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6 Steps Towards Making Security Deposits Less of a Hassle

Doing any sort of business is about reducing risk and increasing your return. When it comes to managing properties, things can fall between the cracks and strategies go by the wayside. You can do simple things to streamline every process so you can enjoy more rewards with less of a hassle.

First, Food For Thought

New landlords assume falsely that security deposits are adequate protection against having to pay big bucks for tenant-caused damages. The truth is, it will barely cover minor damages. And, major damages to property can cost landlords tens of thousands of dollars.

Another factor to consider is that while the security deposit might cover normal wear and tear, they can appeal that decision if a tenant disagrees. Courts tend to take the side of the renter if there is even a little question about damage. 

Even though security deposits offer marginal protection, they are important. The trick is to know how to manage them in such a way that it does not make you want to pull your hair out or stop taking them altogether.

Tenant-Proofing Property

Landlords can take steps towards making properties tenant-proof. Reducing the chances of property damage works out better for both the renter and the landlord.

  • Vinyl Plank Flooring vs. Carpet — Carpet was once the most popular flooring. But, it stains and wears out rather quickly. Vinyl plank flooring lasts far longer and typically does not require replacing between tenants.
  • Glossy Paint — Paint is one of those things that have changed over the years, too. It is not unusual to have to repaint between renters. When using glossy paint, the risk is less because it is far easier to simply wipe down.
  • Door Stoppers — One of the cheapest remedies can save a landlord the most money. Door stoppers save walls by preventing holes in drywall.
  • Garbage Disposal — Garbage disposal-related problems cause some of the greatest headaches. Removing them will help reduce late-night phone calls and expensive repair bills.

Normal Wear and Tear

The entire point of a security deposit is to cover minor property damage. Wear and tear happen, and it comes with the territory. But, it is always the best policy to explain to a possible tenant what you consider wear and tear. 

Different states have different definitions, but remember that the law tends to lean towards the tenant. It is important to research so you can lay out in a lease agreement what you consider wear and tear versus excessive damage. It will make your position clear and help reduce confusion.

Move-In Inspection

Performing a detailed move-in inspection is likely already on your checklist. But, do you do the walk-through with your tenant? If you do it together, you both can make notes of the property’s condition. Recording it using audio, video, or both will help if a former renter challenges a security deposit return. 

Move-Out Inspection

A move-out inspection is just as crucial as the move-in inspection. It is best if you perform it with the tenant. Retrace your steps and compare notes with the former occupant. It makes it easier to cross-reference and make a decision about the security deposit. Transparency goes a long way to making the process less stressful.

Applicant Red Flags

Interviewing potential tenants does a number of things. You can see how they interact and what they say. A huge warning sign is if they start to complain about security deposits. It likely means one of two things — the candidate does not have the money for the deposit or fears they will lose the money. Both are glaring red flags that should not go ignored.

If you can inspect where the potential tenant lived prior, you can get a better idea of who you are dealing with. It goes a long way towards drawing up the lease and deciding if they are more a liability than a respectful renter.

Security Deposit Alternatives

Alternatives to security deposits exist to help fill vacancies faster. Our Lease Insurance Guarantee is one such option helping tenants put out less cash upfront while providing the landlord with more protection against evictions and property damage. Landlords of all sizes, even one property, can benefit from this type of service.

Landlords can ask their tenants to purchase LeaseGuarantee instead of handing over a security deposit. They offer rental income protection up to $10k to cover legal fees, rental losses, and damages. It covers way more than a security deposit and reduces your overall stress and concern.

Wrap-Up

Sometimes little things make all the difference. Security deposits are sometimes more of a hassle than not. However, they are important to hold tenants accountable and help cover any property damage. 

You want to maximize your return and minimize your risk. You can do this through straightforward renovations, a property management service, or both. The important part is streamlining the security deposit process to make it easier for you and more transparent for your tenant.  

Position Realty
Office: 480-213-5251

5 Ways for Landlords to Evaluate a Self-Employed Renter

Self-employed renters naturally strike fear in a landlord’s heart. Sure, we admire their moxie. But what about paying the rent? What about the ebbs and flows of business? How can you be sure a dip in sales won’t leave them weeks or months behind on paying up?

The same goes for freelancers, gig workers, and all those other professionals without standard, 9-to-5 jobs. They’re worrisome.

Fortunately, you don’t have to take a leap of faith when these tenants come calling to your rental property. There are many ways to both evaluate a self-employed renter’s income and ensure they’re a good fit for your rental all in one fell swoop. Here are five of them.

1. Ask questions

Get to know the prospective tenant. Ask them about the nature of their business, how long they’ve been operating, what types of clients they work with, and more.

You should also find out about the tenant’s credentials, past employment, and education history. How qualified are they to be doing what they’re doing? How likely is it they have the connections and skills to keep their business afloat?

You can also special order a business credit report from AAOA for $59.95 to find out if their business has good credit, high debt, lawsuits, violations, or high risk of default. Call (866) 579-2262 to request a comprehensive business credit report.

2. Research the business

You should also research the business. Do they have a website? Are they registered with your state? Are they licensed and insured? These are all indications a self-employed person is legitimate. (You might even be able to check out their pricing if you find their website!)

