Podcast Host, Andrew Schultz, chats about divulging information about a rental property’s criminal history. Do you have to tell tenants that the property has a bit of a past?
Find out if “rent discounts” are a thing in 2021 and suggestions on how and when to implement them for your best tenants.
Last, but not least, Andrew talks about the best way to handle tenants threatening legal action.
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Andrew Schultz: (00:00)
Hey everyone. Welcome back to another episode of the Rent Prep for Landlords podcast. This is episode 349 and I’m your host, Andrew Schultz. On today’s episode, we’re going to be talking about offering rental discounts to tenants that pay early. Should you inform new tenants of a rental’s past criminal history and how do you handle tenants that are threatening legal action. We’ll get to all that right after this.
Voice Over: (00:24)
Welcome to the Rent Prep for Landlords podcast. Now your host Andrew Schultz.
Andrew Schultz: (00:28)
Before we jump into today’s episode, don’t forget to check out the red prep for landlords Facebook group. It’s a great free resource for you to network with housing providers from around the country. And if you have a question or a situation that you’ve never dealt with with over 12,100 members, chances are someone in the group has been there before and can lend a helping hand if you haven’t checked it out yet, do it today. Over at facebook.com/groups/rentprep. Don’t forget to mention the podcast when answering the questions. So we know how you found us
Voice Over: (01:00)
Forum quorum, where we scour the internet for ridiculous posts from landlords and tenants.
Andrew Schultz: (01:09)
Our forum quorum this week comes to us via the Rent Prep for Landlords Facebook group. Pretty straightforward question that we have here. Let’s go ahead and jump right? In most landlords charge a fee for paying rent late. Does anyone do a discount for paying rent early? And again, this one comes from the Rent Prep for Landlords Facebook group. So I spent a little time thinking about this. This is actually not something that we do in our office. We just kind of expect the tenants are going to pay their rent on time when they’re supposed to, generally speaking, that’s a pretty good tactic to take it. Doesn’t always work out that way as I’m sure everyone’s aware, but that’s that’s generally the way that we handle it. So I will preface this by saying, to check the legality of doing something like this in your area.
Andrew Schultz: (01:47)
In many areas, there are restrictions on what late fees can and cannot be. They may be limited into when they can be applied, how much you can charge. There also may be limits as to when you can charge them or how frequently and things like that. For instance, here in the state of New York the maximum as of 2019, I think it was June 2019 when they passed HSTA is now a 5% maximum $50. So 5% of the rent with a maximum of $50 is your late fee. And you must now offer a grace period as well as two separate notices, a five-day and a 14-day notice as opposed to what used to be just a three-day notice here in our state. So there are a lot of States that have put into place, different restrictions with regards to late fees and things of that nature.
Andrew Schultz: (02:39)
Definitely make sure that you check your legislation locally and at a state level, just to see if there’s anything like that. That could be a concern for you as you are, you know, setting something up when it comes to late fees. Something else that I wanted to mention is that if somebody is looking to pay you multiple months of rent in advance, is that something that could be considered a red, or is that something that’s even legal in your state? Again, I’ll reference the state of New York since I’m most familiar with the laws here in the state of New York, the law, again, as of the HSTA passing in 2019, is that you are allowed to collect your first month’s rent and you were allowed to collect one month of rent in security deposit. So we’re no longer allowed to do first, last, and security. We’re no longer allowed to do first and a double security deposit, which kind of sucks from our perspective, because that was how we used to offset risk with tenants that were a little bit more borderline or may not have necessarily pass through our normal tenant screening guidelines.
Andrew Schultz: (03:35)
We kind of had, you know, something that we could do to still get people approved and get them into apartments while still offsetting some of the risk to our clients. And unfortunately, that’s been kind of stripped away from us. So that’s something to consider. If somebody is looking to pay multiple months in advance, you know, number one, isn’t even legal for someone to do that in your state. And number two, could it possibly be a red flag? What are they trying to get you to ignore? You know, if you’re in the screening stages and somebody is telling you that they want to pay multiple months in advance, is there something that they’re not being forthright with, that you need to work to uncover as part of your screening so that you’re not making a bad tenant placement decision? So that’s something that you might want to consider as well.
