Posted by & filed under Eviction.

The Centers for Disease Control and Prevention (CDC) announced on Tuesday, August 3, that it will be extending the federal eviction moratorium through October 3, 2021. This announcement was made after the previous moratorium ended on July 31.

Notice to tenant for eviction inside brown envelope and face mask on top.

Like many rental housing professionals, you likely have questions about what’s changed with the latest reiteration of the moratorium and how it will affect your properties. Here’s everything you need to know about the latest CDC eviction moratorium extension, who’s protected, and how to access federal rental assistance for help.

An Overview of the Latest CDC Eviction Moratorium Extension

Like the previous moratorium, the latest CDC eviction moratorium extension prohibits evictions involving tenants who are unable to pay their rent, late rent fees, penalties, or interest as long as they meet the eviction protection requirements. The purpose of extending the moratorium is to allow more time for landlords and renters to apply for and receive funds from the federal Emergency Rental Assistance program.

This latest CDC order is intended to “temporarily halt evictions in the hardest-hit areas.” This means that the moratorium will only be effective in counties that have a “substantial” or “high” level of COVID-19 transmission. According to the CDC, a “substantial” transmission rate is considered more than 50 new COVID-19 cases per 100,000 people within the past seven days; a “high” transmission rate is considered more than 100 new cases per 100,000 people within the past seven days. Unfortunately, this currently includes approximately 80% of the counties in the U.S.

Once an individual county’s transmission levels are below the “substantial” rating for 14 consecutive days, the moratorium will be lifted in that area. However, if there’s an increase again in that county, the moratorium will be reinstated.

Keep in mind that the moratorium extension isn’t applicable for areas that already have the same or greater levels of COVID-19 eviction protections in place. It also doesn’t prevent local or state governments from enacting additional eviction protections.

The new extension also covers evictions that were filed during the lapse between the previous moratorium and the current one (August 1-3). However, it does not provide protections for evictions that were finalized during that period.

Who is Protected Under the Latest Extension?

The latest moratorium extension will cover an estimated 90% of renters, according to Senator Chuck Schumer, and will include the $46 billion in emergency rental relief allocated by Congress.

Like the previous moratorium, tenants must provide their landlords with a signed declaration and meet the following requirements to qualify for eviction protection:

  1. The tenant has used their best efforts to obtain government assistance for rent or housing.
  2. The tenant either earned less than $99,000 (or $198,000 if filed jointly) in 2020 or expect to earn no more than that amount in 2021, or they weren’t required to provide income to the IRS in 2020, or they received a stimulus check during the pandemic.
  3. The tenant is unable to pay their monthly rent in full due to loss of a job or income, or a decrease in income or hours because of the pandemic, or they face extraordinary out-of-pocket medical expenses.
  4. The tenant is continuing to make partial rent payments as close to the full amount as their circumstances permit.
  5. The tenant would be homeless or would need to move into close living conditions (ex: moving in with friends, family, or to a shelter) if they were evicted.
  6. The tenant lives in a county with a “substantial 9” or “high 10” COVID-19 transmission rating according to the CDC.

Evictions are currently being monitored by the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) and will be enforced with a penalty of up to $100,000, one year in prison, or both. If the eviction somehow resulted in a tenant’s death, the fee will be increased to up to $250,000, a year in prison, or both. If a housing company or organization violates the moratorium, it will be fined up to $200,000 per violation and $500,000 if the eviction resulted in a tenant’s death.

Are Any Evictions Allowed During the Moratorium?

Can you still evict tenants during the moratorium? Yes, as long as the eviction isn’t due to the tenant’s inability to pay rent. You may still evict a tenant for any of the following reasons:

  • Damaging the property
  • Threatening the health or safety of other residents
  • Criminal activity on the rental property
  • Violating building codes or health and safety regulations
  • Violating the lease beyond making rent payments, late fees, or similar financial obligations

The Emergency Rental Assistance Program

If you’re looking for ways to lessen your financial hardship or that of your tenants, you should consider applying for your local COVID-19 Emergency Rental Assistance (ERA) Program. Each local program is set up differently, with various policies and procedures designed to suit the needs of their community. In some areas, tenants may be able to apply for the aid themselves, while in others, they may need your assistance in the process.

The federal ERA program allows local programs to cover rent, utilities, and home energy costs. If you currently pay the utilities or energy costs for your properties, these will be considered part of the tenant’s rent. Rental assistance may also include:

  • Reasonable late fees (if they aren’t included in the tenant’s rent or utility debt)
  • Internet service
  • Moving expenses and other rental-related fees like security deposits, application fees, or tenant screening fees) for tenants who have to move

Some programs may also cover housing counseling, case management, legal representation, and other types of housing stability resources and services.

Find a rental assistance program for your area here.

Posted by & filed under Tenant Screening.

Every landlord wants to have responsible tenants who pay their rent on time, respect the property, and don’t cause any trouble. Unfortunately, there’s always some risk associated with renting your property; this is why it’s essential to be cautious when reviewing applicants and keep an eye out for any red flags that could indicate a scam.

Many people have access to scanners and photo editing software these days, which makes it easy for someone with basic computer skills to fake important documents like pay stubs, employment records, or other financial information. This type of scam is often difficult to detect – especially if the applicant submits the documents online. Proper tenant screening and verification can protect against scams, as well as prevent the long process of eviction and the need to replace the tenant.

Even the most cautious landlord can fall victim to fraud, so it’s important to be able to recognize the most common types of tenant scams and take the proper precautions.

Lying About a Co-Tenant

This type of scam often involves providing falsified information to present the applicant in a better light, however, it can also include lying about who will be sharing the rental property with them. This could be due to a criminal record or credit problems that might otherwise hurt their chances of renting the property.

If the applicant lists a co-tenant, make sure to run a background check on each of them, even if the co-tenant is a spouse. After the tenants are living at your property, confirm that their identity matches and that the number of people living there is the same number as listed on the lease. Also, make sure you inform applicants and co-applicants that lying can be grounds for immediate lease termination.

