Beware of Professional Tenants!

DennisFassett.comI have to say that one of my biggest fears about being a rental property owner is running into a “Professional Tenant”.

A “Professional Tenant” is a someone who knows the rental laws cold, knows the system, and therefore knows how to work the system” by taking advantage of pieces of the law to live rent free. Sometimes indefinitely.

They can cost you several months of rent and thousands of dollars in legal fees before you win. And they’re generally not collectable so while you’ll eventually get your house back the judgment will be worthless.

I’ve mitigated that risk somewhat by buying and owning properties in the best school districts, so I generally have no less than ten good quality applicants to choose from when I have a vacancy. So I can reject an applicant that doesn’t look right on paper.

And to date I haven’t ever rented to one. But my fear is still there.

I bring this up because I just read a great piece on the topic and I wanted to share it with you.

It’s called ‘Professional Tenants’ and How Not to Fall Victim to Them, and it was written by Richard D. Vetstein, Esq.. A link to the article is below.

Here’s the piece:

‘Professional Tenants’ and How Not to Fall Victim to Them

Richard D. Vetstein, Esq.

I am an attorney who has practiced in landlord tenant law for over 15 years in Massachusetts, one, if not the most, tenant-friendly states in the country. I’ve seen the good, bad and the ugly when it comes to tenant shenanigans. I’ve written all about it on my Massachusetts Real Estate Law Blog. Most tenants are problem-free, yet there is a certain type who make even an experienced landlord cringe with fear: The Professional Tenant.

Let me give you the profile of what I mean by a typical Professional Tenant. (This is a generalization based on my professional experience.)

  • They have history of litigation, evictions and/or delinquency with prior landlords.
  • They have a surprising (and dangerous) knowledge of local landlord-tenant law.
  • They often have a background in real estate, engineering, contracting or law.
  • They have marginal to poor credit, with a prior history of collections, judgments or bankruptcies.
  • They have gaps in rental history.
  • They have non-existent or incomplete prior landlord references.

Now the above may sound simply like a poor rental applicant, and maybe that’s true. But the Professional Tenant will make a landlord’s life miserable and cost them thousands in lost rent and legal fees. Here’s what a Professional Tenant will do to a landlord.

The Professional Tenant’s Scheme

Shortly after moving in, the Professional Tenant will start to complain about small issues with the rental property. Some will complain to the local board of health to have the landlord cited for code violations. Often the tenant has caused these very code violations — bathroom mold is a common situation. (Most state Sanitary Codes can trip up even the most conscientious landlord.) Based on the code violations, the Professional Tenant will stop paying rent, claiming that they are “withholding rent” due to bad property conditions. Under Massachusetts law, for example, a tenant can legally withhold rent for even the most innocuous code violations and there is no rent escrow requirement. The Professional Tenant will also assert that the landlord violated the local last-month-rent and security-deposit law, and ask for their deposit back, trying to set up the landlord for a hefty legal claim. In Massachusetts, tenants can win triple damages for deposit law violations.

In the meantime, months may pass before the landlord will realize that they are being set up. The landlord will have repaired the minor code issues, only to have the tenant call the board of health again and again. The landlord is forced to start eviction proceedings, only to be met with a slew of counterclaims and defenses from the Professional Tenant. The Professional Tenant will then send the landlord a myriad of document requests and interrogatories which will often delay the eviction hearing. Months and thousands of dollars in attorneys’ fees later, the landlord finally gets his day in court. And the Professional Tenant doesn’t show up, leaving the landlord with a worthless judgment for thousands in unpaid rent — and a trashed apartment.

How Can Landlords Avoid the Professional Tenant?

Professional rental screening techniques, experience and common sense instincts will help a landlord avoid a Professional Tenant. My advice to landlords is to make screening the most important thing you do as a landlord, and do the following:

  • Invest in good credit history checks.
  • Follow up with landlord references for all applicants. Call the past landlords and talk to them!
  • Check and verify employment information.
  • Check prior bankruptcies and court dockets.
  • Personally interview all tenants and size them up!

If someone seems fishy, they probably are. Trust your instincts!

Do you have your own story about dealing with a Professional Tenant? If you do, please share them in the comments!

Here’s the link to the article: http://realestate.aol.com/blog/2014/08/30/professional-tenants-and-how-not-to-fall-victim-to-them/

 

 

Dennis is an active real estate investor based in Metro Detroit.

In addition to his day job, at present he holds a portfolio of rental houses and he's an active wholesaler who has closed deals in real estate markets throughout the country.

He's also a published author of a book on rental house investing called "How to Buy Your First Set and Forget Rental House", and has trained over 1000 new real estate investors on how to get started with real estate.

You can reach him directly at dennis at dennisfassett dot com

Please note: I reserve the right to delete comments that are offensive or off-topic.

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