors by using accounting software to manage their books. While many property managers still rely on legacy software, cloud-based software may be a better option. Cloud-based software prevents the risk of losing important data in a computer or hard drive crash, and the software is kept automatically updated.

  7. Failing to Prepare a Vacant Unit Properly
    When you have a vacant property, it must be adequately prepared for a new tenant to move in. All surfaces should be cleaned, including the inside and outside of windows. Walls should be uniform, with holes patched and a fresh coat of paint if necessary. In general, if you attract a tenant that’s fine with an unkempt unit, they’re more likely to keep it that way. A clean unit is also more likely to generate interest and won’t be vacant for long.

  8. Poor Property Management
    It may seem obvious, but poor property management can hurt you. Property managers should be responsive to tenants and quickly handle any problems that are brought to their attention. Ignoring repairs can cost you more money if left unaddressed. Even worse, it can cause frustrated tenants, high turnover, and vacant properties.

  9. Installing Smart Devices
    Many property managers are eager to install smart devices in new apartment buildings. Unfortunately, hardware often becomes rapidly outdated, leading to malfunctions or simply a loss in your investment. Most buildings don’t have an in-house team with the expertise to handle technical issues, so it’s best to leave the smart devices to homeowners.

At the end of the day, property managers are running a business. By avoiding these common management mistakes, you can save yourself headaches, hassle, and unnecessary costs. Small changes in operation can mean significant changes in profit and customer satisfaction.

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If you have a tenant that’s moving out – or in – halfway through the month, chances are they won’t want to pay for a full month’s rent. Nor would it be fair to expect that of them. Instead, it’s best to keep your rent due dates consistent and be considerate to the tenant by prorating the rent. Prorating can also help you get new tenants into the property faster and ensure you don’t lose any profits from rent.

What is Prorated Rent?

Prorated rent divides the monthly rent cost into the cost-per-day. The landlord can then apply the cost per day to the number of days the tenant will be occupying the property. The tenant will pay for only the number of days they will be living there.

Why Would You Prorate Rent?

All landlords want to find good tenants, and good tenants will appreciate a landlord who is considerate to their needs and finances. Being flexible and honest with a tenant by prorating their rent shows that you’re a fair landlord. Another reason is that it will keep your rent due dates the same. If your rent is always due on the first of the month, prorating it until the first will make it easier to keep track of. Prorating the rent also ensures you receive rent for every day a tenant occupies the property.  

How to Prorate Rent

Here are two common ways to calculate the prorate rent rate:

  1. Daily Rate by Month

    Divide the monthly rent amount by the number of days in the month in question. This calculation will give you the daily rental rate.

    Multiply the daily rate by the number of days the tenant will be living at the property. This will be the prorated rent amount.

  2. Daily Rate by Year

    You may prefer to calculate the daily rate by dividing out the year, as opposed to the month. This method is generally used when dealing with a year-long lease.

    Multiply the monthly rent amount by 12 (for the number of months in the year).

    Divide that number by the number of days in the year (365) to find the daily rate.
    Multiply the daily rate by the number of days that the tenant will occupy the property.

How to Collect Prorated Rent

If you’re dealing with a year-long lease, it can be confusing to know when to collect the prorated rent. While it may vary depending on the circumstances, this is the typical process:

  1. The tenant signs the lease when they move in. They’ll put down a security deposit and pay the first month’s rent.

  2. If the tenant moves in on August 20th, and the rental date is on September 1st, the tenant would pay the prorated amount for the 12 days they were living on the property during August.

  3. On October 1st, the tenant would pay the full month’s rent.

The tenant won’t pay for the prorated rent until the first due date because they already paid for the full first month’s rent when they signed the lease. You can handle these payments differently as long as the tenant agrees to the terms, and the arrangement doesn’t violate your local housing laws.

Prorating your rent is an excellent way to start the tenant/landlord relationship. It ensures that you’re receiving fair pay for the days the tenant occupies your property and that the tenant is fairly treated.  

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Working in real estate brings about many unique challenges that can be difficult to resolve without previous experience. Housing laws frequently change, and tax codes can be intricate and difficult to navigate. One problem that most landlords won’t need to deal with is having a tenant without a lease or rental agreement. However, under special circumstances, you may decide to allow someone to live at your property without a contract. What happens when you need them to leave the property? How would you go about removing them?

Fortunately, there are guidelines on how to evict this type of tenant, although they vary based on the situation. This guide will explain how to effectively and lawfully remove them from your property.

Many landlords worry that the law isn’t on their side in such situations, but there are laws that limit and benefit both parties – tenant and landlord. It’s essential to understand your legal rights, as well as what is considered unlawful. If you break any laws, you could potentially lose some of your property rights, receive a fine, or even go to jail. So, here’s a brief overview of some lawful – and unlawful – reasons for eviction.