Providing a Fraudulent Credit Report

Credit reports offer vital insights into how a person handles their financial responsibilities. So, it’s essential to order the credit report yourself, rather than relying on the applicant to provide one. Today’s technology makes it incredibly easy for people to manipulate documents in their favor.

By ordering the applicant’s credit report yourself, you’ll be able to have peace of mind that the information you’re receiving is accurate and unbiased. However, make sure you’re not just relying on the credit score—pay attention to other factors in the report, like credit limits and account balances to have a better understanding of the applicant’s financial responsibility.

Falsifying Pay Stubs or Lying About Employment

Pay stubs are the best way to verify the applicant is employed, who their employer is, and how much money they make. It may surprise you to learn, however, that there are actually websites where people can order falsified pay stubs.

These fake pay stubs often look legitimate at first glance. For this reason, it’s important to check all the basic information on the stub you’re provided. Here are some things to look for:

  • Are the numbers perfectly rounded? Although it’s possible to be paid a flat $1000 during the pay period, it’s unlikely.
  • Does it look professional? All the characters and numbers should be legible and lined up evenly.
  • Is there a difference between Os and zeros? The letter “O” is much more rounded while 0s are more oblong. A professional accountant would never make this kind of mistake, so it’s a good sign the document is fake if you can’t tell the difference between the two.
  • Is the basic information (name, address, social security number, etc.) consistent with the other information the applicant provided?

You’ll also want to make sure to ask for employment references, or even better, order a tenant verification. Keep in mind that an applicant’s employer often can’t give you an employee’s salary information without written permission, so you may want to consider adding a release form or clause to your rental application.

Another employment scam to be aware of is to list a non-existent employer with a fake job description, job length, and salary. With this type of scam, applicants will often ask another person to pose as an employer or Human Resources contact who will “confirm” their employment.

It’s important to verify that any employment references listed on the application actually exist. Asking for pay stubs, a W2 tax return, and bank statements will help expose the scam. If you choose to verify employment yourself, ask to speak to the tenant’s immediate supervisor so you can get a more personal character reference.

Lying About Previous Landlord References

Like the employment scam, some applicants will also provide false contact information for previous landlords. When calling to verify the applicant’s tenancy, there’s a chance you could be speaking with a friend or family member who’s lying about their identity in order to provide a favorable reference for the tenant.

If you choose to perform the verification yourself, some things you’ll want to check include:

  • The address provided is the landlord’s rental property
  • The property the applicant says they lived at is listed in the credit report
  • Ask for utility bills in the tenant’s name; cross-reference the address with other information they’ve provided
  • Confirm the reference’s name, number, business, or tax records to see if it matches with what your applicant provided
  • Listen to the reference’s responses; do they just agree with you and give short answers, or try to get you off the phone as soon as possible? Or do they sound knowledgeable? Keep in mind that if the rental was a few years back, they may have difficulty remembering.

Overpaying the Rent or Deposit

There are several variations of this type of scam. In the most common version, the applicant wires too much money for the security deposit or writes a check for more than what is owed. If the applicant uses a wire transfer, typically they’ll write a check for more than the amount, then request the extra funds to be wired back to them.

However, the initial check provided is fraudulent—but it will take weeks to bounce. This means the landlord will be out not only the money they refunded but also the correct amount from the check, too.

If you accept wire transfers, keep in mind that any funds from a deposited check shouldn’t be used until the check has officially cleared. In some cases, this could take weeks. You may also want to consider requiring renters to pay rent online through a portal, which will eliminate the chances of receiving a fraudulent check.

Similarly, you may have a tenant who “accidentally” writes a larger rent check then request you refund them. Or, you may receive a call or email from someone who claims they’re relocating to the area because of work, and that their employer will send a check to cover the move-in costs.

To avoid these scams, don’t accept payments that are more than the specified rent or deposit; don’t accept an out-of-state paper or cashier’s check, especially if it’s for more than the amount you’re due. You should also make a point to meet your tenant in person and avoid accepting an applicant who only communicates by phone or email.

The Tenant Landlord Scam

This scam involves a tenant who poses as you while stealing your rent. Typically, what happens is a landlord fails to run a background check and rents the property to someone who is using a fake identity. The person then rents the home out to another person and collects the deposit and rent.

Another scenario is the scammer may charge the unsuspecting tenant more rent than they pay the landlord and keep the difference for themselves. This type of scam can be avoided by confirming the tenant is who they say they are.

Illegal subletting can be another version of this type of scam. The tenant sublets the property and asks for a large amount of rent in advance, only to disappear once they receive it. Adding a no-sublet clause to your lease can help prevent this type of situation. If you choose to allow subletting, make sure to specify that any new tenants must be pre-approved before subletting the unit – and don’t forget to run tenant screening and verification on them, too.

The Tenant Won’t Pay Their Rent

Most tenants sign the lease agreement with every intention to pay their rent, consistently and on time. Sometimes this doesn’t happen; other times, the tenant is a scammer who didn’t have any intention to pay rent.

With this type of scam, the tenant may pay rent for a month or two, then stop entirely. Your only action at this point is to begin the eviction process. However, the scammer realizes they can live rent-free for several months until they’re forced to leave. The best way to prevent this type of scam is to have a comprehensive screening process that will give you insight into the tenant’s previous rental history.

Taking Advantage of the Eviction Process

Many scammers are successful because they know loopholes, including how to outsmart the eviction process. For example, if the landlord accepts partial payment from the tenant, the eviction process may need to be restarted, which buys the tenant extra time to stay in the home.

If you allow the tenant to stay in your home for even a few more hours or an extra day may also end the current eviction order—which means you’ll have to start the process over again. Make sure you read up on your local laws prior to filing to ensure the eviction process goes smoothly.

Additional Steps You Can Take to Avoid Being Scammed

Since the pandemic, rental scams have been on the rise; the percentage of “fraud triggers” detected by TransUnion in 2020 increased by nearly 30% from March to August. This has been in part due to more wide-spread economic issues, but particularly the rental housing industry’s increased reliance on digital and contactless methods for interacting with tenants and applicants.

