Podcast Host, Andrew Schultz, chats about tenants who violate the subleasing terms set out in their contract and how to best handle the situation.
Tax season is here! Have you received a W9 request from your tenant’s employer? If so, you’re not alone. Find out what to do when you’re asked for this information.
Last, but not least, we’ve got a story about tenants who had one too many and found themselves crawling through their landlord’s doggy door.
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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 number 348, and I’m your host, Andrew Schultz. On today’s episode, we’re going to be talking about tenants’ employers requesting a W-9 renters violating the subleasing rules and drunk tenants crawling through doggy doors, who will get to all that right after this.
Voice Over: (00:22)
Welcome to the Rent Prep for Landlords podcast. Now your host Andrew Schultz.
Andrew Schultz: (00:26)
Before we jump into today’s episode, don’t forget to check out the Rent 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 12,000 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 that today over at facebook.com/groups/rentprep. And don’t forget to mention the podcast when answering the questions. So we know how you found us
Voice Over: (00:58)
Forum quorum, where we scour the internet for ridiculous posts from landlords and tenants.
Andrew Schultz: (01:05)
This week’s forum quorum comes to us from the landlord subreddit. It’s a pretty straightforward question. We’re going to go ahead and jump right in here. Hi, my tenants’ employer paid a portion of his rent at the beginning of his tenancy. The employer is now requesting a w nine, which would contain my S S and my social security number. Is that typical. So I will preface this by saying, yeah, this is not a huge deal. And then I’m going to jump in a little bit as to what a w nine form is and things like that. So form w nine is an IRS tax form. That’s basically you providing information to another entity. The information you’re providing is very, very straightforward. It’s name of either yourself or the taxing entity. It’s the social security number or tax ID number for that entity, the address of the entity, things like that, very straightforward, essentially what you’re doing is providing your tax information to someone so that they can issue a 10 99 form to you at the end of the year.
Andrew Schultz: (02:00)
So essentially that’s what the company is looking to do here is they’ve paid rent to you, and they want to issue a 10 99 for that rent so that they can show that as a deduction on their taxes, the most typical place that we would see this would be with any sort of a section eight agency or any kind of a rental assistance agency. Really, they typically won’t pay out a dime of rent until they have a valid w nine on file for their accounting purposes. And it’s basically the same type of a situation here, except they’ve already paid you the rent. Obviously what they’re looking to do is issue a 10 99 misc form to you at the end of the year for the amount of the tax money that they have issued out to you over the course of the year. So it’s generally not a big deal.
Andrew Schultz: (02:41)
The only time that it would be a big deal is if you were not trying to report your rental income on your taxes, obviously if you get a 10 99 for that rental income, and you’re not trying to claim that income on your taxes, that’s going to present an issue for you. So obviously, you know, claim your rental income, pay the taxes that you’re supposed to pay, and then that won’t be a big deal. The other thing I would mention here is that you don’t necessarily want to hand this directly to the tenant. You mentioned that it’s going to expose your social security number. Don’t hand it directly to the tenant, send it to the company’s accounting department. It’s pretty straightforward. Their accounting department will know exactly what you’re looking for, or actually, they probably were the ones who requested it from you.
Andrew Schultz: (03:20)
So they know exactly what they need. And they’ll tell you exactly where they need it sent. So there are a couple of other places in this industry where the w nine and the 10 99 forms pop up quite a bit. It’s worth mentioning that you should be collecting w nine forms for any vendor that does more than $600 a year worth of work for you. Realistically speaking, I always recommend getting that w nine on the front end, before you’ve paid anything out, because if you have to go back after the fact kind of like what this company is doing with you right now, you may find some contractors are reluctant to give up that information because they don’t want to have to pay the taxes on the income or whatever the case may be. So, you know, get a w nine upfront from any vendor that does work for you, as well as a copy of their GL insurance.
Andrew Schultz: (04:01)
I’m sure you can go back and listen to some of our previous episodes where we talked about all that information. And the other thing that we do is with our property management clients, we have a tub we have to collect the w nine from them at the onset of their contract, so that we can issue a 10 99 misc out to them, essentially the rents flow through our account, and then back out to the property owner. So they get issued a 10 99 since we’re the first party to receive the rent and then the rents get forwarded back out. So there’s quite a bit of information on the IRS website about how 10 90 nines and how nine work. You can certainly grab a lot more information over there. And realistically speaking, your accountant can also help you through a lot of this stuff, especially questions about when you should and should not provide information about you as a taxpayer to another entity. Your accountant would be very well versed in how all of that stuff should work. So whenever you’re presented with something like this, and you’re just not sure, it’s never a bad idea to consult your team of professionals that are going to have the answers that you’re looking for about 95% of the time. And it can save you a lot of stress in the long run
Voice Over: (05:00)
Water cooler wisdom expert advice from real estate pros.
