Bill Gray – The Landlord Doctor

Insider Advice on Collecting Tenant Debt and Screening Tenants

Archive for the ‘1’ Category

My Interview With “Lowes For Pros”

Posted by Bill Gray on April 17, 2010

Recently I was interviewed for an article for Lowes For Pros.   The article, “How to Successfully Perform Background Checks on Potential Tenants” does a good job of covering the basics of screening potential tenants. [tweetmeme source=”your_twitter_name”]

Here is a link to the article:  Lowes For Pros

Email me your tenant screening and tenant debt questions.

Bill Gray

Bill@thelandlorddoctor.com

www.thelandlorddoctor.com

Tenant Debt & Screening Forum www.theinformedlandlord.com

Copyright 2010 – Click here to reprint/re-post

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Failure to Comply With Tenant Deposit Notifications Could be Costly

Posted by Bill Gray on February 22, 2010

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A Landlord's Worst Nightmare

Imagine being forced to write a check to a previous tenant who still owes you money.  This is a very real possibility if you fail to comply with the law after the tenant moves out.  With the amounts and occurrences of tenant debt rising, having to pay a previous tenant who still owes you money only adds insult to injury.

In most states, landlords and property managers are required to notify their tenant if they do not intend to refund the tenants deposit after they move out.  States vary in the required timeframe and method of notification, but most do require it.  This notification is referred to in various terms such as SODA (Statement of Deposit Account), Deposit Disposition, Final Account Statement, etc.  Some states require the notice be sent via certified mail, while others accept First Class mail notification.  I advise landlords to mail this notice via Certified Mail, whether the state requires it or not.  Sending it Certified Mail provides you with a receipt proving you mailed it and complied with the law.

Failing to notify your previous tenant of how you intend to apply the deposit he paid you may end up costing yourself even more money!  Regardless of the unpaid rent, damages, eviction legal fees, etc., if you fail to notify the tenant as required by law in most states, the tenant can demand his deposit back.

Let’s say the tenant paid a $1,000 deposit on a twelve-month lease. Six months into the lease, the tenant skipped, leaving your rental trashed and owing you a month’s rent.  Once you calculate your losses, you determine that the tenant owes you $3,000.  After subtracting the $1,000 deposit, you are in the red $2,000.

If in this scenario you do not notify the tenant of how you intend to apply the $1,000 deposit toward the $3,000 loss, the tenant in many cases could demand his $1,000 back, regardless of what he owes you.  Yes, he may have to sue you to get the deposit back, but if you have violated the law, he most likely will win.

So, take a look at what your failure to comply with the law may cost you in addition to a big headache.  Immediately, you have cost yourself the $1,000 deposit plus any legal fees you paid to defend yourself in court.   A quick Google search will give you further proof, revealing a number of class action suits against landlords and property management companies who failed to notify past tenants of how the deposit was applied.

In many cases, you might not have a forwarding address to mail the notice to. Your only option is to mail the notice to the last known address, which is the address of your rental. Half or more of these notices will be returned to you as undeliverable or having a wrong address.  File the returned mail with the tenant’s file and save it.  You may need the returned mail as proof that you did attempt to send the notification.

Comply with your state’s deposit notification law.  Doing so may save you money.

The information contained in this article is provided for informational purposes only, and should not be construed to be legal advice.  Consult a local landlord-tenant attorney to discuss your specific situation.

Email me your tenant screening and tenant debt questions.

Bill Gray

Bill@thelandlorddoctor.com

www.thelandlorddoctor.com

Tenant Debt & Screening Forum www.theinformedlandlord.com

Copyright 2010 – Click here to reprint/re-post

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Accepting Late Payments Can Land You in Court

Posted by Bill Gray on February 11, 2010

There are many reasons why you shouldn’t allow a tenant to pay rent late, but the legal implications must always be at the top of the list.[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5D Unfortunately, by being the nice guy, or gal, and accepting late rent payments, you might be establishing grounds for a Fair Housing lawsuit.  Last year, I sat in on a seminar given by Milwaukee landlord-tenant attorney Tristan Pettit, where I learned that case law has been established that says you cannot accept late payments from one tenant and not accept late payments from another.