In addition to some of the tips we’ve already mentioned, here are some additional steps you can take to avoid being a victim of a scam:

  • Always ask applicants for two types of identification (including a photo ID)
  • Run a comprehensive background check
  • Never allow a tenant to occupy your property without paying a security deposit and at least one month’s rent
  • When possible, visit your properties to make sure that the person you rented to is actually the person who’s living there

While there’s no 100% foolproof way to avoid being scammed, having the right process in place to screen prospective tenants (and to collect rent payments) will greatly reduce the chances that you’ll be taken advantage of.

Posted by & filed under Eviction.

Landlord Tenant Law book

The federal eviction moratorium has been extended numerous times since the start of the pandemic, but it now appears to be reaching its end on July 31, 2021. This last extension, which prohibited evictions for an additional month, was intended to give Congress more time to determine a long-term solution to the looming wave of evictions anticipated in the coming months. President Biden has said that once the ban lifts, his administration will begin a “series of actions” to help state and local governments prevent evictions and foreclosures.

Currently, about 44 million households (approximately 1/3 of the U.S. population) are renters, many of whom have been protected under some form of an eviction moratorium since the initial passing of the CARES Act. Along with the federal moratorium, some state and local governments have enacted their own temporary eviction moratoriums, some of which extend past the federal July 31 end date. According to a household survey conducted by the U.S. Census Bureau, around 3.2 million renters said it was likely they would have to vacate their homes within the next two months due to eviction.

Although there are still many uncertainties about what the next few months will look like for landlords or their tenants, here’s a look at what we do know so far. Please note that this is for informational purposes only and is not intended as legal advice.

When Can I Evict Tenants and How Will the Process Change?

In theory, rental housing professionals should be able to resume evictions for non-payment of rent as soon as the federal moratorium ends, provided their property isn’t under a state or local moratorium as well. Since the federal moratorium didn’t ban eviction filings, it may be possible to begin the eviction process ahead of the end date, depending on local and state laws.

Also, keep in mind that some areas like Washington D.C. have temporarily banned eviction filings. Although the city’s moratorium is set to expire on July 25, notices to pay or quit cannot be sent out until 60 days after the public health emergency has ended. In addition, all types of eviction now require at least 30 days advance notice to the tenant.

In California, Governor Newsom has extended the state moratorium until September 30, 2021, as well as signed Assembly Bill 832 into law. According to the newly revised bill, landlords and property managers are prohibited from evicting tenants over non-payment of rent through September 30.

Landlords are also able to apply for rental assistance covering 100% of back and forward rent, as opposed to the previous law stating a landlord could only apply for 80% of the missed rent, forgiving the remaining 20%. Under the new bill, those who applied for a partial refund will receive the missing funds. If both the tenant and landlord apply for the funds, the money will go directly to the landlord; the tenant will only receive the funds if the landlord declines to participate in the program.

To file an eviction lawsuit after the moratorium has ended, landlords must provide the court with evidence that they applied for rental assistance. The case will only proceed if the tenant doesn’t complete their rental assistance application or qualify for aid. Unsurprisingly, many landlord groups have voiced their frustration over the new bill, as there’s no clear answer to when the eviction protections will actually end. In addition, eviction restrictions may be tighter within certain localities, Los Angeles. However, under the new bill, cities are not able to enact stricter rules through March 2022.

Other states and local governments have enacted their own moratorium and eviction regulations and forms of rental assistance, so be sure to review all the laws applicable to your property prior to filing for eviction. If you’re unsure, consult with legal counsel to ensure you’re acting within the letter of the law.

Posted by & filed under Rent.

Mortgage and Home Buying Concept. Huge Human Hand Put Golden Coin into Slot at Roof of Cottage House. Investment in Real Estate, Loan Payment, Building Purchase, Debt. Cartoon Vector Illustration

Rental income is one of the primary reasons many people invest in rental properties. Unfortunately, rent collection doesn’t always go smoothly—especially if your tenants have been impacted by COVID-19. The federal eviction moratorium and state moratoriums make nonpayment of rent even more complicated, as qualifying tenants cannot be evicted due to nonpayment.

Whether you’re dealing with tenants affected by COVID-19 or have tenants who are just not holding up their end of the lease, here are a few strategies you can implement to get your tenants to pay their rent on time. Please note that this is for informational purposes only and is not intended as legal advice.

Tenant Screening

If you currently have a vacancy, the first step in preventing nonpayment issues is to find reliable tenants. Tenant screening and tenant verification will help you determine if the applicant has a history of meeting their financial obligations on time, if the information they’re providing you is accurate, and whether they’ve been a good, responsible tenant overall. You’ll also be able to see if they make enough money to comfortably cover the rent, if they’re currently employed, and other helpful information to base your rental decision on. Although tenant screening can’t 100% predict the future, it will give you a clear idea of the type of renter an applicant has been in the past.

Read Up on Your Local Laws

The eviction moratorium makes nonpayment of rent complex, particularly because some states have enacted their own moratoriums in addition to the federal moratorium. This means the rules can vary greatly depending on where you’re located. In some areas, you’ll only have to consider the federal guidelines, while in others, there may be state restrictions as well.

Keep in mind that if a tenant doesn’t qualify for the protections under state or federal moratoriums, you may still have the right to move forward with eviction. Under the federal moratorium, tenants may still be evicted for reasons such as nuisance, committing a crime on the property, or if the owner has a justified reason for taking back the property. Make sure to consult with legal counsel to get more insight into your options.

Depending on the state your property is located in, you may be able to find specific resources to help guide you on how to handle rental and eviction questions. For example, California has created this handy checklist for landlords.

Keep Communication Open and Document Everything

If your tenants are having difficulty meeting their rent payments, keep the lines of communication open. Talk to them about their situation and see if you can come to an agreement, whether it be a payment plan, paying partial rent, or forgiving back rent. Ask them if they have a solution that you haven’t offered. Whatever you discuss and decide, make sure it’s documented. If your tenant agrees to a payment plan, for example, make sure you add it as an addendum to your lease, with all the agreed-upon terms and the start and end date. Have your tenant sign the addendum as well to verify that they are aware of the new terms.

