Archive for November, 2009

TENANT MOVED OUT AND LEFT YOU HOLDING THE BAG!

Nov 24

Posted by Tristan R. Pettit, Esq. in Collections | 1 Comment

With a short week ahead of us due to the Thanksgiving  holiday, and the fact that I will be traveling to the wonderful land of flat terrain and tons of wind (a.k.a Kansas), I thought I would take this opportunity to re-post some very good advice from a friend of mine and fellow blogger, Bill Gray of Rent Recovery Services, who is also known as The Landlord Doctor.  http://www.TheLanlordDoctor.com

Bill writes a blog that focuses on collection issues, and specifically collection issues related to past tenants.  He also serves as the regional manager for a great collection service called Rent Recovery Service which I wrote about in a prior blog.  Bill has some very good advice to share and I especially enjoyed his blog post entitled:

TENANT MOVED OUT – LEFT YOU HOLDING THE BAG. 

Perhaps your tenant lied and took advantage of you.  He may have skipped out on the lease or you may have evicted him.  In either case, he damaged your rental and cost you money!  What do you do now?

1.  First, set your emotions aside and spend some time organizing your ex-tenant’s file.  Whether you own one unit or one thousand, or whether you manage your rentals full-time or part-time, you are running a business.  Any successful business keeps well organized, complete records. Read the rest of this entry »

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CITY OF MILWAUKEE’S REVISED RENTAL CERTIFICATE PROGRAM ORDINANCE RELEASED

Nov 24

Posted by Tristan R. Pettit, Esq. in Residential Rental Inspection (RRI) Program / Mandatory Rental Inspections / Landlord Licensing | No Comments

As I mentioned in a prior post, the City of Milwaukee’s Common Council agreed to hold off on voting on the city’s proposed mandatory rental inspection ordinance (Residential Rental Certificate Program) for 1 month.  The reason for the postponement was to allow the drafters of the proposed ordinance time to go back and make some revisions and clarifications.

The Apartment Association of Southeastern Wisconsin, Inc.  (AASEW) retained the services of a law firm who met with the drafters and sponsors of the proposed ordinance and offerred suggested changes.  During that 2 hour meeting the AASEW attorneys also pointed out the myriad of legal problems with the proposed program and how it was drafted.   It appears as if the revised ordinance was completed this past Friday, however I first received a copy of the ordinance today, only after our attorneys called one of the sponsors to check on the status.

You can read the proposed ordinance with its revisions here.

While the city appears to have included some of our suggested changes for the most part they ignored our comments.

One concern that the AASEW has that was ignored was the fact that the ordinance still does not contain an objective definition of a “disqualifying violation.”  The AASEW has been told that a rental certificate will only be withheld if the current conditions in the unit are so bad that there are safety concerns for the tenant.  To me that would mean such things as an improperly secured porch, a bedroom in the attic, or something similar.  Our attorneys were even presented with a list of such qualifying conditions at the meeting after they pressed this issue.  However, those listed conditions still have not been included in the definition of a “disqualifying violation.”   Why not?

The ordinance as written reads as follows   – A disqualifying violation “means . . . or other conditions that violates the provision of the building code . . . “  So in essence, a rental unit could be denied a rental certificate for any building code violation — such as not having the address number posted on the garage in the alley.  This does not seem to me to qualify as safety issue that would warrant the denial of a certificate.  Nontheless, the city could argue that the lack of an address number on the garage of a rental unit is a safety issue becasue if there is a fire or similar hazard the paramedics or fire department’s response might be delayed if they drive  through the alley and can’t determine which property to go to.  Maybe that is a safety issues – I don’t know – but my point is why don’t we put all of the cards on the table so that everyone is clear.  Do I think it is the city’s intent to deny a certificate for something like missing address numbers in the alley?  I certainly hope not — but I don’t know, nor do you, nor does the inspector that is going to inspect the unit.  What I do know  however is that as the ordinance is currently written a landlord could be denied a rental certificate becasue of missing address numbers on a garage. 

I don’t want this ordinance to become a tool for an inspector who wants to make life miserable for a landlord that he doesn’t particular care for.  If the city truly only means to withold a rental certifcate in certain situations which place the tenant safety at issue then why don’t we specifically include what those conditions are so that everyone — including the inspectors themselves — have clear direction.

This proposed program is to be voted on by the Common Council on Tuesday, December 1st.  Have you told your alderperson how you should think they should vote.  If not, please do.