Lawful reasons to evict a tenant

  • Illegal drug use
  • Property damage
  • Breaking rental contracts or agreements
  • Refusal to pay rent
  • Not paying required utility bills
  • Unauthorized pets
  • Expiration of the lease
  • Health or safety violations
  • The property is being removed from the rental market
  • The owner is moving into the property

Unlawful reasons to evict a tenant

  • Racial, religious, or other types of discrimination
  • Retaliation for complaints made by tenants
  • Withholding rent until a health issue is resolved
  • Attempting to evict a tenant without a court order

With these in mind, there are still ways you can lawfully evict a tenant who doesn’t have a lease. It’s important to remember that no matter what the situation, you should always go through the proper channels and never try to remove a tenant yourself.

Evicting an Inherited Tenant

One of the most common ways to end up with a tenant without a contract is when you take possession of a new property. This can be a property that you bought or inherited that already has a tenant living there. In most cases, you can give such tenants a notice to quit. These types of evictions generally take longer since the tenant had a valid contract with the previous owner of the property. If you didn’t make an agreement with the tenant to move before you acquired the property, then you’ll need to do the following:

  1. Serve the tenant with an official notice to quit with the proper waiting period

  2. File for eviction with your local court if the tenant doesn’t want to move

  3. Prepare documentation explaining that you didn’t intend to keep the tenant when you acquired the property or why you need the tenant to leave before the original contract ended

  4. If the court rules in your favor, bring the court order to your local authorities to carry out the eviction.

Evicting Squatters

A squatter could be a tenant that stays on your property after the rental contract has ended or someone who moved into your property without permission. Evicting a squatter is similar to evicting renters; you’ll need to give them notice that you’ll be filing an eviction suit. Every state has its own set of rules about the length of time between providing a notice to quit and filing for eviction, so you’ll want to check your local laws. Once you’ve given them adequate warning, you can file for eviction. If the court sides with you, take the court order to the authorities to remove the squatter from your property.

Evicting an At-Will Tenant

A tenant that you’ve allowed to live at the property without a lease is called a tenant-at-will. In these situations, there’s usually a verbal or written agreement between the landlord and the tenant. These tenancies are often month-to-month and can be terminated by either party with a 30-day notice.

To evict a tenant-at-will, you’ll need to give them a minimum of a 30-day notice to quit. If the tenant isn’t paying the rent according to the agreement, you may give them a 14-day notice to quit window. With these types of tenancy, you’re not required to provide them with a reason to leave other than you’d like the tenancy to end. If the tenant refuses to leave within the 14 or 30-day timeframe, you can then file an eviction suit.

What’s a Notice to Quit?

All of these eviction situations require serving a notice to quit to the tenant. A notice to quit is an official way to let a tenant without a lease know when they must leave the property. If a tenant has a lease and refuses to leave after the contract period ends, the lease ending is generally considered to be a notice to quit. In this case, it may be beneficial to give them an official notice to quit.

A notice to quit is only legally valid in court if there’s confirmation that the tenant received it, so it’s recommended to send these by certified mail.

Another Option: Cash for Keys

The eviction process can be long, so some landlords may opt to offer cash for keys. In this process, the landlord will pay a flat fee to the tenant in exchange for their keys to the property. This can often entice reluctant tenants to leave quickly. This method is a good alternative to bring about a resolution without the need to go through the court process.

It can be stressful when you have a tenant overstay their welcome at your property, but there are legal steps you can take to remove them lawfully. One essential step to prevent such situations is to conduct a thorough screening of tenants during the application process. While this won’t prevent inherited tenants or those who moved onto your property without permission, it can help you choose tenants who have a solid, responsible rental history. Our tenant screening services allow you to make an informed decision on tenants, minimizing the risk of problems arising. If you’d like to learn more about the types of reports we offer, give us a call at 800-523-2381.

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If you have an upcoming move-out, it can feel overwhelming to get the property ready for a new tenant. Thankfully, with a little organization, it doesn’t have to be a lengthy process. If you make a list, schedule each task, and start early, many of the steps can be taken care of before your current tenant even moves out. Here’s an overview of how to efficiently prep your property.

Before Your Current Tenant Moves

  1. Conduct an informal walkthrough
    As soon as you receive notice that your current tenant’s notice, schedule an informal walkthrough of the property. The walkthrough will allow you to check for any maintenance that needs to be done, as well as let the tenant know if there is any damage or maintenance that they’ll be responsible for. Make a list of all the maintenance that you’re responsible for. Confirm the tenant’s official move-out date and schedule a final walkthrough.

  2. Schedule services
    If you found issues during the informal walkthrough that need to be addressed by a professional service, such as an electrician or plumber, it’s best to contact them as soon as possible. While you’ll have to wait for some jobs to be completed after the tenant moves, leaky faucets or faulty outlets can be repaired while they’re still at the unit.