Offer Multiple Ways to Pay Rent

Make sure you don’t give your tenants a reason not to pay when the rent is due. Offering several options for rent payments (such as check, credit card, debit card, online, mail, or in-person) makes paying the rent more convenient and gives tenants the choice to choose whichever method works best for them. If possible, avoid accepting cash as other methods leave a paper trail you can refer to if needed. If a tenant pays partial rent, make sure you’re documenting how much they paid and how much is still owed.

Offer Incentives for Paying Rent on Time

Get creative and think of some ways you might be able to reward your tenants for paying rent on time. One example is you could offer a small discount if the tenant pays before the due date. Or, you could let your tenants know that for every on-time rent payment, they’ll earn a small kickback at the end of the year or lease period. If a tenant pays rent on time for a certain number of consecutive months, you can offer a percentage off the following months’ rent. Likewise, you could offer other incentives, like small upgrades to the property or gift cards.

Look into Rental Assistance

Although the CDC order doesn’t include rental assistance, the American Rescue Plan Act (ARP) passed in March 2021 includes nearly $50 billion in housing and homelessness resources, including $27 billion for rental assistance and $5 billion for utility assistance—in addition to the $25 billion Emergency Rental Assistance Program (ERA) passed in December. Many state and local organizations are also offering rental assistance programs that may be able to help your tenants get back on their feet – and allow you to continue collecting rent.

Find a rental assistance program near your property.

Credit Reporting

Although uncommon, some tenants have claimed they don’t have the ability to pay rent when they actually can. If this is the case, there will likely be red flags, such as failure to furnish a hardship confirmation or avoiding discussions regarding payment plans. Make sure you’re documenting all attempts to discuss the situation, along with any suggestions you’ve offered to rectify the situation.

You may also want to consider credit reporting if your attempts at outreach go unanswered. Let the tenant know that if there is no resolution or discussion about the matter, you’ll have to report them to the credit bureau. Since the majority of tenants would like to keep their credit in good standing, this could offer very good motivation to put more effort into making their payments.

Conclusion

Whether you’re dealing with nonpayment issues now or you anticipate them in the future, it’s important to assess what’s going on in your situation before deciding on how to proceed. Consider the following questions:

  • How much rent is owed and when was it due?
  • Has the tenant been notified about the late rent? If so, what was their response?
  • Are there any factors that prevent you from pursuing eviction, such as the tenant qualifying for the eviction moratorium?

By answering these questions, you’ll be able to better plan your next moves. In most cases, the first step is to discuss the matter with your tenant and see if you can agree on how to handle the payments. From there, you can determine what to do next based on your legal options.

Posted by & filed under Eviction.

the notice of eviction of tenants hangs on the door of the house, front view

The federal eviction moratorium has been extended another month, with an end date of July 31, 2021. The CDC says this will be the last time the moratorium will be extended, however, some states (like California) have extended the moratorium even longer. While evictions can still take place under some circumstances, all evictions based on nonpayment of rent or other fees are prohibited.

Although you may not be able to pursue eviction at this time, there are some steps you can take to mitigate the financial impact of tenant defaults.

Look into Rental Assistance for Your Tenants

Although the CDC doesn’t provide rental assistance for tenants, you may consider researching the U.S. Department of Housing and Urban Development’s (HUD) emergency grants and other programs to see if there’s one your tenant might qualify for.

Likewise, check locally to see if there are any types of rental aid in place; some areas have also been offering rent vouchers or emergency funds to tenants in need of assistance. There are currently many resources available to help renters, so it may be in your best interest to research these options and bring them to your tenants’ attention – do what you can to help them pay you.

Here are some additional resources that may help.

Work Out a Temporary Solution with Your Tenants

Depending on how much you rely on rental income from your tenants, you have a few options for working with those who have fallen behind on their rent:

  • Forgive rent. If your financial situation allows it, and you’re willing, you could waive rent for a month, with an agreement to revisit the payment arrangement in the future.
  • Postpone rent and offer payment plans. You could offer to postpone rent for a designated period of time, with an agreement that the rent will be repaid. In your repayment agreement, make sure to state whether the payments for the rent owed can be spread out over time, paid all at once, or paid back when they receive a stimulus or other form of financial aid.
  • Reduce the rent. In some cases, lowering the rent may be a good option for you and your tenant. This will allow the tenant to meet some of their financial obligations to you while providing you with some income to handle your expenses. For example, if you normally collect $1,200 a month for rent, but your mortgage is $900, you could temporarily lower the mortgage to $900 so you can continue to pay your lender. You may not be able to make a profit this way, but it can help you avoid defaulting on your mortgage.

Keep in mind, though, that a rent reduction is permanent. This means future rent increases must be based on the lowered amount, which becomes the new base rent. In addition, landlords aren’t allowed to withdraw or cancel the reduction at a later date. In areas with rent control, you’ll only be able to raise the rent according to the set increase rate and market conditions.

In California, for example, this would mean you could only enact a 5% rent increase plus the annual CPI (Consumer Price Index) percentage change. Depending on how much you lower the rent and where your property is located, it could take some time to be able to raise the rent back to its previous price.

Before you decide to make any of these changes, talk to your tenants and ask them what they think would work. If you can accommodate their suggestions, there’s a better chance they’ll work harder to uphold their end of the bargain. Whatever is decided, make sure to put it in writing (preferably as an addendum to your lease or rental agreement) and have the tenant sign it.

Offer to Let Tenants Out of Their Lease

If carrying a non-paying tenant has become too much of a hardship, you can offer to let them out of their lease early and without penalty – including the back rent – if they agree to leave by a designated time. If they don’t want to leave, gently remind them that they will continue to owe all the back rent they haven’t paid.