Andrew Schultz: (05:09)
This week’s water cooler wisdom comes to us from the Rent Prep for Landlords Facebook group. This is an interesting one. It’s a landlord-tenant situation has the potential to go sideways very, very quickly. Let’s go ahead and jump in here. I have a tenant with a trailer on my property. The lease is months a month. It specifically says no subleasing in the contract. She has been moving out for days, and I’m quite sure she’s going to try to sublease to her child. How do I prove this? Once the action begins, the trailer is on my property within about 200 feet, so I can see everything that’s going on. It’s just that, I’m not sure how you can actually prove this whole thing. So going just off the information that’s in the post here, I think my first question would be, have you walked over there to talk to the outgoing tenant, to find out what’s going on?
Andrew Schultz: (05:53)
Why they’re moving? Obviously when they’re moving is pretty apparent since they’re already the process. But I would say start there, I mean, have a conversation with the tenant before you do anything else. Because that at least will give you some information as to what’s actually going on. You know, there, there might be more to the situation than what you know, or whatever the case may be, but it has to start with a conversation. It has to start with communicating with the tenant before anything else takes place. Without doing that, you’re basically setting yourself up for failure, right from the beginning. So the lease agreement that you have, you did say it’s a month-to-month lease. But there’s not really much more information in here. I guess my second question would be, does your lease have any language in it with regards to required?
Andrew Schultz: (06:36)
Notice if someone plans on moving, it doesn’t sound like this person is really planning on giving you any notice other than the fact that you can see them moving things out of the trailer currently. So I would say they’re probably going to be in violation of whatever that lease language would be assuming that you have some in there, to begin with. Now, you do say that the lease specifically prohibits subleasing, which is good. Generally speaking, even if Elise does allow for subleasing, the sublease would have to be approved. So that would likely be another lease violation. And as far as that goes, you’ve already covered that angle by saying that your lease does not allow for subleasing. That being said, it doesn’t sound like this person has any real intent of following the lease guidelines as it sits right now. Anyway, so generally speaking, as far as proving it, I would say, start documenting now beginning with, you know, whatever you’ve seen thus far and the dates and times that you’ve seen that stuff, as best as you can recall with regards to what’s been happening, then I would start with the conversation with the tenant you know, who is present at the time of the conversation.
Andrew Schultz: (07:37)
When was when was the conversation, where did it take place? What was said back and forth, et cetera, just trying to keep a log of what’s going on with the situation. As far as documenting the actual move-out process, you might want to snap some photos showing them, obviously moving things out. You can also snap photos of the new person, moving things in. You can take photos of different vehicles showing up different people in and out of the property, et cetera, et cetera here. So there’s quite a bit of stuff that you can do to document what’s going on to actually prove that there has been a tendency change. And then as actually something I had just thought about, you may even be able to determine if there’s been a tendency change by contacting the utility companies, to see if the gas and electric have been turned off or switched from one name to another or something like that, some utility companies are a little bit more open with providing basic information, a landlord, some of them won’t provide you with anything.
Andrew Schultz: (08:29)
So I guess it just depends on the utility providers in your area, but that’s another way that you can actually show, you know essentially abandonment from the previous tenant and then a new tenant moving in on an illegal sublease. So yeah, unfortunately, this is a really nasty situation. It sounds like it’s pretty much going to happen, whether you want it to or not. It sounds like it’s probably already happening or happened by the time we record the podcast. So now let’s talk about what your options with regards to dealing with this situation now that it’s occurred. So you don’t mention in the post what state you’re in. I don’t know if there are eviction moratoriums in your area or not. I know that we do have the federal eviction moratorium which may or may not have some sort of play here, but the first thing I would do would be issue a lease violation, notice to cure whatever it’s called in your state.
Andrew Schultz: (09:16)
I’m specifically calling out the violations in the lease. If you are doing this, do this in writing and make sure that you call out from the lease. I actually put like the the section of the lease that they’re in violation of, or I’ll copy and paste that section of the lease right into the the violation letter. So that it’s very clear and then understand what you have to do to serve that lease violation or notice to cure or whatever in your state, because the rules do vary from area to area. And you’re gonna want to make sure that you’re doing it the right way so that you can get this situation dealt with as quickly as possible. So once the lease violation or notice to cure, whatever it is, has been served it’s pretty straightforward. It’s either they comply and they move out of the space or you follow up with an eviction for the lease violations.
Andrew Schultz: (10:00)
You should read up on what the laws are in your area regarding terminating a month-to-month tenancy as well. You did mention that the tendency is month to month. They’ve already exceeded their yearly term if I mean, even if they were on the early term at the beginning of the lease, either way, it’s a month a month now. So take a look, find out what the rules are regarding terminating a month-to-month tenancy in your state to see if that might be a viable option for you as well. Last but not least my best advice. Whenever it comes to something like this, talk to an attorney that is skilled with landlord-tenant law and find out what the best-case scenario is for you. If you should accept any rent fronts from these people who have now moved into the unit, whatever the case may be, talk to a competent legal professional, and get the best possible advice from them that you can. And the reason I say that is because with everything going on in the world today, with the pandemic, with the eviction moratoriums, and everything else, the legislative landscape is very, very complex. And the, you might be thinking that you’re doing the right thing, but the rules changed six months ago in the middle of the pandemic. And you just didn’t know about it. So now more than ever, we’re strongly recommending people speak to legal counsel before they attempt any sort of an eviction action or anything like that. With regards to their properties,
Voice Over: (11:11)
Feet on the street, real stories from real property managers.