Andrew Schultz: (04:15)
One thing that we have done in the past that has actually worked pretty well for us is to run contests for tenants that make on-time rent payments for a period of six months or a period of 12 months or whatever, what we’ve done in the past is run some sort of a contest, whether it be, you know, a pretty sizeable gift card or televisions always go on sale around Black Friday. So maybe we’ll grab a, a TV and raffle that off. But basically, you have to be in it to win it kind of a thing. So if you had a rent payment that came in late in the month of February, you’re not going to be eligible for that drawing in the month of December. So that’s something to keep in mind. That’s something that we’ve done successfully through our office here before. And that seems to work pretty well.
Andrew Schultz: (04:57)
In terms of, you know, trying to get a tenant to pay early, what we found works best with slow-paying tenants is assessed the late fee, send the late rent letter, and then begin the eviction proceeding. I understand that that’s easier said than done right now, especially in a lot of jurisdictions where there are eviction moratoriums and things of that nature, but rather than trying to get somebody to pay early, we found that just going along with the natural route of ensuring that, you know, there’s a late fee it’s in the lease and that the late fee gets recorded on the ledger as appropriate. And that the tenant is notified as appropriate. That seems to work the best for us. Realistically speaking, if somebody is going to pay rent, when they get an eviction notice on their door or when a marshal or a sheriff or a police officer shows up to serve them with paperwork stating that they’re going to be evicted for nonpayment, that’s more than likely going to be the catalyst that gets a mountain payer to become a payer.
Andrew Schultz: (05:49)
If they’re going to pay at all if they’re not going to pay, then really, you’re just kind of chasing your tail until you get to the courtroom at that point. But that that’s generally speaking how we found things to work pretty well is just expecting people to follow their contract obligations, you know, rather than offering them a discount. We already have written into the lease the late fee penalty for not following their contractual obligation. That seems to be the route that works best for us. Some people have had good luck by offering tenants a, an early pay discount. Your mileage may vary, you know, give it a shot. If you think that that’s something that might work. But my strong recommendation would be ensure that whatever you’re doing is being done the legal way. Talk to an attorney that understands landlord-tenant law in your area, and make sure that whatever you’re doing is not going to turn around to bite you at the end of the lease, or if the tenant decides to stop paying or something along those lines,
Voice Over: (06:42)
Water cooler wisdom, expert advice from real estate pros.
Andrew Schultz: (06:51)
We have two water cooler wisdoms for you this week. The first one comes to us via the Rent Prep for Landlords Facebook group. And we’re going to go ahead and, and jump right in. Do I have an obligation to inform prospective tenants of a burglary to a single-family home in Los Angeles during the vacancy period squatters broken for a few days, everything was cleaned up and security was beefed up. All yard Gates were locked and a two-year ADT alarm system has been installed and paid for. Should I inform the perspective tenants? I will be describing the enhanced security measures and the tenants will likely find out anyway. So this is actually a really good question. And unfortunately, I have to start at the same way. I feel like I start so many of these things, check your state and local laws before you do anything else.
Andrew Schultz: (07:33)
And I use that disclaimer so much and I hate having to use it so much, but you have to understand that things vary so much from one, one area to another, even here in New York, we have laws in New York City that don’t apply to upstate New York where we’re located. So understanding the laws in your area. It’s so, so critical when you’re dealing with real estate because there are just so many places that you could get pinched for something that you thought you were doing right. And it just wasn’t that way. So obviously, I guess I’ll preface this one again by saying, check your local and your state disclosure laws to see what you’re required to disclose in your area. All of that being said, I take the stance of never over disclosing any more than you absolutely have to. So if you’re not required by law to make that sort of a disclosure in your state or in your municipality, I probably would not mention it.