I had to rent a home a few years after I transitioned into freelancing, and my portfolio and published links (like those right here at Millionacres) were just a few of the items that helped prove my business’ legitimacy and success.

3. Request bank statements

If you want the most accurate depiction of the tenant’s income, ask for recent bank statements (business ones, if they have a business account). Pay careful attention to the deposits — how much they are, the consistency/cadence of them, etc. — and make sure the expenditures don’t outweigh the incoming cash.

Tax returns can work for verifying income, too, but these often don’t reflect the person’s full earnings — nor are they the most updated picture of their cash flow (they are annual, after all).

4. Pay special attention to their credit report

You’ll also want to pay special attention to the tenant’s credit. Look at the balances on any credit cards, loans, or other accounts they have out, as well as the monthly payment those come with.

You should also look carefully at payment history: Have they had any problems paying bills on time or in full? Are there any collection efforts or derogatory notes in their name? Have they had any bankruptcies or foreclosures? These can all give you insights into the tenant’s financial health — as well as any struggles they may be having.

5. Talk to past landlords

Finally, be sure to ask for the contact information for any past landlords the tenant has had. Call them up, ask about their payment history and, most importantly: Find out whether the landlord would be willing to rent to them again. Typically, if a landlord says “no” here, you’re best off moving to the next candidate. (Just make sure you’re abiding by fair housing laws and not discriminating!)
One last tip

If you’re not sure whether the tenant is a good fit, you can always consider requiring a cosigner, also known as a guarantor. This is someone who agrees to vouch for the tenant financially, as well as cover the rent if they’re unable to down the line. You can also have the tenant pay for a LeaseGuarantee policy which can cover future rental losses.

Position Realty
Office: 480-213-5251

Landlord’s Successfully Challenge The CDC’s Residential Eviction Ban

Earlier this year, the Eastern District of Texas invalidated — commerce clause grounds — the Centers for Disease Control and Prevention’s (CDC’s) ability to halt residential evictions during the COVID-19 pandemic. Subsequently, in Tiger Lily, LLC v. U.S. Dept. of Housing & Urban Development, the Sixth Circuit Court of Appeals granted another win to landlords in Tennessee, who argued the agency’s order exceeded its authority.

On March 29th, the court denied the government’s emergency motion to stay a lower court’s order barring enforcement of the CDC’s Halt Order, which extended the moratorium on residential evictions until December 31, 2020. The Sixth Circuit found the government could not show a likelihood of success on the merits of its appeal such that enforcement of the lower court’s order should be stayed.

The decision turns on questions of statutory authority and whether Congress granted the CDC the power to extend the moratorium on residential evictions past the date set out in the CARES Act. After the act’s congressionally authorized moratorium expired on July 25, 2020, the CDC unilaterally issued the Halt Order, extending the eviction ban until December 31, 2020. The CDC based its ability to do so based on Section 361 of the Public Health Service Act, which allows the secretary of Health and Human Services to issue regulations necessary to prevent the introduction, transmission or spread of communicable diseases and allows the secretary to provide for “inspection, fumigation, disinfection, sanitation, pest extermination, destruction of animals or articles found to be so infected or contaminated as to be sources of dangerous infection to human beings, and other measures, as in his judgment may be necessary.” The government argued that a nationwide moratorium on evictions is among the “other measures” for disease control covered by Section 361.

The Sixth Circuit disagreed, finding the Halt Order to be outside the scope of the statute. The court reasoned that the residual phrase “and other measures” was controlled by reference to the enumerated categories before it, and that “[p]lainly, government intrusion on property to sanitize and dispose of infected matter is different in nature from a moratorium on evictions.” According to the court, regulation of the landlord-tenant relationship is historically the province of the states, and, if Congress intended to alter the usual constitutional balance between the states and federal government, it would have done so in “unmistakably clear” language. The absence of such language in the Public Health Service Act was dispositive in the court’s opinion. Notably, the constitutionality of government intrusion onto typically state-dominated areas concerned the Eastern District of Texas case as well.

Given the success of the recent challenges to the CDC’s authority, more lawsuits are sure to come. And, while the public health effects of COVID-19 will diminish as more Americans are vaccinated, the economic effects on both landlords and tenants are sure to endure. It remains to be seen whether Congress will issue a new eviction ban, or whether President Biden will address the issue via executive order.

Position Realty
Office: 480-213-5251

How to Screen a Tenant Who Does Not Have a Social Security Number

Landlords to Take a Different Tact with Tenant Screening Without a Social Security Number

Some states, such as California, prohibit a landlord from inquiring about a tenant’s or prospective tenant’s immigration status or citizenship and requiring proof of legal residency or citizenship as a prerequisite to renting.

A SOCIAL SECURITY NUMBER IS NOT REQUIRED TO RUN A TENANT SCREENING REPORT. With Position Realty we don’t only pull a credit report but we also run a tenant screening report. Call us Today!

The law does not prohibit a landlord from requiring documentation necessary to verify a prospective tenant’s identity or financial qualifications to rent, it may be necessary for a landlord to find other ways to screen a prospect who has no credit.You may want to decide to screen using personal references, and independent income verification.