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What Questions Should You Ask An Applicant’s Current and/or Prior Landlord During The Screening Process

Nov 19

Posted by Tristan R. Pettit, Esq. in Screening Tenants | 3 Comments

Screening applicants/potential tenants is the single most important element of landlording in my opinion.  As I have mentioned in prior posts, if you properly screen your applicants you will have a better chance of finding a good tenant that pays rent on time and does not abuse your investment property.

Landlords should require each adult person to completely fill out a written rental application.  After you have all this good information about your applicant you now need to confirm that info.  You have not conducted a thorough screening until you have confirmed all of the information that was provided to you in the application. 

Some of that info is more important than others.  In my experience the most important information that you need to confirm about a potential tenant is: (1) the applicant’s current and prior rental history, (2) the applicant’s employment information, and (3) whether or not the applicant has been evicted, had a money judgment taken against them, or been charged/convicted with a crime  — this information, at least for now, can be obtained through CCAP.

This post will focus on item #1 – the applicant’s current and past rental history.  The way to confirm this information is to communicate with both the applicant’s current landlord AND their prior landlord.  You are probably asking yourself, “why is it necessary for me to talk to more than just the applicant’s current landlord?”  The answer is simple — if the applicant is a bad tenant then the current landlord may tell you anything (even a bunch of lies) in order to get rid of their problem tenant.  A less than honest landlord who is trying to unload a bad tenant may neglect to tell you that the tenant has loud parties every weekend, pays rent late every single month, enjoys hoarding pit bulls, and thinks its funny to rev the engine on his crotch rocket when he comes home after bar time.  While it would be nice if all landlords realized that we are all in this together and were truthful to one another, that is not always the case.  If you think that a fellow landlord would not lie to you in order to pass on a nightmare tenant then I want to let you know that I have a new ebook for sale which I just completed writing – and which I am selling for the unreasonable low price of $79.95 – that I guarantee you will teach you how to make a million dollars in 30 days through investing in real estate, even during this recession : )

A prior landlord – one tht is at least one landlord removed from the applicant’s current landlord – has no reason to lie to you.  They no longer have any connection to their old tenant and therefore have no personal interest in whether you accept him or her as your new tenant.  So it is always reccomended that you talk to both the applicant’s current landlord AND their prior landlord.  Now that you know who you should be talking to and why, the next hurdle is determining what questions you should be asking. 

Oftentimes, the current/prior landlord is going to want to confirm that the applicant has authorized you to talk to them about the applicant and his/her information.  This may involve having the applicant call the landlord and verbally telling them that they can talk to you, but more often than not it involves providing the landlord with a written authorization signed by the applicant.  If you are using a good Rental Application then you may already have the authorization language in that document. 

When providing the authorization to the current/prior landlord be careful to only provide the landlord with the authorization language, the applicant’s signature, and the date that it was signed.  While the current or prior landlord most likely already has all of the applicant’s personal information – you do not want to take the chance and divulge personal info that you shouldn’t have.

Prior to calling a landlord you should be aware that sometimes an applicant will list a friend or a family member as their current or prior landlord.  They may do this for any number of reasons such as: (1) they have no prior rental history, (2) they have been evicted by their prior landlord, (3) or they know that they are a less then stellar tenant and that their landlord will not have positive things to say about them.  As I’m sure you can guess, a family member or friend that is standing in for the applicant’s real landlord is going to have nothing but glowing things to say about the applicant. 

In order to avoid having this ruse played on you, you should attempt to confirm that the person you are speaking to is the actual current or prior landlord.  There are several ways you can do this but none of them are foolproof.  One trick is to call the alleged landlord and act as if you are a tenant inquiring about a vacancy.  If the listed “landlord” is a friend or family member they will probably not respond appropriatley to your inquiry.  I have caught one person applying to rent from me by this method.  The person I called responded along the lines of “what are you talking about — you must have the wrong number – I ain’t renting out sh*t.” 

Another option is to check online property data records for the munucipality in which the current/prior landlord’s property is located to see if the name on the property records matches the name of the alleged landlord.  This method does not always work.  If the property is being managed by a management company then the name that the applicant gave you is most likely that of the manager and not the owner.  Additionally, if the property is legally owned by a business entity then there will be no individual person’s name listed on the property data.  Most municipalities have their property data infromation available on the web.  I just googled “property data” and the name of various municipalities in Milwaukee County and came up with 4 sites in just a few seconds — Milwaukee, West Allis, Greenfield, Wauwatosa.  Short of the above methods you will just need to remain attentive during your conversation with the person and see if they “slip up” while talking with you.