The Fair Housing Act makes it illegal to “set different terms, conditions, or privileges for sale or rental.”  By accepting late payments from one tenant and not another, you may be violating the law.

Any trip to court can be precarious and expensive in terms of time and money. You can never be certain of what the outcome of a court case or dispute is going to be.  Any good attorney will tell you that avoiding court altogether is always preferred.

To compound the issue of being sued for a Fair Housing violation, consider what you are doing to the terms of your lease by habitually accepting late rent. Let’s say your lease requires the rent to be paid by the third of the month. But for the last six months, you have accepted the rent on the fifteenth. Suddenly, in the seventh month you put your foot down and demand the rent be paid by the third, but the tenant ignores you and continues to pay the rent on the fifteenth. In the eight month, you file for eviction when the tenant again is late with his or her rent.

If the tenant were to hire a savvy attorney to represent them, the attorney could easily argue that you had amended the terms of the lease by accepting the rent late the first six months of the lease. Not only could this force you to continue accepting the rent, it could cause a counter suit.

Enforce the terms of the lease and require that the rent be paid on time—from each and every tenant.  Doing so may keep you out of court.

The information contained in this article is provided for informational purposes only, and should not be construed to be legal advice.  Consult a local landlord-tenant attorney to discuss your specific situation.

Email me your tenant screening and tenant debt questions.

Bill Gray

www.thelandlorddoctor.com

Bill@thelandlorddoctor.com

Tenant Debt & Screening Forum www.theinformedlandlord.com

Copyright 2010 – Click here to reprint/re-post

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Incomplete Rental Applications Cost Landlords Profit

Posted by Bill Gray on January 19, 2010

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DFinancially, many landlords are shooting themselves in the foot. The application process is normally the first place they do so. Incomplete and inaccurate rental applications cost landlords much needed profit. Nearly 50% of the applications I review are either missing information or are illegible.

Sloppy applications speak negatively about the prospects filling them out, but they say even more about the landlord or property manager who accepts them.  When a landlord accepts an incomplete or illegible application, he or she is telling the applicant, “I don’t care.” Think about what seeds an “I don’t care” attitude plants in the applicant’s head.

If the landlord is not serious about the application and the information which may or may not be in it, what else is he lax with? If he is not serious about the application process, is he serious about the rent being due on the 1st of the month? If the landlord is unprofessional during the application process, is he serious about the prospective tenant taking good care of his rental unit?

The application has several important purposes, all of which rely on it being completed legibly.

Much of the information requested in an application is needed to sufficiently screen the tenant. When I see a sloppy application, my first thought is that the landlord is cutting corners in the screening of potential tenants. By the way, the reason I am called upon to look at the application and file is because the landlord is owed money by the very applicant who submitted a sloppy application. Now, he is turning to me for advice on collecting it. I firmly believe there is a direct correlation between the application/screening process and tenants who leave the property owing an average of $3,500.

The rental application should contain a space for at least one emergency contact.  Completing this section should always be a requirement.  Nobody wants to envision a situation where you need to contact someone in case of an emergency, but if you do, you will have the contact information to do so.

The property manager who is eager to rent seldom considers the last purpose of the rental application. The information on the application is invaluable in the collection process when the tenant is either evicted or abandons the property and the lease. In that case, an incomplete or illegible application makes collecting the debt difficult, if not impossible.

Require that your applicants complete the application in its entirety and legibly.  Doing so will decrease debt and increase profit.

Also see my article, “Don’t Miss an Important Component to Screening New Tenants!

Email me your tenant screening or tenant debt questions.

Bill Gray

Bill@thelandlorddoctor.com

www.thelandlorddoctor.com

Copyright 2010 Click here to reprint/re-post

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