According to a spokesperson for a national screening company, a social security number is not mandatory for a credit check. You can order a credit report with a name and address. However, when the prospect does not have a social security number, you are highly likely to get a “no hit” or “no report available” response. Before a person is noted by the credit bureaus, a file has to be created. The landlord’s act of requesting a report may be the very thing that initiates this person’s credit history. Still, ordering a tenant credit check may be worth a try to see what information might have been reported earlier.

Other Reports Available

  • A tenant background checks does not require a social security number. A full name and date of birth are crucial for determining if you have the right information.
  • Eviction reports are available without a social security number.

Unfortunately, you cannot receive a PATH report, the address history, which could create a hardship when cross-checking criminal and eviction reports. There is no doubt that a social security number is an important identifier when weeding out duplicate names.

Position Realty
Office: 480-213-5251

Tenant Rights to Smoke Cigarettes or Marijuana in Rental Units

There Is No Absolute Right to Smoke

Tenants don’t have a universal right to smoke in their rentals. There is no law, either state or federal, that provides people with the freedom to smoke when and where they want. Nor are bans on smoking discriminatory: State and federal laws prohibit discrimination on the basis of certain attributes (such as age and national origin), but being a smoker isn’t one of them.

In fact, states, cities, and the federal government can place restrictions on all types of smoking. However, the laws regarding how, what, and where people can smoke vary.

Federal Smoking Laws

The federal government has the power to regulate almost any substance you might consider smoking, including tobacco and controlled substances such as marijuana.

Tobacco. Smoking tobacco is legal under federal law. The federal government doesn’t restrict its use in private rentals but does restrict it in public housing. The U.S. Department of Housing and Urban Development (HUD) requires all public housing agencies (PHAs) to prohibit certain tobacco products:

  • in all indoor areas (including individual units) and
  • all outdoor areas within 25 feet of a building.

HUD makes all PHAs ban the use of cigarettes, cigars, pipes, and water pipes but allows PHAs to decide whether to prohibit e-cigarettes. Each PHA can also decide to be entirely smoke free or create stricter anti-smoking rules than HUD’s. No matter what, if you live in public housing, you won’t be able to smoke in your unit.

Marijuana. Using and possessing marijuana for any purpose (including medical reasons) is illegal under federal law. Because it is a banned substance, using it anywhere—even in the privacy of your rental unit—exposes you to the possibility (even if remote) of being charged with a federal crime.

State and Local Smoking Laws

States and cities have the power to pass laws and ordinances that protect the health and safety of the public. This power includes the ability to restrict or ban smoking in rental properties.

Many states and cities have laws that prohibit or limit smoking in or around multiunit buildings due to the fact that smoke migrates so easily across shared spaces. In some areas, even buildings with as few as two units are considered multiunit for these purposes. Often, if the law doesn’t ban smoking altogether, it prohibits it in a certain percentage of units or in shared spaces such as common areas and parking lots. It’s also possible for a state or city to pass a law banning smoking in all rental properties—even single-family homes.

Most state and local anti-smoking laws clearly define what activities are considered smoking. For instance, a law might prohibit the use of pipes, cigars, and cigarettes. When a law is unclear about the definition of smoking, though, it’s probably safe to assume that it applies to anything that involves lighting or heating and inhaling the substance. Many anti-smoking laws also apply to vaping and using electronic smoking devices such as e-cigarettes.

Marijuana. If marijuana is illegal in your state, state and local anti-smoking laws definitely apply to it. If, on the other hand, marijuana for medical or recreational purposes is legal in your state, you’ll need to look at the relevant statute or ordinance for guidance. Some anti-smoking laws carve out an exception for smoking medical marijuana. Others define “smoking” as involving, or even define “tobacco” itself as, any plant matter that can be smoked. Many others are silent on the matter. To find out what the law is in your area, do an Internet search for “anti-smoking laws” or “smoking ban” where you live, or contact your city manager’s office.

Although landlords who manage properties subject to laws that limit or prohibit smoking should attempt to inform tenants of the rules, it’s the tenant’s responsibility to be aware of and comply with the law.

Landlords Have the Right to Restrict Smoking

Even when there’s no applicable anti-smoking law, landlords can limit or prohibit smoking anywhere on the rental premises, including individual units. Health concerns about secondhand smoke aside, landlords often prohibit smoking in an effort to limit fire hazards on the property, reduce fire insurance premiums, and avoid stains and odors. Landlords might also prohibit smoking to avoid lawsuits—tenants have sued landlords who allow smoking on various legal grounds, such as:

  • nuisance (for example, odors from smoking annoy other tenants) and
  • breach of the duty to keep the rental habitable (for example, units subject to secondhand smoke being uninhabitable because of health concerns).

Landlords typically inform tenants of a no-smoking policy or smoking restrictions through a clause in their lease or rental agreement. Most likely, such a clause applies to smoking of any sort, not just tobacco, but if you’re not sure, ask your landlord—preferably before you sign anything. However, even if your lease or rental agreement doesn’t mention smoking, you should familiarize yourself with any state and local smoking laws, as they might apply regardless of what’s in your lease.

Can a Landlord Evict a Tenant for Smoking?