  3. Purchase any supplies you’ll need
    If you know you’re going to need new blinds or other supplies to get the rental prepared, you don’t need to wait. You can purchase them all ahead of time and have them ready to take to the property after the tenant vacates.

  4. Take care of yard maintenance
    If your current tenant isn’t responsible for yard work, you can take care of it during the last week of their tenancy. Depending on the season, you can mow the grass, prune overgrown trees and shrubs, pull weeds, and spray out the cracks in the sidewalk or driveway.

  5. Wash the windows
    While tenants are generally responsible for cleaning the interior of the windows, the exterior is typically the landlord’s responsibility. While you’re washing the windows, you can inspect all the screens to see if any of them need replacing. This should be completed shortly before the current tenant moves out.

  6. Check the air filters
    Check the filters in your HVAC system and replace them as needed. You may also want to consider a full-servicing on your furnace or duct cleaning if you haven’t had one done for a while.

    After Your Tenant Moves

  7. Re-key the locks to the property
    Once your tenant has left, you can change all the locks on the property. Be sure not to overlook things like the garage door and alarm codes. Make sure to collect the garage door opener or keys for other locks, such as mailboxes or sheds.

  8. Paint the property and make the necessary repairs
    Be sure to fill any holes in the walls before painting and replace damaged or badly stained carpet. Make any other repairs that you weren’t able to do while the tenant was still living in the unit. If you’ve already made a note of all the repairs that were needed during the informal walkthrough and have the supplies you need, this step can be completed very quickly.

  9. Have the carpets cleaned
    Many landlords have a provision in the lease or rental agreement that states the tenant is responsible for cleaning the carpets during their move-out. If you have such a provision in your lease, the cleaning costs can be deducted from their security deposit. A thorough, professional carpet cleaning is essential to making the unit clean and move-in ready, especially if the former tenant had pets.

  10. Hire a cleaning company
    If your previous tenant didn’t do a thorough job cleaning when they moved, hire a professional cleaning company to get the place spotless. This is similar to carpet cleaning in that you may have a provision in the lease that allows you to deduct the costs from the tenant’s security deposit.

With a little planning and organization, getting the property for new tenants can be a quick and manageable process! Once your property is move-in ready, you can focus on finding a new tenant. While this process can be time-consuming, our tenant screening services make it easy. Since 1985, Tenant Screening Center has been providing landlords and property managers with reliable tenant screening reports, including background checks, credit checks, criminal and eviction history, and more. Save time and money with our accurate reporting while making the most informed decision possible.

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How to Handle a Tenant Who Won’t Leave After Eviction

Eviction can be hard on everyone involved – tenant and landlord alike. Not only is there a lot of paperwork involved, but the process can be long and draining. To make matters worse, there are occasions when landlords or property managers are faced with a tenant who won’t leave. This can be extremely frustrating – not to mention that it can end up causing you to lose money. 

While it may be tempting to become confrontational with them, it’s not the best course of action. Here are a few of the most common scenarios for why tenants refuse to leave and what to do if you’re faced with such a situation:

Common Reasons Tenants Won’t Leave After Eviction

Regardless of why you wanted to evict your tenant, chances are you’d like them to leave your property as soon as possible. Unfortunately, it can take weeks or even months to progress through the eviction process. Even after serving an eviction notice or receiving a judgment from a court hearing, there are several circumstances where the tenant isn’t required to leave after receiving notice:

  • They dispute the eviction reason
  • They want to take the issue to court
  • They don’t care about the court’s judgement
  • They have nowhere to go
  • They’re angry about the situation
  • They need more time to find new housing

It’s completely understandable and reasonable to have sympathy for tenants who are facing eviction, but it’s vital to remember that their refusal to move affects your business. In each of the situations above, there are several specific actions you can take to keep the eviction process moving along. 

1. The Tenant Won’t Leave After Receiving Notice

Landlords are required to send an eviction notice notifying tenants that they need to move out. There are several different types of notices that are used, including:

  • 3-day notice to pay or quit for nonpayment of rent
  • 5-day notice to fic or quit for lease violations
  • 5-day notice to quit for serious lease violations
  • 5-day notice to quit for repeated nonpayment of rent
  • 30-day notice for a month-to-month lease that’s ending
  • 60-day notice for when a property is being sold or demolished

These are just a few types of notices, some of which can differ by state. So, what should you do if your tenant won’t leave after receiving one of these notices? 