Andrew Schultz: (08:22)
Realistically speaking chances are the tenant’s going to find out themselves either through a multitude of resources that are available or even just a neighbor telling them, you know, what’s happened or something like that. And I can tie that back to a quick story. We actually purchased a rental property here in our market that someone had, unfortunately, committed suicide in the Attica of, and we had no idea it wasn’t something that was required to be disclosed when the property was purchased. And it wasn’t something that we would have ever thought to ask because it didn’t seem terribly relevant. But one of the first that happened once we took possession of the property was one of the neighbors walked over and immediately 88, you guys know, you know, what happened to the attic. And of course, we certainly found out quickly, we’ll search turned up the news article in this at the other thing.
Andrew Schultz: (09:10)
So it’s not hard to find that information out more than likely the tenant’s going to be notified by a neighbor or something along those lines. Regardless of whether you tell them or not, if a tenant comes to you and asks about crime levels in an area or something along those lines, what we would typically do would be refer them back to the local police department the Sheriff’s office, whatever the law enforcement agency is that covers that area state police in some instances, and there’s also a ton of different websites that you can go out to and find data on crime activities, spot crime.com is a good one. Crime mapping.com you know, sex offender, registries at a state or a federal level. Those are all going to be publicly searchable. You know, one thing I will mention is that the data that you find on these websites is only as good as the data that the websites receive from reporting agencies, and not all agencies report to every website.
Andrew Schultz: (10:07)
So for instance, here in Buffalo, you know, I might go to spot crime, for instance, the city of Buffalo doesn’t report to spot crime. So it’ll go and look like there’s no crime anywhere in the city of Buffalo. And I can, I can assure you, that’s simply not the case. So then you might go to crime mapping.com and you might find, Oh, wow, there’s a bunch of stuff going on in the area. The best possible resource is going to be, you know, tell the tenant, go to the local police department. They can ask about the property or the neighborhood or things like that. Let the police department talk to them about that because they may be able to explain more than what you can explain just simply based on the data that they have available. So that would be, my recommendation would be, you know, point the tenant to an authoritative resource, whether it be a website, whether it be the local police agency, whatever the case may be, that would be the recommendation that I would have.
Andrew Schultz: (10:57)
So some steps that you can take from a physical security level, like at the actual property itself. And I’m actually kind of happy. We get to talk about this topic because I feel like I’m using my criminal justice degree despite the fact that it doesn’t seem to get a lot of use. There are some physical steps that you can take to kind of beef up security around the property. For instance, this landlord specifically mentioned that they had an alarm system installed and are paying for two years of service. It’s kind of a nice perk. And it’s something the tenant doesn’t have to pay for, which is great. So one thing I will mention is that a lot of crime, especially petty crime package thefts bike theft, broken windows, stuff like that, a lot of things like that are opportunistic. If the opportunity’s not there, then more than likely the person’s just going to pass your house by and keep right on moving, because they’re looking for the easy target, some things that you can do to make your property a little bit less of an easy would be installing nice, bright motion lights outside the property, especially near entrances or driveways or garages or things like that.
Andrew Schultz: (12:03)
Areas where people would be inclined to try to find entrance. You may want to consider cameras in common areas or outdoors, depending on what your situation is, how many units the legalities of that in the year area, things of that nature to things that people really don’t seem to think a lot about. They’ll sit and throw a $12 lockset on from home Depot that the average lockpick can pick through in a, in a matter of about 15 seconds, invest in some good commercial grade locks that alone, you know, that’s one of those things that if it’s difficult for somebody to gain access, they’re going to look for another target, make sure that all your window locks are in good working order. We just toured a property yesterday and found out that, you know, first floor, apartment two of the windows, the locks weren’t working on it.