A clear no-smoking policy prohibits all forms of smoking, including smoking marijuana for medical reasons. A landlord who has included a no-smoking policy in a lease or rental agreement can terminate the tenancy of or evict a tenant who smokes. When the no-smoking policy is part of the rental’s rules and regulations (but not incorporated into the lease or rental agreement), the landlord might only be able to terminate the tenancy or evict if the tenant repeatedly violates the rules.

Landlords might also be able to end a tenancy or evict based on a lease’s or rental agreement’s “illegal activity” clause. Again, under federal law, possessing and using marijuana is a crime. Whether a landlord will be able to evict a tenant for smoking marijuana based solely on the illegal activity clause depends on the circumstances. Many judges won’t evict when the tenant doesn’t have a history of breaking the law and the illegal act is relatively minor (especially if marijuana is legal under state law).

If you plan to smoke in your unit, it’s best to find out the smoking policies before you sign a lease or rental agreement. If a landlord tells you that you’ll be able to smoke in your unit, make sure you get that statement in writing. Otherwise, don’t enter into a lease or rental agreement knowing that you’re going to violate the no-smoking rule. Hold out for a rental that meets your needs—the risk of legal hassles or even eviction just isn’t worth it.

In the last election in Arizona, it was approved for adults 21 and over to possess up to one ounce of marijuana and for adults 21 and over to grow up to six plants per household.

Position Realty
Office: 480-213-5251

Landlords’ Guide to Navigating The Extended CDC Eviction Ban

Congress just passed a COVID-19 stimulus package that extends the federal eviction ban until Jan. 31, 2021, and provides rental assistance. The president signed it into law Dec. 28. The Centers for Disease Control and Prevention (CDC) halted residential evictions in September in an effort to stop the spread of COVID-19. The order was set to expire at the end of the year.

What do landlords need to know about the CDC’s order?

  • Landlords cannot evict “covered persons” from residential properties in any jurisdiction to which this order applies through Jan. 31, 2021.
  • It doesn’t apply in any state, local, territorial or tribal area with a residential eviction ban that provides the same or greater level of public health protection.
  • It does not relieve a tenant’s obligations to pay rent, make housing payments or comply with other obligations the tenant may have under contract.
  • It does not bar landlords from charging or collecting fees, penalties or interest based on the tenant’s failure to make timely payments.
  • Landlords can still file evictions for reasons other than non-payment of rent.
  • Violations of the CDC order can result in criminal penalties.

How can tenants get the order’s protections?

To invoke the protections of the order, tenants must provide an executed copy of a declaration that meets certain requirements. Each adult on the lease must complete a declaration that states under penalty of perjury that:

  • The tenant has used best efforts to obtain all available government assistance for rent or housing.
  • The tenant either:
    1. Expects to earn no more than $99,000 in annual income for 2020 (or $198,000 if filing jointly)
      Was not required to report any income in 2019 to the IRS
      Received an Economic Impact Payment (stimulus check) through the Coronavirus Aid, Relief and Economic Security Act

  • The tenant is unable to pay the full rent due to substantial loss of household income, loss of compensable hours of work or wages, a layoff or extraordinary out-of-pocket medical expenses.
  • Eviction would likely render the tenant homeless or force the tenant to live in close quarters in a new shared living setting because the tenant has no other housing options.
  • The tenant is using best efforts to make timely partial payments that are as close to the full payment as the tenant’s circumstances permit.

If tenants don’t meet these conditions, are they still protected from eviction?

Landlords should note that tenants who do not meet the criteria for protection under the federal ban might still be protected under state or local orders.

Landlords should also stay up to date with other federal tenant protections:

  • The Federal Housing Administration (FHA) extended its ban on evictions from properties secured by FHA-insured single-family mortgages through Feb. 28, 2021.
  • Government-backed mortgage buyers Freddie Mac and Fannie Mae have barred landlords of single-family properties with Freddie Mac- and Fannie Mae-backed mortgages from evicting tenants until at least Jan. 31, 2021.
  • Certain owners of multifamily properties backed by Freddie Mac and Fannie Mae can extend their loan forbearance. If they do so, they cannot evict tenants during the term of the forbearance.

Position Realty
Office: 480-213-5251

Tips For Safer Property Management During COVID-19

Many people are leery of changes, moves or disruptions to their routines during COVID-19 and with good reason. Information may be difficult to distill from regular news sources, so here are seven tips to help you manage a property during this crisis.

Routine Maintenance
There are many routine maintenance activities that must be taken care of regardless of the current pandemic. Garbage must be removed, landscaping tended, and clogged sinks need attention. All the routine jobs that keep your property in good shape can continue to be done with certain precautions.

Create a schedule and let tenants know when someone will be cutting the grass or cleaning public areas of the building. This way contact can be avoided between personnel and tenants. And if someone is moving into the building, it’s important to communicate very clearly during this time.

Showings
Managing a property requires that you show prospective tenants the various spaces that are available to rent.

The safest method is to use digital tools. Use your smartphone to create a virtual walk-through. If a prospective tenant expresses real interest you can text, email or speak to them and find out specific areas they would like to see virtually or take them on an individual tour using FaceTime.

Seriously interested parties can arrange to visit the property in person. Sanitize all touchpoint areas of the home before and after their visit and if you will be there to guide them continue to wear your personal protective equipment (PPE) and ask them to do the same.