What to do: 

If a tenant doesn’t respond to your notice or leave the property within the specified timeframe, you should follow these steps:

  1. File for eviction with your local court system
  2. Gather evidence that your tenant is in violation
  3. Attend the court hearing to state your case
  4. Win a writ of possession and have the sheriff’s department remove the tenant from the property

2. The Tenant Doesn’t Agree with the Eviction Notice

In some cases, the tenant may refuse to leave because they don’t agree that they violated the terms of the lease. For example, the notice may have been served to them because they’ve consistently parked in a non-designated area. The tenant could argue that they weren’t violating any terms because parking wasn’t clearly defined in the lease. 

What to do: 

If a tenant doesn’t agree with the notice, there are a couple of things you can do. First, you can try talking to the tenant. If you have proof that the tenant is in truly in the wrong, explain why you believe this to be the case. Many times, these situations can be worked out without the need to go to court. If you’ve talked to them and they still don’t agree, it’s best to take the issue to court. File for an eviction hearing, where both you and the tenant can present your case in front of an impartial judge. 

3. The Tenant Challenges the Court Ruling

If you’ve gone to court for an eviction hearing, you may think that’s the end of it, but unfortunately, some tenants will want to challenge the decision. Most state laws state that the eviction is put on hold while the case is further reviewed, meaning the tenant won’t leave until after the hearings are complete or another judgment is made. 

What to do: 

You could try to make a deal with the tenant, but most likely they will be unwilling to work with you at this point in the process. Chances are you’ll have to wait for the court process, although you may be able to file for an expedited hearing citing your business as the reason for expediency. It’s recommended you work with a lawyer who specializes in property management if you haven’t been already. 

While the lawyer may not be able to speed up the process, they will be able to help you sue for damages caused by the additional delay if the court rules in your favor again. Depending on which state you’re in, the damages can be significant. In Massachusetts, for example, a judge could potentially extend a stay of execution for up to 6 months, depending on the situation.

4. The Tenant Ignores the Judgment

If you win the eviction hearing, the judgment in your favor will allow you to receive a writ of possession. This is a legal document that state you’re the rightful owner of the property with the right to control what happens there. However, even with this document, tenants may still refuse to leave the property. 

What to do: 

If your tenant continues to live at the property, you can take the writ of possession to your local sheriff. They’ll handle the move out date and if needed, remove the tenant forcibly. They’ll also help you change out the locks so you can regain control over your property. If the tenant is particularly problematic, the sheriff’s department may also be able to help you file a “failure to vacate” judgement. This is considered a criminal judgment which could carry misdemeanor charges on the tenant’s record. 

5. The Tenant Needs More Time to Move

In some cases, the court may award the tenant with a “stay,” even when you’ve won the eviction hearing. This grants the tenant more time to stay at the property. The amount of time can vary and is decided at the judge at the hearing. Stays are usually requested by elderly tenants, families who have children, or others who may have difficulty moving out quickly due to their family, physical constraints, or lifestyle. 

What to do: 

Since the period of time granted for the stay is decided in court, there’s not much you can do to make them leave. If you believe the stay is unfair, you can challenge the decision and request an appeal from the court. 

6. The Tenant is Ignoring the End of the Lease

Finally, there are always cases where the lease ends, and the tenant simply refuses to move. 

What to do: 

Similar to the first case, you’ll have to file for eviction with your local court if you want the tenant to be officially and legally removed from the property. Another option is talking to the tenant and trying to find a solution that will help them move out as soon as possible. This could include monetary assistance or aiding them in finding another rental. Often times, being reasonably helpful will have the tenant vacating your property sooner and under better terms. Furthermore, this option can be quicker (and less expensive) than going to court. 

In addition to knowing how to get a tenant to leave your property, it’s also essential to know what to avoid when dealing with a reluctant-to-leave tenant.

7. Don’t Remove the Tenant Yourself

No matter how frustrated you feel, you should never try to make them leave yourself. Physically removing a tenant or blackmailing them to leave is illegal. It’s always recommended you use every legal mean to remove the tenant to preserve your reputation and business. 

Read Up on Local and State Laws 

Housing laws can vary quite a bit from state to state, so it’s essential you know and understand the laws that apply specifically to you and your properties. It’s not uncommon for laws to change either, making it even more important to stay updated. If you don’t follow your local laws properly during the eviction process, you may have to start the entire process from the beginning – which takes more time and causes you to lose out on more money. 

Ultimately, the best way to prevent the need to evict tenants is to prevent the need to do it from the beginning. Conducting a thorough screening during the application process can help you choose tenants that have excellent rental histories. While tenants can certainly surprise you at times, screening applicants can drastically reduce the chances you’ll end up with a problematic or deadbeat tenant. 

Screening tenants can take up a significant amount of time, but our tenant screening services make it easy for you to make informed decisions during the application process. We offer affordable, accurate background checks, tenant screening, credit checks, criminal and eviction history, and more. Save money, time, and prevent the hassle of dealing with troublesome tenants with our 100% guaranteed accurate services. For questions or more information, contact us today at 800-523-2381.

