tenants seem to think their security deposit should cover the last month’s rent – it doesn’t seem to matter that they signed a legal contract specifically stating that this is NOT the case
one of the games the tenant will play is to make sure there isn’t enough money in the checking account to cover the last month’s rent check – long before you can collect on the bad check they will have moved out
some of the ways to prevent this situation:
– collect first and last month’s rent up front along with a security deposit (most people don’t have this much money available so you will severely limit your pool of potential tenants doing this)
– make the security deposit significantly more than one month’s rent – by at least $500 – this gives the tenant an incentive to pay the last month’s rent since they will lose the $500 otherwise
if you end up with a bad check from a tenant here’s a potential workaround: take the bad check to their bank and deposit enough cash into their account so the check will clear – if you can deposit $300 and cash a $1200 check you will be far better off than trying to get a judgment against the tenant – a collection agency will only give you half of what they collect IF they are successful at collecting
the bank won’t tell you specifically how much you have to deposit – you have to say something like, “if I deposit $300 will I be able to cash this check?”
most likely, by cashing the check you will cause the tenant to bounce a whole string of checks before they realize what has happened – at $15 to $45 per pop for bounced checks, their attempt to get over on the landlord becomes expensive quickly – I only had to do this a few times and each time it was young tenants (twenty-somethings)
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on a related note, NEVER accept partial payment for rent or a security deposit – if the tenant doesn’t have full rent on the due date serve them with the three day pay or quit notice – if you accept partial rent you are stuck with them for at least another month and they may or may not ever pay the remaining balance – likewise with paying the security deposit in chunks – once you let a tenant move in they are in control of that property – what is your recourse if they choose to never pay the remaining balance?
I am hoping to be first time landlord soon. As per recommendations here I did get the Nolo book.
Please recommend which service to use for credit check. Also there are so many different kinds of tenant screening packages. What kind of service should I use?
For the credit check I used simplescreening.com last time. Seemed to work OK. IIRC you need to download a a consent form for the tenant to fill out, and you fax it back. Or maybe I just used the NOLO consent form, I don’t recall at the moment. But you have to send them some form of authorization and they email back a link to the credit check. Pretty painless.
They enter information there, pay for the credit report. You get notified to view the credit report.
As far as background check. If your prospective tenant works at a large company, chances are as condition of employment, the company already did the background check for you.
So you would just need to have tenant give you proof of employment at that company.
If your tenant happens to volunteer the information they are on H1-B (because you definitely can’t ask for that info)…then you should know government has already done a background check for you and same for the employer that employs them.
There are plenty of quality tenant screening services online. I would also stress to ask for a few months worth of bank statements and reconcile those statements with what the tenant claims as liabilities and income on their application. I find that to be a much better measure of their ability to pay rent then any credit report.
[quote=4plexowner]collect first and last month’s rent up front along with a security deposit (most people don’t have this much money available so you will severely limit your pool of potential tenants doing this)[/quote]
The Nolo press book strongly advises against calling any part of the security deposit “last month’s rent” because the tenant will likely take that literally. It also creates an ambiguity should you later raise the rent during the tenancy.
In California the security deposit cannot exceed two month’s rent (CC § 1960.5(c))
Get the Nolo press book. It’s 30 bucks well spent and has all the forms you’ll need.
My means of checking:
* ask for four references, two personal, one work, one second to current landlord (current may give a good reference just to have them out!). If I don’t get the references promptly, the person is obviously not interested
* Google everyone
* Google the tenant(s)
* call everyone, talk a lot. See if stories match. See if my amygdala hates the tenant-to-be
* no background/immigration/credit checks other than my own informal one
* one month’s security deposit, no money accepted or contracts given till the above has happened