Communicate with Tenants
Whether you’re in a COVID-19 hotspot like some luxurious Chicago neighborhoods or a rural area with very few cases, current and new tenants will want to be notified of any changes regarding their homes. If amenities are closed because they could pose a health risk, make sure to get that information to everyone in clear, concise language.

Work out rooms and swimming pools are two areas that potentially involve close contact and potential viral spread. If you would like to make certain amenities available to your tenants, figure out a schedule and a cleaning system that reduces contact between people and sanitize, sanitize, sanitize. Continuous updates, with good and bad news, should be given to residents on a weekly basis.

This assures them that you are mindful of their health. Include links to sites with more information, like the CDC. Send information to tenants using mail, email, texts, and bulletin boards. Let everyone know what additional precautions and procedures are being used to keep everyone healthy.

Protocols for COVID-19 Emergencies
It is a fact that people can carry and spread COVID-19 and never feel ill themselves. Asymptomatic spread is perhaps the most dangerous method of spread because a person does not realize that they are a threat. In the event someone in a building you manage does become ill there are certain legal guidelines you must follow. Though it may seem like a good idea to notify everyone that the person living in unit 2314 has become sick, legally you cannot do this.

Disclosure of such information is a violation of federal privacy laws and can subject you to liability. While there are no mandatory federal guidelines for protocol in this situation, there are guidelines from the CDC, local and state health departments.

There also may be terms suggested in the lease which require a landlord or property manager to notify all remaining tenants of a health threat. Most landlords follow similar guides and protocols, so communication should be very detailed.

Residents should be warned that a co-tenant, employee, or vendor has become infected and has been encouraged to self-isolate. Follow up with reminders to continue to practice precautionary hygiene procedures and limit contact with other people.

Requests from Tenants
Although you may want to limit contact between staff and tenants there are times when an incident requires immediate attention.

Think plumbing. Not only could a plumbing issue be inconvenient for the resident, but this type of issue can also cause serious damage to one or more units.

When something like this occurs make sure to prepare your staff with all necessary PPE to mitigate possible contamination from close contact with a tenant. Assure the tenant that all safety precautions are being taken and if possible, ask the tenant to leave the apartment while the issue is addressed.

Monitor Personnel
It is incumbent upon you to provide a safe work environment for your employees. Taking temperatures before working, asking questions about employees’ contacts and how they are feeling are completely acceptable if your employees are aware of the procedures. Avoiding becoming a virus hot spot is beneficial to you, your employees, and your tenants.

Be Nice
The old saying, “You catch more flies with honey than with vinegar” is always appropriate. Be nice to your employees during these demanding times. You depend on them to keep your buildings running smoothly. Your employees should be your allies in the fight to keep buildings and grounds safe for everyone. Hand out a small bonus periodically. It could be cash or a grocery store gift card — really anything that shows you appreciate the work they do.

With a little kindness and diligent sanitizing, you can easily maintain your properties with safety during COVID-19.

Position Realty
Office: 480-213-5251

Five Ways to Spot Fake Landlord References

One of the most crucial aspects in tenant screening is that of checking your prospective tenant’s landlord references, so here are 5 ways to spot fake landlord references from Keepe the maintenance company.

Unfortunately, some tenants have been known to make up references or list friends or family members as previous landlords. There are even companies that hire themselves out to pose as landlords.

As a property manager, you are bound to receive landlord references day in and day out. Some are beautifully written testaments to the incredible nature of these individuals looking to rent, while others are simply fake, with bogus testimonials about the tenant.

5 ways to spot fake landlord references

Below, we’ve shared some ways in which you can spot fake references.

No. 1 – Call the references yourself
For starters, on most landlord references, they will provide a phone number.

One of the first things you can do to tell if the reference is a fake is to call the number inquiring about a rental. If it is fake, the number either won’t work or will lead to a completely different person or place.

In rare instances, a fake number does lead to an individual, but they may seem to be either untruthful or not detailed in their answers.

No. 2 – Check up on the reference’s name
Go online and Google the reference’s name and look them up on social-media platforms.

Check to see if this person is tied to the potential tenant through tagged pictures and/or posts. If there is a lot of overlap in the people’s profiles, these individuals may have a personal relationship and not a tenant/landlord relationship.

No. 3- Look at tax records

The tax records for all property owners are in the public domain. All you have to do is look up the records for the address where the applicant claims to have lived.

The name on the tax record should match the name you’ve been given. Double-check that the property hasn’t been sold, but otherwise this is a great way to spot a fake.

No. 4 – Analyze a reference’s answers
It’s best to always fall back on your knowledge as a landlord and analyze the answers that the potentially fake landlord reference has given you.

If their answers are vague and don’t have details then it’s likely that they aren’t a real landlord and are instead a friend or family member of the person who is trying to rent from you.

No. 5 – Ask for advice from the reference
 Landlords tend to have the same frustrations, interests, and problems.

It wouldn’t be at all unusual for you as a property manager to ask for some advice from another landlord while calling for a reference. Ask for their procedure for getting rid of a tenant who doesn’t pay, for instance.