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What You Need to Know About Squatter’s Rights

Squatter’s rights have become a popular topic over the past few years, especially with the founding of organized rehousing groups like Take Back the Land. Squatters are defined as any person who chooses to live in a property or piece of land that they don’t have a legal right to occupy. Not surprisingly, many property owners feel wary of leaving their building unoccupied to prevent the headache of dealing with squatters. Squatter’s rights can even potentially apply to tenants who refuse to pay rent while occupying a rental, making it even more crucial to conduct a thorough screening during the application process. As a property owner, it’s essential to understand the legalities regarding squatting as well as how to address it. 

What Are the Laws Surrounding Squatters?

“Squatter’s rights” is a term that applies to laws that allow a squatter to occupy another person’s property as long as the property owner doesn’t take action against them. In general, these laws only apply if the person has been occupying the property for a specified amount of time. The amount of time varies from state to state, with some states granting “adverse possession” (granting legal rights to the property) in as little as 5 years. All 50 states have adverse possession laws, but how they’re enforced varies from state to state. Some states may require the squatter to either possess a deed to the property or to have paid taxes while occupying it; others don’t. In some states, the squatter may be granted adverse possession faster if they’re able to produce the deed or evidence of paying taxes. 

States that require the individual to have occupied the property for 20 years or more to qualify for adverse possession include:

Delaware

Georgia

Hawaii

Idaho

Illinois

Louisiana (30 years)

Maine

Maryland

Massachusetts

New Jersey (30 years) 

Pennsylvania (21 years) 

South Dakota

Wisconsin

North Carolina

North Dakota

Ohio (21 years)

Pennsylvania (21 years)

South Dakota

Wisconsin

States that require the individual to have occupied the property for 19 years or less to qualify for adverse possession include:

Alabama (10 years)

Alaska (10 years)

Arizona (10 years)

Arkansas (7 years)

California (5 years)

Colorado (18 years)

Connecticut (15 years)

Florida (7 years)

Indiana (10 years)

Iowa (10 years)

Kansas (15 years)

Kentucky (15 years)

Michigan (15 years)

Minnesota (15 years)

Mississippi (10 years)

Missouri (10 years)

Montana (5 years)

Nebraska (10 years)

Nevada (15 years)

New Mexico (10 years)

New York (10 years)

Oklahoma (15 years)

Oregon (10 years)

Rhode Island (10 years)

South Carolina (10 years)

Tennessee (7 years)

Texas (10 years)

Utah (7 years)

Vermont (15 years)

Virginia (15 years)

Washington (10 years)

West Virginia (10 years)

Wyoming (10 years)

How Do You Evict a Squatter?

Squatter’s rights have become a movement, so it’s essential to understand the steps you can take as a landlord. Many squatters rely on property owners’ lack of knowledge of squatting laws in staking claim to unoccupied properties. Here are some steps you can take to evict a squatter from your property:

  1. Contact the police as soon as possible. They’ll file an official police report, which can be used later if you need to go to court to pursue eviction. Keep all evidence and documentation, so you have a strong case. It’s important to note that you’re not allowed to intimidate or force squatters off your property, so if you must engage with them, it’s best to have the police present. 
  2. Once you’ve notified the police of the individual illegally occupying your property, you’ll need to file an Unlawful Detainer action. This step can vary depending on the state you reside in, so it’s best to contact a lawyer or your local court to ensure that you’re following all the required steps. 
  3. If the squatter refuses to leave, you can file a lawsuit. A hearing will be scheduled, and both you and the individual will be required to attend. If the court rules in your favor, the squatter will be removed from your property by the police, and you’ll be free to change locks on the property. 
  4. Once the squatter is removed, you may have to figure out what to do with any possessions they left behind. Some states require that the landlord provides the individual with a written notice to remove their items by a specified deadline. Squatters can be difficult to contact, so it’s recommended you have this notice prepared and bring it with you when you attend the court hearing. In the notice, you should include what you intend to do with their possessions if they’re not removed by the squatter by the deadline. It’s best to talk to a lawyer or your local court to make sure that you’re following your local laws. 

One way to ensure that you’re protecting yourself from squatting tenants is to ensure that you’re conducting a thorough screening during the application process. By reviewing their rental history, you can be aware of any past squatting attempts or failure to pay their rent. Screening tenants can take up a significant amount of time, but with our screening services, you can reduce your workload while receiving affordable and accurate reports that allow you to make the most informed decisions possible when choosing tenants. With the rise of squatter’s rights as a movement, it’s essential to take steps to ensure you’re protecting your rights as a property owner.