Cash for Keys

If your finances allow it, you may be able to pay your tenant to leave. Known as “cash for keys,” this can be an effective method when you want a tenant to leave as soon as possible. Explain to the tenant why you’d like them to move and offer them a lump-sum to move out as soon as possible. The lump-sum amount should generally be based on the average cost of rent in the area. If the tenant agrees, write up an official agreement outlining the terms, and make sure you and the tenant both sign it.

Continue Due Diligence for New Tenants

Hopefully, this has given you some ideas on how to deal with non-payment without resorting to eviction. If you have vacancies, it’s more important than ever to continue screening tenants to ensure that they’re in good financial standing before you choose to rent to them. Although circumstances can change, screening continues to be the best protection against future nonpayment.

Posted by & filed under Rent.

The pandemic has caused unprecedented migrations from metro areas and rent declines nationwide, but San Francisco property owners have been hit especially hard, with rents decreasing by nearly 27% between early 2020 and early 2021.

Lower Rents, More Incentives, and Less Money for Landlords

While many renters have struggled to get by, so too have many small landlords. Many have experienced nonpayment of rent, coupled with eviction moratoriums that have prevented them from evicting overdue tenants. Desperate to place renters, many landlords have tried to incentivize their vacant properties, with offers of lower rent, free rent, free gym memberships, and hundreds of dollars’ worth of gift cards.

One San Francisco landlord stated that there was a time when potential tenants accepting the asking price for her rentals; now, nearly every tenant offers less. To make matters worse, lower mortgage rates have turned many would-be renters into first-time homebuyers, leading to a drop in potential tenants and more competition for filling empty units.

And for everything that is reduced in price or purchased as an incentive, that’s more money out of landlords’ pockets. On top of that, they may be struggling to pay their own mortgages. Smaller landlords have even more expenses to consider, like electrical, sewage, garbage, repairs, maintenance, property taxes, and insurance.

“There are some landlords that will struggle to pay their bills because they aren’t receiving rent from tenants, or have units sitting vacant,” said Jeff Tucker, a Zillow economist. “It’s not like a larger property management company that can manage units and mostly muddle through. For a smaller-scale landlord with only a handful of rental units, they could easily be forced to sell their rental units or be foreclosed on if they have a mortgage on it.”

David Levy, a San Francisco real estate agent, noted that the property owners who have been most impacted during the pandemic are those who are paying off their mortgage and seniors who live on a fixed income who rely on their rental payments to make ends meet. “A lot of tenants assume that because someone owns property or multiple properties, they’re millionaires, and they can afford to rent this place out for free,” said Levy. “That’s plain not true. A lot of people who rent out their property rent it out because they need money to pay the mortgage or bills or expenses.”

No Easy Answers

While lowering the rent is a good tactic for those who can absorb the losses, it may put other landlords on track for just barely staying afloat – or losing their properties entirely. With the statewide rent control, landlords are generally only able to impose a 5% rent hike annually, plus the price of inflation as determined by the consumer price index (CPI). For those who have dropped their rent by more than 5%, it could take some time before they reach their pre-pandemic prices again. And in the meantime, the price of goods and services continues to rise.

The state plans to provide some relief to landlords, using 2.6 billion in federal assistance funds as rent subsidies to pay landlords 80% of unpaid back rent from low-income tenants for the period between April 2020 and March 2021. In exchange, landlords must forgive the remaining 20% and agree to halt evictions. While this presents a lifeline to some landlords, many others must deal with what will likely be a permanent loss of income that could have lasting financial consequences.

Posted by & filed under Rentals.

Mortgage and Home Buying Concept. Huge Human Hand Put Golden Coin into Slot at Roof of Cottage House. Investment in Real Estate, Loan Payment, Building Purchase, Debt. Cartoon Vector Illustration

The Federal eviction moratorium is set to expire on June 30, 2021, with nearly 9 million households behind on their rental payments. Although it’s unclear whether the moratorium will be extended as it has in the past, it appears this is the end of the line for it, along with the few remaining state moratoriums following in suit. As the world slowly starts to return to many pre-COVID processes, you may be wondering how this will affect your collection practices. Here are some tips on how to handle collection from current tenants, previous tenants, and some steps you can take to avoid future collection issues. Please note that this is for informational purposes only and is not intended as legal advice.

Collecting Rent from Current Tenants

Rent collection should continue in accordance with your lease agreement, however, keep in mind that some residents continue to be financially impacted by COVID-19. Since some areas still have local moratoriums in place, you should check the emergency orders in your jurisdiction to see if there are any restrictions to your rent collection.

One of the main stipulations of the lease agreement is that the tenant will pay their rent on time in exchange for the right to live at the rental property. Despite COVID, if a tenant pays rent late or less than the agreed amount, they’re in violation of the lease. Here are a few ways you can proceed:

  • Payment arrangements.
    If your tenant’s payments are severely delinquent and local regulations allow it, you may consider giving the tenant a fresh start with a payment arrangement. One example would be to have them pay their next months’ rent in full, plus an installment amount that can be put towards their debt. If you decide to allow payment arrangements, be sure to create an addendum to your lease that clearly outlines what you and your tenant agreed upon.
  • Payment Incentives
    Depending on your regulations, you may consider offering a rental discount for on-time, full, or partial payments. This may encourage tenants to put in more effort to pay their rent – or at least as much rent as they’re able.
  • Lease renewals.
    If the lease is going to end soon or the amount owed is very large, you may want to consider having the tenant sign a lease extension to give them more time to pay off their debt. This can be a short-term lease or a month-to-month lease if the tenant doesn’t have the financial means or the flexibility to committing to longer lease terms.
  • Resident resource lists.
    You may also want to consider providing a list of local and national resources to help struggling tenants, including:
    • Contact information for national organizations like the Salvation Army, United Way, and American Red Cross
    • Local social services, religious, and charitable organizations
    • Organizations that assist with food, utilities, unemployment, and other essential services

What You Should Avoid When Collecting Rent

In addition to finding ways to encourage your residents to pay their rent in full and on time, there are also some steps you should avoid when collecting rent:

  • Don’t take the matter into your own hands.
    Most landlords and property managers understand when rent collection requires an outside party, but every so often you hear about a landlord who takes the matter into their own hands, like shutting off utilities or removing the front door. This type of behavior isn’t just unprofessional – it’s illegal. No matter how frustrating the situation becomes, follow the laws and know when it’s time to turn the matter over to another agency.
  • Don’t Harass Tenants.
    Even if they’re behind on rent, tenants have the legal right to enjoy the privacy of their homes without harassment. To ensure you’re not accidentally crossing any lines, make sure you’re following all guidelines and regulations when communicating with your tenants about rent. This includes verbal as well as written or electronic communication.
  • Don’t Send Unauthorized Notices.
    Late rent notices, notices to quit, notices to vacate, and demand letters are all considered legal documents. Check with your state and local laws to make sure you’re sending the appropriate notices and how they should be served. For example, if the laws state you must post a notice on the door, place the notice in a sealed envelope.
  • Don’t call tenants outside of business hours.
    Make sure you’re following any local guidelines regarding calls during normal business hours. Not only is this polite, but it can also prevent accusations of harassment.
  • Don’t abuse electronic communication.
    Email and text messaging make it easy to shoot off a quick message anytime, but like phone calls, these types of communication should only be done during your normal business hours. It’s also easy to make electronic messages more informal — but keep in mind that these are business communications. Keep all communication (whether verbal, written, or electronic) between you and your tenants professional and appropriate for the context.
  • Don’t show up to the property unannounced.
    If you need to visit the property for any reason, make sure to provide appropriate notice. Going to the home for collection purposes is considered harassment unless you’ve otherwise made arrangements with the tenant to pick up payment.

Handling Past Due Balances

Many misinterpret the eviction moratorium to mean rent forgiveness; because of this, some renters may believe any communication regarding a past due balance violates the moratorium. However, any past due amount is still due. So how can you have a discussion about a late balance without the tenant perceiving it as a potential discussion about eviction?

Check your state guidelines to see if you’re still allowed to use a pay or quit notice as part of your collection practices. Even though the eviction moratorium is still active, there should be documentation of the late payments that shows the tenant that they owe rental debt and that it’s still due. Essentially, the consequences of breaking that section of the lease are paused, but the tenant still has an obligation to pay you.

You may also want to check with an attorney to make sure any notices you provide your tenants regarding rent comply with the latest federal and state regulations.

Collecting a Previous Tenant’s Past Due Rent

What if a previous tenant owes you rent? You have a few options:

  • Pursue repayment in-house.
    You may attempt to contact the previous renter and arrange for them to repay the amount owed, however, this can be difficult if they haven’t provided a forwarding address. You can begin the process by sending a demand letter to the last address on file, even if it’s the address of your rental.

    Make sure to write “address service requests” or “address correction requested” and add additional postage to cover the delivery plus the additional service. Once the post office has received it, they’ll research the new address in their database and, if found, will forward the letter. In addition, you’ll also receive a postcard with the corrected address.
  • Debt reporting.
    Another option is to report the outstanding debt to the three major credit bureaus, where it will remain on the tenant’s credit reports as unpaid rent. To remove this from their credit report, the previous tenant will need to repay the balance.
  • Small claims court.
    If the first two options are unsuccessful for any reason, you have the option of taking the previous tenant to small claims court, where you may be able to collect past rent due as well as additional damages, late fees, and legal fees. However, keep in mind that this can require a substantial amount of time and resources throughout the process. You’ll need to determine whether the amount the previous tenant owes you is worth your investment of time and money.

    If you choose to go this route, check your state collection laws. Once you’re familiar with your rights in the process, contact your local small claims court for the required paperwork and provide your tenant’s new mailing address so they can be notified about the court proceedings.
  • Debt collection agency.
    In many cases, working with a debt collection agency is the best option for landlords and property managers because you aren’t required to track down your previous tenants. In addition, reputable debt collection agencies will follow the regulations outlined in the Debt Collection Practices Act (FDCPA) and provide access to a team of trained professionals like skip tracers, attorneys, private investigators, and collection agents who are all working to get the debt resolved.

    Some agencies offer a flat fee collection option, which allows you to immediately report the delinquent tenant to the credit bureaus and order collection letters to be sent by the agency. This can typically be done online and allows you to keep the majority of the proceeds.

Steps You Can Take to Avoid Collection Issues

COVID-19 has thrown a wrench into many processes, but setting clear expectations for your tenants and keeping communication open remain the best ways to avoid potential collection issues. Frequent and timely communication can help you get ahead of issues and allow you and the tenant to work together to find a mutually beneficial solution. Additional steps you can take include:

  • Conducting tenant verification and screening on all new tenants
  • Create a rent collection policy that’s clearly outlined in your lease agreement. Consider adding:
    • A note that partial payments are a breach of the lease agreement and must be pre-arranged
    • Location and office hours for in-person rent payments (you may also want to consider providing pre-stamped, pre-addressed envelopes and a drop box for after-hours drop-offs)
    • Outline all the payment methods you accept, if there are any exceptions, and how these payments can be processed
    • List any payment processing fees
    • The date the rent is due. Be sure to make it clear if the rent is due on or by that date and if you offer a grace period
    • List any additional fees, such as late fees, processing fees, returned checks, non-sufficient fund fees, etc. Make sure you check your local laws on fee limits, as well
    • A note that it’s the tenant’s responsibility to have the applicable funds available for processing the chosen payment method
    • Any consequences for non-payment of rent, such as termination notices
  • Offer a variety of payment options.It’s been shown that the more methods available to tenants for paying rent the more likely tenants are able and willing to pay in full and on time.

Final Thoughts

Although it’s not clear if there will be future COVID-19 restrictions to collecting rent or evictions, your best bet is to stay current with local, state, and federal regulations to ensure your processes are fully legal and conducted by the book. Keeping open communication with your tenants throughout is also important in ensuring not only timely payment but also in preventing relational or potential legal issues. When in doubt, consult with legal counsel to ensure your procedures are conducted within your legal rights.

Posted by & filed under Property Management.