A real landlord will have an actual answer, even if they’re not interested in spending much time on the phone with you. A fake, on the other hand, will likely have nothing specific to say. This can help you further determine whether the person on the other line is a real landlord, or someone just posing as such.

In conclusion
 As a property manager, a significant part of your job involves filling properties with quality, long-term tenants. Including thorough reference verification as part of your tenant screening process, such as the strategies above, can help you avoid costly mistakes and keep you a few steps ahead of the game.

Position Realty
480-213-5251

Seven Legal Details to Know About Evictions During The Coronavirus

On March 13, 2020, President Donald Trump declared a national emergency over the outbreak of the coronavirus (COVID-19), a public health emergency that has affected all 50 states, and in conjunction with the Centers for Disease Control and Prevention (CDC) issued a 30-day social distancing guideline for the states to follow. In response, most states have issued further directives to their citizens regarding social distancing, closures of nonessential business, limitations on travel, restrictions on evictions and foreclosures, and cleaning and disinfecting procedures. As these recommendations continue to evolve, landlords, condominium associations and property managers (collectively, Property Owners/Managers) have growing concerns over how the health, safety, security and privacy standards recommended by the CDC will affect the management and operations of their buildings. This article will list practical recommendations for Property Owners/Managers to implement during the COVID-19 event.

1. Understand Your Duty
The general rule of law is that Property Owners/Managers owe a duty to exercise due care for their residents’ safety, with condominium associations having the heightened fiduciary duty to act in the best interest of all of their residents. This duty is generally limited to the lines of ownership of the Property Owner/Manager, i.e., the areas under the Property Owner/Manager’s control. As such, it is important that Property Owners/Managers thoroughly read through their respective controlling documents (i.e., the lease, declaration of condominium or property management agreement) to determine what areas or services are under their control (i.e., elevators, pool, janitorial services, security, stairwells) and what obligations they have to their residents in maintaining these areas. Historically, as long as the Property Owner/Manager exercises due care in maintaining the common areas, courts will not impose further duties (unless the controlling documents state otherwise) on the them. In addition, the controlling documents may detail how additional costs for measures implemented in response to the COVID-19 event (such as cleaning and remediation costs) are shared between the Property Owner/Manager and the tenant.

After reviewing the controlling documents, it is important for Property Owners/Managers to be educated on their local laws and statutes to determine whether there are any additional responsibilities imposed or additional powers granted to them under state law. Most states have a landlord-tenant act, condominium act and/or not-for-profit corporations act that proffers guidance on the rights and obligations of Property Owners/Managers under state law. It is important to note that these statutes do not abrogate, but rather ratify, the common law. In addition, the state statutes can also give broader powers to Property Owners/Managers that are not outlined in their respective controlling documents.

Although the some states statutes were drafted with natural disasters creating property damage in mind, many of the emergency powers granted under the statute can apply to the COVID-19 event, again highlighting the importance of understanding the local laws and statutes of your respective states.

2. Stay Informed
With the ever-changing landscape on the federal, state and local levels, it is vitally important that Property Owners/Managers keep abreast of the directives and orders being issued that may affect day-to-day operations at their properties. Not only are these directives and orders important in helping Property Owners/Managers make informed decisions about next steps during the COVID- 19 crisis, such as whether to close the common areas or limit visitor access, they may also give additional powers to Property Owners/Managers to help protect their residents and their properties during the COVID-19 event.

Staying informed on the Property Owner/Manager level also allows the Property Owner/Manager to make faster decisions, disseminate information to its residents in a timely and effective manner, and ensure that they are complying with local laws. For example, most states impose requirements on Property Owners/Managers to comply with applicable building, housing and health codes.

Lastly, there may be restrictions on Property Owners/Managers related to evictions and foreclosures during the COVID-19 event. Understanding what those restrictions are and how they apply during and after the COVID-19 event will allow Property Owners/Managers to effectively assess the economic impact to their business and the appropriate measures to take to mitigate those risks. In addition, there may be federal, state and local financial relief efforts that Property Owners/Managers may be able to take advantage of to help soften the financial impact of the COVID-19 event.

3. Be Proactive
During these uncertain times, residents may look to Property Owners/Managers for guidance on how to maintain the property during the COVID-19 event. Informing residents that the Property Owner/Manager is aware of the COVID-19 event and is taking the necessary precautions to stop the potential spread of the virus throughout the building offers reassurance to residents and also prepares them for eventual closures of common areas or other emergency procedures that may need to be implemented. Other ways to be proactive include, but are not limited to:

  • Closing down common areas such as pools, clubhouses, tot lots, workout areas or any areas within the control of the Property Owner/Manager that may attract large gatherings.
  • Postponing community events until the spread of the COVID-19 virus is contained.
  • Communicate changes to building maintenance schedules, such as limiting requests to emergency repairs only or delaying nonemergency building maintenance for a reasonable amount of time.
  • Posting the CDC recommended guidelines and materials to educate tenants, employees and visitors about all suggested and mandated “social distancing” and “shelter in place” measures.
  • Thoroughly cleaning and disinfecting common areas to help stop the community spread of the virus.
  • Preparing an emergency response plan for the property.