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New Laws Every California Landlord or Property Manager Needs to Know

California legislators have been busy during the first half of 2019! There have been a number of new bills, acts, and ordinances that have either been passed or are currently pending, many of which have implications for landlords and property managers. Even if you don’t have rental properties in California, it’s important to keep updated on what’s coming down the legislative pipeline, because as we’ve seen, some types of legislation have a way of becoming a national trend. Here’s an overview of what you should be aware of:

Tenant Screening Fee – Pending

The total amount allowed for tenant application fees has increased by $1.81. This brings the total amount that landlords are allowed to charge for screening processing fees to $50.94.

Just Cause Eviction – Pending 

There are two “just cause” eviction bills that have been proposed this year. Both bills attempt to limit evictions to specific reasons, such as failure to pay rent and define some “no fault” eviction causes (like demolishing the unit) but the bills contain some differences. AB-1697, if passed, would only apply to tenants who had been occupying the residence for 10 months or more. AB-1481 would apply to all tenants while also banning the owner’s right to terminate the tenancy to move into the unit if the tenant is 60 years or older – unless it was disclosed in the lease or permitted by the tenant. 

Both bills have been moved to the inactive file at this time. 

Keep Californians Housed Act – Pending

The existing laws require tenants with a month-to-month lease to be provided with 90 days written notice if the property is sold in foreclosure. Tenants that have a fixed-term lease would have the right to occupy the property until the end of the lease period, except under specified circumstances. The law officially expires on December 31, 2019. If SB-18 passes, the law will stay in effect indefinitely. 

Rent Control – Pending

This year there were two bills proposed regarding rent control: AB-1482 and AB-36. AB-1482 would put a 5% cap on annual rent increases – plus the percentage change in the cost of living. Rental owners would be prohibited from terminating the tenancy to increase rent above the cap amount. If AB-1482 passes, the law will be active until January 1, 2030. 

If passed, AB-36 would allow local governments to cap rents on single-family rental properties and on construction on rental properties that are at least 20 years old. Landlords with 10 units or less would be exempt. 

Extended Notices for Rent Increases – Pending

Existing law states that month-to-month tenants must be provided 30 days notice if landlords increase the rent by 10% or more. If the increase is more than 10%, the landlord is required to provide 60 days’ notice. If passed, AB-1110 would require landlords to provide 90 days notice for increases that are more than 10% but under 15%. If the landlord plans to increase the rent to more than 15%, they would be required to provide their tenants with 120 days’ notice. This bill is currently in the Senate. 

Applicant’s Criminal Records in the Screening Process – Pending

In a trend we’re starting to see nationally, the AB-53 bill aims to reduce discrimination of rental applicants due to criminal records. If passed, this bill would prohibit landlords and property managers from asking about criminal records during the application process. Once the preliminary application phase is completed, landlords would then be able to conduct a criminal background check. If the landlord wants to deny an applicant based on their criminal screening, they’ll be required to provide the applicant with a written statement of their decision within 5 days of receiving the criminal background report. 

Rental applicants would then have 2 days from receiving the statement to respond to the accuracy of the criminal check, evidence of rehabilitation, or other factors that may prove their history doesn’t affect their status as a potential tenant. The landlord would then have to consider these factors within a specified amount of time; if their decision not to rent to them still holds, they would be required to notify the applicant again in writing. Additionally, AB-53 would require landlords to provide a notice stating that criminal records are used as a part of their screening process. 

Allowances for Tenants to Shelter People at Risk of Homelessness – Pending

The AB-1188 bill would allow tenants to temporarily shelter a person at risk of homelessness for up to 12 months, regardless of what was stated in the lease about co-habitants. Landlords would be able to adjust the rent as compensation for an extra person occupying the property. The terms for the new rental amount would need to be stated in writing and agreed upon by the tenant and the owner. The bill would also allow owners to establish the rights and the obligations for all parties, including making the tenant liable for the additional occupant (to the extent of the terms within the lease) and requiring a written rental agreement from both parties. 

Requirements for the Homeless Coordinating and Financing Council – Pending

SB-333 would require the Homeless Coordinating and Financial Council to develop and implement an effective plan to address the large homeless population in California by July 1, 2021. 

CalWORKs Extension and Payments – Pending

CalWORKs (the California Work Opportunity and Responsibility to Kids) program provides financial assistance to low-income and homeless families. CalWORKs currently provides permanent housing assistance to pay for up to 2 months of the last month’s rent and security deposits. The AB-960 bill would allow counties to approve extended shelter assistance to prevent homelessness while households are waiting to receive permanent homeless support. It would also remove the requirement of property owners needing to have a history of renting properties to be able to receive payments. 

Using Pesticides – Pending

The AB-1788 bill, also known as the California Ecosystems Protection Act of 2019, would expand the prohibited use of common types of rat poisons in wildlife habitat areas. 