Andrew Schultz: (11:20)
We’re going to lighten things up this week for feet on the street. We’ve actually got a crazy tenant story coming out of the landlord subreddit. And then I’m actually going to share a crazy tenant story from earlier in my career as well. Let’s go ahead and jump right in here. So I rented an apartment to a family member next door to my house, a mother-in-law suite. They climbed over my fence. They were really drunk and then decided to crawl through the doggy door and scare me at like three in the morning. I was like, what’s going on? How did you get in here? Thinking it was an emergency. They simply said they lost their cell phone and just needed help finding it. Oh, did this all completely naked? And didn’t remember anything the next day. Yeah. I mean family member or not, I’m pretty sure that one would be leading to a leading toward an eviction on my end.
Andrew Schultz: (12:04)
I don’t really care for people breaking into my place in the middle of the night, regardless of the reason they’re doing it, especially when they’re doing it when they’re naked. So that one would certainly be going towards an eviction, at least in my life. So that one was pretty brief. But now I’m going to tell you the story of rat boy. This actually comes from a way way earlier in my career. Probably probably close to the beginning of my career, to be honest with you. We had a, I was working for another property management company at the time. It was well before I had gone out on my own and they had just picked up a new client. They had an oil, was an older couple and they own just one single three-unit property in the city of Buffalo. And from everything they told us about the property, it was kind of a weird little setup.
Andrew Schultz: (12:43)
It was a, like an upper and lower in the front. And then there was a carriage, not really a carriage house, but alike an addition on the back of the house. And that was its own separate unit. And that’s where the tenant of our, of our story, lived. So the two front tenants were completely fine. They’d been there for several years, never issues. Rents were always paid on time. Things like that. The problem they were having was with this tenant in the back unit rat boy and rat boy became our headache when we signed the management agreement. So essentially what was going on his rat boy was exactly what you would expect. He had an apartment full of rats. We figured that there were North of 150 rats in this apartment, and he was raising them as feeders for other animals, basically selling them to pet stores and to people directly and things like that as feeders for snakes or whatever the case may be.
Andrew Schultz: (13:36)
Obviously, the apartment was completely disgusting from, from top to bottom, and kind of tying this story back to the story that we had in our previous segment. We had to go through the full eviction procedure. So we started with the lease violation letter, which obviously the tenant was completely non-compliant in. He didn’t do anything to clean up the apartment, get rid of any of the animals, anything like that. At that point, it turned into a full-blown eviction hearing, which he obviously lost as soon as we showed pictures of what was happening to the judge. Actually, the judge wanted to have the the SPCA come out, but we knew the SPCA was not really going to be able to do anything other than take these rats and turn around and do exactly what this guy was doing, sell them to, or give them to a pet store or something like that.
Andrew Schultz: (14:23)
So, and eventually wound up turning into a full-blown move-out. We had to have the city Marshall come out and physically remove the tenant from the property. Fortunately, at that point, he had already removed all of the rats or the bulk of the rats from the property. And he took the rest of them with him when he went which was great. Believe it or not, the we never had a rat issue at that property after he left, I was legitimately shocked. I figured that he would have been letting rats go all over the neighborhood and stuff like that, simply because didn’t know what else to do with them, but we didn’t have any issue with rats at the property after he was gone. But we did have to obviously gut that apartment right down to the studs and, and redo it basically from scratch.
Andrew Schultz: (15:02)
So yeah, definitely screen your tenants’ folks. I understand that as a, as an individual housing provider, it’s not always the easiest scenario to do tenant screening at a, at a high level, but you know, having good tenant screening practices eliminates so many problems on the backend. I can’t emphasize that enough always screen your tenants. So you don’t wind up with somebody like rat boy. Yeah. Spring is officially here and you know what that means spring cleaning, whether it’s reminding tenants of how to request repairs, making sure that all of your appliances are in working order or revising your budget, rent preps, latest guide offers spring cleaning tips to ensure that your properties are in tip-top shape the season. Check it out today over at rentprep.com slash blog. 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.
Andrew Schultz: (15:51)
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 that goal. If you heard anything in this week’s episode or any of our other episodes that will help someone, you know, 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. We recently had a tenant move out in the middle of the night and trash a place on the way out. You’ll find the video of that carnage right at the top of whatsdrewupto.com. Take a look and don’t forget to subscribe.
Andrew Schultz: (16:28)
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 the enterprise-level programs and pricing. We’ve been enterprise users 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 that you won’t want to miss until then. I’m Andrew Schultz with ownedbuffalo.com for rentprep.com. And we’ll talk to you soon.