Another way Property Owners/Managers can be proactive during the COVID-19 event is by being supportive of their residents. The COVID-19 event has been stressful on numerous parties, and emotions may be at an all-time high within the property. Maintaining an open dialogue with your residents and setting reasonable expectations about procedures and the Property Owner/Manager’s general ability to provide guidance during this time are essential to preserving the relationship between the Property Owner/Manager and tenants. In addition, open dialogue with tenants may allow Property Owners/Managers to be better informed about cases of COVID-19 on the premises.

It is important to remember that each state has privacy laws and regulations that must be adhered to, and protecting the privacy of each resident is paramount. Personal information regarding an infected individual should not be shared with other residents within the building, unless prior written consent is obtained. Property Owners/Managers may, however, provide residents in the building with a general statement that an individual on the premises tested positive for COVID-19 and include information on the procedures the Property Owner/Manager plans to implement to clean and sanitize the common areas of the building.

In all, following these three steps – understanding your duty, staying informed and being proactive – during the COVID-19 event may help Property Owners/Managers best address their concerns regarding managing and operating their properties in a safe manner.

4. Federal eviction moratoriums
A portion of the CARES Act that expired on July 25th, 2020 did require some landlords to observe a 120-day eviction moratorium. In other words, even if a tenant didn’t pay rent for 120 days, they could not be evicted legally if their apartment fell under certain conditions—one of which was if your property had been financed by a federally backed mortgage.

5. Local eviction moratoriums
Arizona, has extended its local eviction ban until October 31st, so regardless of any lapse in federal protection, Arizona tenants cannot legally be evicted, nor can their nonexempt property be seized. Therefore, it is very important to check with your local government to see what eviction protections are still in place.

6. Rent is not forgiven
Eventually, these eviction prohibitions will be lifted, and at that time tenants behind in rent payments will have to figure out how they are going to make payments going forward while at the same time taking steps to pay back rent. COVID-19 eviction prohibitions do not usually wipe out past-due rent balances, although local governments may introduce new regulations covering the handling of past due rent when the evictions bans do expire.

7. There is help available
The Arizona Department of Housing has set up a site with a self-assessment questionnaire. Certain persons can qualify for COVID-19 rental assistance by completing the questions and continuing with the assistance process. Check your state’s resources if you think your tenant might qualify for help.

While the CARES Act does offer some protection against negative credit reporting for certain late payments, late rent payments can affect a tenant’s credit score. Many landlords—especially those with only one or two units—generally do not report late rent to credit bureaus and most follow the typical landlord guide on the majority of issues with tenants.

Position Realty
Office: 480-213-5251

10 Laws All Landlords Need to Know

Dozens of federal, state, and local laws govern the residential rental industry and the landlord-resident relationship. All of these laws are important. The following calls to your attention ten important laws for you to know and follow when you’re a landlord.

The Fair Housing Act
The Fair Housing Act prohibits you from discriminating against applicants or residents based on any of the seven protected classes:

  • Race
  • Color
  • Sex
  • National origin
  • Religion
  • Handicap
  • Family status

The Fair Housing Act establishes only the minimum protections. States and localities may set additional protected classes, such as source of income — whether a person’s income is from a job, alimony, child support, unemployment, welfare, disability payments, and so on.

The Fair Credit Reporting Act
According to the Fair Credit Reporting Act (FCRA), you may use credit reports to evaluate rental applications. However, if you deny housing to an applicant based on information contained in the credit report, you must provide the applicant with an adverse action notice that includes the following information:

  • The name, address, and telephone number of the credit-reporting agency (CRA) that supplied the credit report, including a toll-free telephone number for CRAs that maintain files nationwide
  • A statement that the CRA that supplied the report didn’t make the decision to take the adverse action and can’t give the specific reasons for it
  • A notice of the applicant’s right to dispute the accuracy or completeness of any information provided in the credit report, and the applicant’s right to a free report from the CRA upon request within 60 days

The FCRA also comes into play if you want to report the nonpayment of rent to one or more CRAs. If you report a resident for nonpayment of rent and the resident cures the debt, you’re legally obligated to update the resident’s credit report to indicate that the debt has been cured.

The implied warranty of habitability
The implied warranty of habitability requires that landlords provide residents with living space that’s fit for human occupancy. To be habitable, living space must have heat when it’s cold, running water, a sufficient amount of hot water, plumbing and electricity that function properly, and so on. Landlords must also maintain clean and sanitary buildings and grounds — free of debris, filth, rubbish, garbage, rodents, and vermin.

If a rental unit is uninhabitable, residents have the right to withhold rent until the necessary repairs are made or, in more serious situations, terminate the lease.

Although your residents are responsible for repairing anything they or their guests break, you’re required to perform any repairs required to maintain fit and habitable living conditions, and you must complete the repairs in a reasonable period of time.

The mutual covenant of quiet enjoyment
Implied in every lease and rental agreement is the mutual covenant of quiet enjoyment, which grants all residents the right to the undisturbed use and enjoyment of the rental property. This covenant applies to you, as landlord, in two ways:

  • You’re not allowed to enter a resident’s unit whenever you want. You can enter in an emergency that threatens life or property, when you ask and the resident gives you permission, and to perform necessary inspections or repairs or show the unit to prospective renters or buyers (only after giving the resident sufficient notice).
  • You need to reasonably investigate complaints and potentially take action against any resident who’s disturbing his neighbors.