Long Beach’s Tenant Relocation Ordinance – Pending

Back in April this year, the Long Beach City Council voted in favor of an ordinance that would require landlords with 4 or more units that are older than 1995 to pay a tenant’s relocation fees if they raise the rent more than 10% in a year. They would also have to pay relocation fees if they require the tenant to move. The relocation amounts are subject to change, but currently, they would cover $2,706 for studios, $3,235 for a one-bedroom, $4,185 for a two-bedroom, and $4,500 for a property with 3 or more bedrooms. 

Inglewood’s Temporary Rent Caps and “Just Cause’ Eviction Policy – Passed

In March 2019, Inglewood set a 5% temporary rent cap for pre-1995 apartments as well as a “Just Cause” eviction policy. The policy has since been approved permanently, blocking property owners from increasing rents more than 5% annually. Renters will also be eligible for relocation allowances when they’ve lived at a property for at least 2 years and were evicted for “just cause.” 

Of Note: Los Angeles Rent Control 

The annual allowable rent increase for rent-controlled housing was increased to 4% within the City of Los Angeles. This increase first took effect on July 1, 2019 and runs through June 30, 2020.

Posted by & filed under Tenant Screening.

Catch Up on the Latest HUD Guidelines for Screening Tenants

As a landlord, screening is one of the most important things you can do to reduce the chances of ending up with a problematic tenant. Tenant screening is relatively straightforward, however, it’s essential to make sure that you’re staying compliant with the guidelines laid out by the Department of Housing and Urban Development (HUD) when determining whether someone would be a suitable tenant. Failure to comply with HUD rules and denying a tenant your rental for an invalid reason could cause you to incur a large penalty ($21,039 for a first-time offender!) so it’s essential to stay on top of the latest guidelines. 

The Federal Fair Housing Laws

HUD guidelines are also known as the Federal Fair Housing Laws and are derived from the Fair Housing Act that was enacted in 1968. The Fair Housing Act was created to ensure that landlords can’t legally deny an applicant for reasons of race, religion, ethnic background, national origin, family status, gender, or mental and/or physical disabilities. Legally, landlords cannot ask for information about any of these topics on a rental application or use the knowledge of any of these factors as a reason to deny them tenancy at their rental. Doing this is illegal and can put you at risk of incurring a large fine. 

Recent Changes to HUD Guidelines

HUD released a memo in April 2016 to clarify some of the aspects of the FHA’s Fair Housing policies that prevent tenant discrimination, and for the most part, it revolved around those who have criminal records. There were no housing discrimination protections granted to those with criminal records for a long time. Some cities, like San Francisco, created their own form of housing protections, but these city-derived protections tended to be fairly limited in scope. 

After a 2015 US Supreme Court case, it proved that landlords could be discriminating against a protected class of tenants by blocking a commonality of that group. Following this court case, HUD determined the following:

  • Landlords that included a “no arrest or conviction” requirement on their application were preventing Hispanics and African Americans from renting their properties due to both groups’ higher arrest rates. 
  • Landlords shouldn’t feel the need to reject a potential tenant with an arrest without conviction status because the status doesn’t indicate that there was any actual wrong-doing or potential threat. 
  • All races should be included in the elimination of denying tenancy based on and arrest-without-conviction. 
  • The memo urges landlords to consider the severity of the conviction and the amount of time that has passed between the occurrence and their application. 

This isn’t to say that criminal records can’t be considered during the tenant decision process; criminal records can still be considered if you have a concern about safety for your property, neighboring tenants, or yourself. For example, an applicant who was convicted for a physical altercation with a neighbor 3 years ago could legally be denied; an applicant who was convicted for petty theft a decade ago could not. That distinction is important, as is the fact that an arrest is not a conviction. A blanket “no arrest or conviction” policy could be denying housing opportunity to someone who deserves a fair chance.  

The HUD memo hasn’t been passed into law or officially adapted into the Fair Housing Act, however, it should still be an important consideration when screening tenants. 

How to Screen Your Tenants and Stay Compliant with HUD Guidelines

Here are some important considerations to keep in mind when screening potential tenants:

  • Give a lot of information about the property, your policies, and expectations at the beginning of the application. It should include the cost, address, included amenities, smoking policy, pet policy, and all the other non-negotiable information right away. If a tenant doesn’t agree to these, you’ll both know that from the start – no need to go any further in the application process. 
  • Require the applicant to provide you with rental history and employment information. This will allow you (or your screening service) to verify from employers and previous landlords whether the potential tenant is a good rental candidate. 
  • Collect personal references to find out more about an applicant’s reliability. 
  • Run a credit check and background screening through a reputable tenant screening company to give you a complete picture of the applicant’s history. 

Proper tenant screening is essential! It allows landlords to find reliable tenants that are a good fit for your requirements and your property; it can also ensure that you’re less likely to end up with tenants that have trouble paying rent. Screening also offers protection from potential lawsuits. While proper vetting of tenants can be time-consuming on your own, relying on a tenant screening service like Tenant Screening Center saves time and can ensure that you have all the information you need to make the most informed choice.