Not long ago, a rental property owner went viral after she snatched some packages from her renters, which she claimed was payment for the rent she was owed. Unsurprisingly, her actions weren’t well-received online, causing her to quickly backtrack on her position.

Real estate agent is holding a house model. Buy, loan for a house

A story like this is a great example of what NOT to do as a property manager. And although it seems obvious that you shouldn’t steal from residents under any circumstance, it’s likely this won’t be the last time we’ll hear a story like that on the news. So as a helpful reminder, here are some of the top “no-no’s” you should avoid as a property manager. Please keep in mind that this is for informational purposes only and is not intended as legal advice.

Stealing from Residents

Although the pandemic is getting better, there are still many residents who are behind on rent. However, this doesn’t mean that property managers are entitled to take compensation however they please. Stealing mail, in particular, is asking for legal issues. Even if it’s a package left on the street, mail theft is a federal offense. It’s likely a jury wouldn’t be favorable towards you if you were to end up in court over the matter – not to mention, the property owner could fire your property management company.

Asking Intrusive Questions

When interviewing applicants, keep in mind that there’s a limit to the type of questions you should ask. Some common (and acceptable) questions include asking whether they smoke, if they’re employed, or if they have any pets. Don’t ask questions that could be seen as discriminatory, such as questions regarding their race, religion, sexual identity, or other personal questions.

If they have a service dog refrain from asking questions about whether the dog is actually a service dog or why they need one. Another example of questions to avoid is asking an applicant about their drinking habits or if they enjoy partying. Even though you may be wondering about any of these things, asking intrusive personal questions is a good way to find yourself in legal trouble.

Using Social Media to Vet Applicants

When selecting an applicant, it’s helpful to do your due diligence to make sure they’re the right fit. With the majority of people being on social media, it may be tempting to use these platforms to aid your vetting process. However, a person is not their social media account. Social media is typically curated moments; it doesn’t offer objective data to base a decision on. In addition, many people now have multiple accounts where they compartmentalize different aspects of themselves.

One person could have a professional account, a “family-approved” account, and another account they use only with their friends. Who knows which one you’ll stumble across? Not to mention, it becomes a privacy issue with legal implications. Social media won’t prevent you from seeing information that you’re not allowed to use in the decision-making process. The best way to vet applicants is to stick with the industry gold standard: tenant screening.

Making Assumptions

Some people claim they can tell everything they need to know about a person within the first five minutes of knowing them. While you may have a good sense of people, it’s best to avoid making assumptions of any kind. This includes things like assuming someone must be a hard worker because they’re wearing a button-down shirt, or assuming an applicant doesn’t have much income because their car looks older or dirty. The only thing you can know for a fact is that they showed up to the interview and are interested in renting the property.

Dropping by Unannounced

Plenty of property managers (and property owners!) would love to drop by to check on their properties whenever they want. This isn’t advisable, however. Tenants have a legal right to privacy and must be given reasonable notice should you want to stop by for an inspection or maintenance. The length of notice you’re required to give could vary depending on where your property is located, so make sure you’re up on the local laws to prevent any privacy issues.

When in Doubt, Put Yourself in Their Shoes

These are just a few things you should try to avoid in your property management company, and there are undoubtedly more. A good way to avoid making these mistakes is to see things from the perspective of the tenant or applicant. Would you want your property manager stopping by unannounced, stealing mail, snooping through your social media, or asking you invasive questions about your lifestyle? If it’s something you wouldn’t like if the situation was reversed, chances are the tenant wouldn’t like it either. Take a step back every once in a while and make sure you’re not accidentally crossing any lines!

Posted by & filed under Leases.

Landlords are faced with many important decisions when renting their properties, including the duration of the lease. Although all landlords would like to have stable long-term tenants, there are times when a month-to-month lease may be a better option than an annual one.

Business legal document concept : Pen and glasses on a lease agreement form. Lease agreement is a contract between a lessor and a lessee that allow lessee rights to use of a property owned by lessor

A month-to-month lease lasts for 30 days and automatically renews at the end of the month until either the landlord or tenant decides to cancel it. Monthly leases work similar to a longer lease, with the same clauses, deposit requirements, and penalties. Most states require at least 30 days’ notice to quit the lease, although it varies from state to state. Month-to-month leases can be a great option for many landlords, but it’s important to weigh the pros and cons to make sure it’s the right fit for your property.

Please note the following is for informational purposes only and is not intended as legal advice.

Pros of a Month-to-Month Lease

Flexibility and Control

The most obvious reason to choose a month-to-month lease is the greater flexibility it offers compared to a yearly or 6-month lease – for both landlords and tenants. A monthly lease makes it easier to adjust the lease as you see fit, like removing outdated policies or adding new ones. If you want to raise the rent (within your location’s rent control limits), you can do that without needing to wait a year.

Month-to-month leases give you greater control over your property by not keeping you locked into renting to someone for an extended period of time; if the tenant isn’t a good fit for some reason, you don’t have to renew the lease. If the tenant isn’t sure they want to rent your property long-term due to uncertainty in their life or other circumstances, a monthly lease can be used as a trial run. If something changes and the tenant decides they’d like to stay on, the monthly lease can be converted to a standard lease.

Monthly Premiums

Increased flexibility for tenants also means taking on greater risk of temporary vacancies. For this reason, some landlords will charge more for short-term rentals to cover costs like advertising, cleaning, and preparing the home for a new tenant. Check with a lawyer in your area to find out if this is a legal option for you.

Fewer Complications

If your tenant doesn’t pay rent for the month or violates the lease in some way, you don’t have to worry about breaking your contract, working with an eviction lawyer, waiting for a pay-or-quit, or other considerations you’d have with a yearly lease. All you need to do is give the tenant proper notice that you won’t be renewing the lease.

As long as there are no “just cause” requirements in your area for short leases, evicting a nonpaying renter is simpler. Just make sure that you’re up on your local laws and any restrictions in place due to COVID-19.