Andrew Schultz: (12:50)
So all it would take would be somebody to push that window up. And now they’ve got access. So, you know, on your move-out inspection, one of the things you should do is make sure that all of the windows are closed and locked so that you don’t make it easy for somebody to just sneak into a place. And last but not least something I wanted to mention is package control. Don’t let your deliveries set on the front porch for extended periods of time. You know, if you have the room for it, maybe get one of those big plastic bins that can be secured to something, have the Amazon driver or the ups driver, throw your package in there and then, you know, leave a padlock on top of it so they can secure it with a good quality padlock. And now your package is secured, or, you know, I know Amazon has some different features where they can actually set packages inside of a building or whatever.
Andrew Schultz: (13:34)
I’m not getting into any of that stuff. But, you know, package control is huge. A package on the front door is a very, very easy target. It’s a very, very opportunistic target and something that somebody could really take advantage of quickly. So there are some steps that you can take to kind of mitigate some of the opportunity, which I think would definitely help to reduce the overall liability of a situation like this. Our second water-cooler wisdom this week comes to us via the landlording subreddit. This one is firstname.lastname@example.org. And this is a pretty interesting one because we’re talking about not only our neighbors, neighboring tenants deciding to no longer be neighborly. But one of the tenants is decided to no longer be neighborly to the landlord either. Let’s go ahead and jump right into this one. So I recently took over managing my parents’ rental units.
Andrew Schultz: (14:22)
We have two houses that are next door to each other. My parents have always winged it with the rentals. So the agreement has always been a basic template of what the deposit is, and what’s covered by tenant. What’s covered by landlord, et cetera. We never added in any rules, which I know is awful. Anyway, our tenant has been complaining about his new neighbor, making noise with his car, parked in the carport at all hours of the night. He texted me this morning and said that no one told him the carport was shared and he feels like he was deceived. He said he’s planning to pursue legal action. Not sure that would entail, but how should my response be? So first and foremost, I would say that this is a neighborly dispute. And it’s not necessarily something that you as the property owner need to be involved in.
Andrew Schultz: (15:02)
So first and foremost, I would say send the tenant that has the complaint to their neighbor and have them talk to their neighbor and just stay out of it. These tenants are adults and they should be able to come to some sort of a conclusion that doesn’t even require you to be involved in it. Like this seems like a very straightforward thing where a conversation would probably resolve this issue just between the two tenants without you ever needing to be involved. If the neighbors working on his car at two in the morning, and he’s revving the engine, I could see that being a legitimate concern. At that point, it’s a noise complaint and it likely can be directed to the local police department if it’s truly an at all hours of the day and night thing, as most areas do have some kind of a noise ordinance that would be the next step, send the tenant, the complaining tenant to the police department have them file a noise complaint.
Andrew Schultz: (15:50)
Because again, this is a neighbor to neighbor dispute, and you don’t really need to be in the middle of it. You could follow this up with a letter to the tenant that had the noise complaint filed against them, asking them to reduce their noise along with a copy of the police report. You know, remind them if there’s anything in their lease about quiet hours or quiet enjoyment or things of that nature, you know, there somewhere in there, you may find something in your lease indicating that the tenant does have to abide by some sort of quiet hours. But realistically speaking, I don’t know of any municipality, unless you’re way out in the country, that doesn’t have some sort of a noise ordinance that people are required to follow. So that would be the way that I would handle that next part would be okay if you can’t resolve this between the two of you, you know, talk to the police department about the noise complaint, because again, this is a neighborly dispute and it has really not much to do with you at this point while they’re out taking a look at what their options are, talking to the police, whatever the case may be time for you to sit down and review your lease.
Andrew Schultz: (16:48)
If there’s anything in the lease about the carport who has access to it, when they’re supposed to have access to it, things of that nature, more than likely the lease would resolve that issue. But it sounds like in this instance, your lease is probably not going to have anything like that, which would basically, at least in my opinion, make this some sort of a common area that could be used by either tenant. So it sounds to me like it’s a dispute now over a common area, the use of a common area. So if you’ve kind of run through all of those options and you still haven’t been able to resolve the issue or the tenants haven’t been able to resolve the issue, you may want to consider a situation where w you offer one of the tenants and exit just to end the situation.