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Rising Housing Costs: How Does This Affect Landlords?

Whether you’re an independent landlord or a property manager, it’s essential to stay on top of the current housing market trends. Whether you’re planning to acquire a new property, wish to sell a property, or are doing competitive research on similar units in the area, having a handle on the market will allow you to make more informed decisions. 

As you’re probably aware, housing costs are rising throughout the country – for renters and homeowners. Renters, however, are seeing higher cost increases. According to a report from CoreLogic, single-family rents increased 2.9% year over year in February 2019; rents on lower-priced rentals increased 3.7% while rents for higher-priced homes increased by 2.4%. How do these rising costs affect the rental market, and what do they mean for your bottom line?

Why are Rent Costs Rising?

The costs of housing prices have significantly increased over the last decade or so, leading many people who may have been homeowners in the past to rent instead. This has contributed to crowding in the rental market, with more affluent renters competing with lower income tenants. As the demand for additional rental housing increases, the costs of rentals rise. Even in areas where there is active, ongoing construction of apartment housing, it may not be enough to prevent further rental hikes, especially because many developers tend to build luxury units to appeal to a high-income tenant. 

Increased Rent Burden on Tenants

According to TransUnion SmartMove self-reported data from independent landlords, rental prices are growing faster than renter’s income. It’s estimated that between 2014 to 2017, rent growth surpassed income growth by over 200%. A 2017 report from the National Low Income Housing Coalition stated that renters would need to earn an average of $21.21 per hour to be able to afford a two-bedroom rental home – significantly higher than the Federal minimum wage of $7.25 per hour. Millennials tend to spend the greatest amount on rent, with an average of 45% of their income going to rent costs, however, they still view renting as a more affordable option than owning. 

What Does Rising Housing Costs Mean for Landlords?

The combination of rising rent costs and stagnant wages means more renters will have a difficult time saving the money needed to put a down payment on a home. The costs of home prices also continue to rise due to high demand by first-time home buyers and limited availability of affordable homes. This means that there is a large number of people who are seeking rental housing, and landlords can be more choosey about the tenants they select. 

As rents continue to rise, renters will become increasingly burdened, needing more roommates to be able to afford it. Landlords may have to adjust their thinking about rent to income ratio; the old 3:1 ratio may no longer apply. It may become necessary to evaluate on a market to market basis to figure out a realistic rent to income ratio. Additionally, with so many renters paying over 30% of their income on rent, it’s even more essential to run a credit screening on prospective tenants to ensure they’re financially stable and able to handle their finances. 

In conclusion, as renter burden increases, it’s more essential than ever for landlords to ensure their prospective tenants can afford the rent. The high demand for rental housing also means that landlords will increasingly see larger numbers of applicants apply for their rentals. Thoroughly screening applicants through a reputable tenant screening service is essential to mitigate the risk of not being paid in an economic environment where the rental burden is growing.

Posted by & filed under Background Check, Landlords, Tenant Screening.

Changes to How Landlords Can Access Criminal Records

Near the end of May, Cook County in Illinois approved a new change to how and when landlords are allowed to access criminal records while running tenant screening. While landlords are still allowed to inquire about a potential tenant’s criminal history, they are only able to do it as a second step to the screening process. The landlord will have to run a preliminary screening first, which consists of income verification and credit check. Once the landlord has gone through the initial screening and has a list of potential tenants, they can then choose to run the background check with the criminal history report.

Why The Change?

The purpose behind this change appears to be preventing and potentially identifying discrimination by keeping income and credit considerations separate from criminal history. A tenant may fail to pass the initial screening, and their reason for being denied would have nothing to do with criminal behavior. According to one article, as many as one-third of Americans have a criminal record, and some landlords may blanket discriminate against them whether or not the crime was something that should disqualify them as a tenant. 

Statistically, many people with criminal records are recidivists – repeat offenders. This new change will grant people who have criminal records a second chance and the equal opportunity for housing and employment, which in turn may prevent them from returning to criminal activity. This also appears to be part of a larger trend across the country to address high levels of recidivism and discrimination, as several other cities have started implementing changes to how landlords are allowed to use criminal records. In some California cities, for example, an algorithm has been developed to identify and expunge criminal records that are related to specific crimes, such those around cannabis. North Carolina leaders are also considering legislation that would significantly expand the number of people who are eligible to clear their criminal records. 

These changes may not currently affect you, but they’re one reason why it’s essential to stay on top of your state and local laws. It’s conceivable that the trend of moving towards removing criminal records or putting restrictions on a landlord’s ability to screen their tenants based on criminal history will become more common as time goes on.