Cons of a Month-to-Month Lease

Now that we’ve looked at some of the benefits of a monthly lease, here are some cons to be aware of:

Turnover

A yearly lease gives you the benefit of knowing you likely won’t have a vacancy for a year; with a month-to-month lease, that certainty goes out the window. Although a tenant could easily become a long-term renter, they could also be gone in a month or two. It could be difficult to find a new tenant with only 30 days’ notice, so you may have vacancies for longer periods – which can affect your finances.

Another thing to consider is that with only 30 days’ notice, you may be crunched for time to find a new tenant. Don’t be tempted to skip important steps like tenant screening – it’s the best way to make sure you’re choosing quality tenants who pay their rent on time.

Anxiety and Uncertainty

If you tend to be anxious about vacancies, a monthly lease may not be a good option – you may find yourself worrying that every new month may be the last one the tenant plans to stay. Unfortunately, month-to-month leases bring uncertainty because there’s no way to know for sure how long the tenant will stick around.

Stable Renters

Whether you’re using a month-to-month lease or a yearly lease, you want good long-term tenants. Likewise, many responsible tenants want stability and may not like the idea of a month-to-month lease. You may find that it’s harder to attract potential long-term tenants without some sort of incentive.

Final Thoughts on Month-to-Month Leases

Although there are pros and cons to month-to-month leases, many rental housing professionals tend to see them as the most flexible option. In states with tough eviction laws, a monthly lease may also be the easiest way to make sure you don’t get stuck with problematic tenants long-term – and save time and money on the eviction process.

However, other rental housing professionals like the stability an annual lease offers, especially in areas that have higher turnover, like college towns or military communities. Keep in mind, though, that there’s no guarantee a tenant won’t break the lease anyway.

Ultimately, you’ll need to weigh both the pros and cons in relation to your needs to determine which type of lease works best for your property.

Posted by & filed under Uncategorized.

It’s common to see tips for “winterizing” your rental for the cold months, but summer maintenance is often overlooked. With warm weather on the way, now is an ideal time to check in on your properties to ensure everything is in perfect working order – especially if your rental is currently vacant.

Miniature house and umbrella on beach, blue sea and sky on blurred background. Real estate, sale or property investment concept. Symbol of dream home for family. Copy space

Typically, summer is one of the most active times of the year for the real estate market. For example, families with school-age children tend to move in the summertime before the next school year begins. Many college students and graduates are relocating for school, internships, and jobs while some renters choose to move in the summer so they can get settled in well before the holiday season.

This makes the summer an especially lucrative time of the year for rental properties! With that in mind, here are a few tips to ensure your rentals are summer-ready for your existing tenants or future ones.

Inspect Your Air Conditioning Unit

With the temperatures rising, it’s important to make sure your rentals are cool and comfortable. The best way to do that is to make sure your air conditioning unit is well-maintained.

Start by changing out the filter. This is usually located in the blower unit near the return duct. If the filter is clogged, it can cause the cooling coil to freeze up or the unit to overheat. Both of these issues are fairly expensive to repair, but a replacement filter is cheap and easy to replace. While you’re looking inside the unit, check the belts and bearings and replace anything that looks worn or damaged. Being proactive now will save you money in the long run!

Next, you’ll want to make sure that the exterior condenser has room for airflow. There should be at least two feet of space around the unit. If your unit is outdoors, you may have to trim nearby plants or shrubs, remove low-hanging branches, or clean up leaves or other debris.

Check the Interior Airflow and Ductwork

Once you’ve inspected your air conditioner and performed any needed maintenance, it’s time to go inside and check out the airflow and ductwork. First, check to see if all the air vents are open and free of things that could obstruct them, like furniture, rugs, or picture frames.

Next, it’s a good idea to take a look at the ductwork. Do you see excessive dust or mold? These can cause health problems, especially for tenants with respiratory illnesses, so it’s worthwhile to invest in having the ductwork cleaned.

Prep the Doors and Windows

Windows and doors should be inspected from a cosmetic and structural standpoint.

If you currently have dark, thick curtains, consider swapping them out for something lighter and allows the natural light inside. This makes the space feel larger, more open, and more inviting.

Next, check the areas around the doors and windows for any gaps that could let cool air leak out or allow insects to come in. Depending on the size of the gaps, you may be able to add some weather stripping or caulk to close them off. You should also check the window screens and replace (or repair) any that are ripped or torn.

Test Smoke and Carbon Monoxide Alarms and Security Systems

This tip isn’t specific to summer, but if you’re already making inspections, now is a convenient time to check your alarm systems to makes sure they’re functioning properly. If they’re in good working order, you may want to consider replacing the batteries while you’re there.

Clean the Dryer Vents

According to the National Fire Protection Association, firefighters respond to approximately 15,000 property fires caused by clogged dryer vents each year. These result in several deaths, hundreds of injuries, and millions of dollars in property damage. Fortunately, these types of fires can be easily prevented. If your property has laundry in-unit or in the building, make sure to unhook the dryer duct from the wall and remove any dust or lint that’s collected there.

Clean the Fans

Many people don’t use their fans during the winter, which means there are at least several months where dust can build up on the top side of the fan blades. This can create a downpour of dust once they’re turned on and potentially overwork the motor, so it’s best to clean them periodically.

Landscaping Maintenance

Typically, less landscaping maintenance is needed during the winter. Once the warm months come around, you’ll need to make up for the lost time. Cutting the grass, removing fallen branches, trimming shrubs, planting flowers and pressure-washing dirty surfaces will make your property look more attractive. This is especially important since many residents will likely be spending more time outdoors.

Check for Summer-Related Requirements

Depending on where your property is located, there may also be state or local requirements for summer maintenance. For example, in Washington D.C., landlords are required to put screens on the windows and doors from March 15 through November 15 to guard against insects and other pests. Since housing rules often change yearly, it’s always a good idea to double-check for new state or local requirements that could affect your properties.

Final Thoughts

Completing seasonal maintenance can feel like a chore, but knowing what needs to be done and taking care of maintenance items proactively can help you save time, money, and hassle. It also ensures your existing or future residents will stay comfortable all summer long!