Andrew Schultz: (17:25)
You know, it’s sounds to me like this is one of those things that if somebody is not going to be happy until they get some sort of a resolution on it, and if that’s the case, I mean, neither tenants really under any obligation to move. Especially if they’re both on, you know, a longer-term, lease a one-year lease, whatever the case may be. Neither tenant may be obligated to move, but you may be able to offer one of the tenants an exit just to resolve the issue. But that would be like an absolute last resort. For me. I’m not in the business of telling tenants, Oh, you don’t like your neighbor. You can just move. You have a contractual obligation, just like we talked about in one of the previous segments, we expect tenants to uphold their contract rule obligation, just the same as we would uphold our contractual obligation.
Andrew Schultz: (18:06)
So as for the tenant pursuing you on anything legally, I don’t really see where you’ve done anything in particular wrong. The lease doesn’t specify anything about the carport in this instance, the issue really is a neighbor dispute, a dispute between the two tenants that can be resolved either by the two tenants or, you know, with the tenants and police intervention, whatever the case may be. It doesn’t sound to me like you’ve done anything particularly wrong here. If they want to take you to court, they certainly can. There’s nothing stopping anybody from filing a case against anybody ever, for any reason doesn’t mean they’re going to win, but it does mean you’ll have to defend yourself. That being said, I really don’t see what the tenant’s case is. I think that this is a situation that the tenants can solve, resolve without you needing to get involved.
Andrew Schultz: (18:52)
If the tenant decides that they want to take you to court. I think that there are probably a multitude of ways that you can resolve that situation before it ever becomes a situation. But ultimately if the tenant decided that they wanted to pursue you in court for something I’m not entirely sure what it is that they would be trying to pursue you for, because I don’t think that by the sounds of things, you’re really in breach of your obligation on the lease or anything like that. So that’s where I would be at on it. I think that this is one of those things that can be resolved by the tenants with minimal landlord interaction. If the landlord does have to step in, I think it’s going to get messy quickly. But that would be my recommendation is turf it back to the tenants, let them make their own decisions, let them figure it out for themselves.
Andrew Schultz: (19:34)
Rent Prep recently released a nine-step guide on how to turn over your rental property successfully. If you’re looking to turn over your rental property, but you’re not sure where to start check out the guide over at rentprep.com slash blog today. So that pretty much wraps things up for this week’s episode of the Rent Prep for landlords podcast. Thank you all so much for listening. We truly do appreciate it. Our goal with the podcast is to help as many people as possible make educated decisions when it comes to real estate, and you can help us to reach our goal. If you heard anything in this week’s episode or any of our other episodes that will help someone, you know, please do us a favor and share it with them. If you’re looking to get in contact with me, I can be reached over at whatsdrewupto.com from there, you’ll find links to everything going on with me over at own Buffalo, as well as other projects that we’re working on.
Andrew Schultz: (20:20)
We recently had a tenant move out in the middle of the night and trash a place on the way out the door. You’ll find the video of that carnage right at the top of whatsdrewupto.com. Take a look and don’t forget to subscribe. If you’re looking for top-tier tenant screening services, head on over to rentprep.com, there are multiple products to choose from including a tenant paid option. If you’re over 50 doors, ask about our enterprise-level programs and pricing. I’ve been an enterprise user of Rent Prep for years now, and it’s definitely changed the way that we screen our tenants. Check that out today, over at rentprep.com. Again, thank you all so much for listening. We’ll be back in two weeks with an all-new episode you won’t want to miss until then. I’m Andrew Schultz with ownbuffalo.com for rentprep.com. And we’ll talk to you soon.