Your state’s security deposit rules
Every state has a security deposit statute that typically specifies the following:

  • How the security deposit is to be held — usually in an interest-bearing account in an in-state bank
  • What the security deposit may be used for — usually to cover unpaid rent, damage beyond ordinary wear and tear, and cleaning to make the unit as clean as it was when the resident moved in and sometimes to repair or replace the landlord’s personal property in the unit if that use is mentioned in the lease
  • When the unused portion of the security deposit must be returned to the resident
  • That the landlord provide an itemized invoice of any money deducted from the security deposit

Disputes over security deposits are common and frequently lead to the resident taking legal action against the landlord. To protect yourself, comply with your state statute, and take the following precautions as good business practices, even if it isn’t required under the applicable statute:

  • Have a separate interest-bearing account for holding security deposits.
  • Complete a move-in/move-out checklist to document the condition of the property at the beginning and end of a resident’s stay.
  • Take photos or video of the property to create a visual record of the property’s condition at the beginning and end of a resident’s stay.
  • Keep receipts for all repairs and cleaning required to prepare the unit for the next resident, even though you’re permitted to charge the resident only for damage beyond ordinary wear and tear, and cleaning to make the unit as clean as it was when the resident moved in.
  • Return the unused portion of the security deposit to the resident as soon as possible as required by state law.
  • Along with the unused portion of the security deposit, include an itemized list of all costs deducted from the security deposit.

The Residential Lead-Based Paint Hazard Reduction Act
The Residential Lead-Based Paint Hazard Reduction Act, in part, requires that landlords inform residents of the hazards posed by lead-based paint. If your rental property was built prior to 1978 (the year the EPA banned lead paint) you’re required by law to do the following:

  • Disclose all known lead-based paint and lead-based paint hazards and any available reports on lead in the property.
  • Give renters the EPA pamphlets “Protect Your Family From Lead in Your Home” and “The Lead-Safe Certified Guide to Renovate Right.”
  • Include certain warning language in the lease as well as signed statements from all parties verifying that all requirements were completed.
  • Retain signed acknowledgments for three years, as proof of compliance.
  • Housing that is exempt from this rule include the following:

  • Units that have no bedrooms, such as lofts, efficiencies, and studio apartments
  • Short-term rentals of fewer than 100 days
  • Housing designated for the elderly or the handicapped unless children live or are expected to live there
  • Property that’s been inspected by a certified inspector and found to be free of lead-based paint

State-required disclosures
In addition to the federal lead-based paint disclosure, many states require that landlords disclose one or more of the following:

  • Environmental hazards, including periodic pest control and herbicide treatments, toxic mold, asbestos, radon gas, bedbug infestation, and methamphetamine contamination
  • Recent flooding or location in a flood zone
  • Security deposit policies and procedures
  • Nonrefundable fees, such as a pet fee, where such fees are allowed
  • Smoke detector location and maintenance requirements
  • Nearby military ordinance, such as a US Army base
  • Smoking policy
  • Landlord’s or property manager’s name and contact information
  • Any shared utility arrangement

Your state’s Landlord Tenant Act
Nearly every state has a version of the Landlord Tenant Act, which defines the rights and obligations of the landlord and the tenant (also known as the resident), legal remedies for breach of contract, possible defenses to legal actions, and much more. To find your state’s landlord tenant act, search the web for your state’s name followed by “landlord tenant act” and click one of the links that looks promising. If that doesn’t work, track down your state’s official website, and search that site specifically for something like “landlord tenant” or “residential rental laws.”

Eviction rules and procedures
If you need to evict a resident, turning off electricity, gas, and water to the unit to compel the resident to leave is illegal. You must follow your state’s eviction rules and procedures, which typically require that you perform the following steps:

1) Check your state’s landlord tenant act to find out whether you have legal grounds to evict the resident.

2) Give the resident reasonable notice of your intent to file for eviction, including the reason you intend to do so and, if required by state law, the time the resident has to address the issues.

3) Wait until the morning after the deadline specified in your notice, and then file for an eviction hearing at your county’s courthouse.

4) Assuming you prevail in court, wait until the day after the court’s deadline for the resident to move out, and if the resident hasn’t moved out yet, call the sheriff to evict the resident.

Failure to follow your state’s eviction process could result in your losing your case. The resident may end up living in the property for some time, perhaps without paying rent. In addition, the resident may be able to file a legal claim against you in civil court and force you to pay damages, legal fees, and penalties.

Mitigation of damages
When a resident breaches a lease, for example by moving out three months into a one-year lease, the resident is obligated by the contract to continue to pay rent. However, you can’t just let the unit remain vacant for nine months. You’re legally obligated to take steps to mitigate (lessen) the resident’s losses. In this example, ways to mitigate the damages include:

  • Accepting a replacement the resident recommended to rent the unit for the months remaining on the lease, assuming the recommended replacement qualifies
  • Advertising the unit to find a new resident, screening applicants, showing the unit to qualified applicants, and so on

Gather evidence of your attempts to re-rent the property, such as advertisements, records of applicants you screened, and dates on which you showed the property to qualified applicants.

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