Some landlords will be happy to answer your questions orally over the phone while others — especially the larger landlords and management companies — will only respond to your questions in writing.  This means that you will need to send them written questions.  This is normal and should not be a cause for concern.  These companies are merely trying to protect themselves as they will now have proof of the answers they provided you should the tenant accuse them of false statements or sue them for slander.

Whether you are asking your questions verbally or in writing you should insure that you use the same questions for every applicant when talking to their current/prior landlord.  If you fail to do this you may end up inadvertantly violating Fair Housing (discrimination) laws.  To make this simple you should prepare a script of questions that you will use.  I would suggest that you have an experienced landlord, property manager, or landlord-tenant law attorney review your questions prior to using them.

There are no hard and fast rules as to what questions you should ask but any questions posed should include the following:

1.     Confirm that the applicant is/was a current/prior tenant.

2.     Confirm the address of the current/prior rental unit.

3.     Confirm the dates that the applicant resided at the current/prior landlord’s property.

4.     Confirm the rent amount that the applicant is currently paying or paid in the past.

5.     Ask if the applicant has ever been late in paying their monthly rent.  If the answer to this question is “yes” then you should follow up with a few additional questions such as:  how late was the rent paid; was the rent paid late more than one; and how many times was the rent paid late?

6.     Ask if the applicant has ever violated any other terms of the rental agreement (i.e. damage to property, loud parties, unauthorized guests, illegal activity etc).

7.     Ask if the landlord ever had to serve the applicant a 5-Day or 14-Day notice.  If the answer is “yes” then you should attempt to learn additional info about the breach.

8.     Finally, you should ask the landlord if s/he would ever rent to the applicant again.

Remember that your goal in talking to the current/prior landlord and asking them these questions is to try and obtain as much pertinent information as you can about the applicant so that you will be better able to determine whether or not the applicant will be a good tenant for you.

It is important to realize that some landlords may not be comfortable answering these questions – especially the more detailed questions – as they may be fearful of retaliation by the tenant or being sued by them.  This fear is the primary reason why some landlords will only reply to written questions with written answers.  I have personally experienced landlords who would only give me “yes” or “no” answers to my questions and refused to provide any detail.  On the other hand I have talked to more than one landlord that told me way more about an applicant then I would ever want to know (and way more than a landlord should ever knowabout his/her tenant).  You take what you can get! 

Remember that if a landlord is unwilling to verify the applicant’s information then you have a valid and legal reason to deny housing to that applicant, assuming that verification of information contained in the application is part of your written screening criteria.

I hope that it goes without saying — although I will say it anyway – that during this “vetting” process you should only ask relevant and non-discriminatory questions.  If you stick to asking questions about the topics listed above you should be OK.

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How To Really “Read” A Person’s Drivers License

Nov 16

Posted by Tristan R. Pettit, Esq. in Screening Tenants | 2 Comments

I always enjoy learning information that will assist my clients and myself when screening potential new tenants.  Based on my review of the Analytics for my blog, readers also appreciate this info because my post on the Social Security Number Validator consistently ranks as one of the most viewed posts each month.

While co-presenting at the City of Milwaukee and UWM’s Landlord Training Program this past October I learned that a person’s drivers license has all kinds of hidden elements that allow you to verify that the person handing you the DL is the actual person who was issued the DL. 

Here’s what I learned:

Assume that you are looking at a DL of a person named Jane No who has a DOB of 1937 and a DL # of N242-5323-7833-04.

1.     The first letter of the individual’s last name will be the first letter of the DL #.  In this case it is the letter “N.”

2.     The last number of the second grouping of numbers in the DL# and the first number of the 3rd grouping of numbers in the DL will be the individual’s birth year.  In this example it is “37″

3.     If the last three numbers in the third grouping of numbers in the DL # is greater than 500 then the individual that you are looking at should be a female.  In the example provided the number is “833″ which means that Jane No is a female.   Similarly if the last three numbers in the third grouping of numbers in the DL # are below 500 then the person who handed you the DL should be a male.

4.     To determine the the individual’s DOB you can do the following:

For Females:  Take the last three numbers in the third grouping of numbers and subtract 500.

For Males:   Take the last three numbers in the third grouping of numbers but DO NOT subtract 500.

Applying this to our example, we note that the last three numbers of the third grouping of numbers of Jane’s DL # are “833.”  So we should do the following calculation:  833 – 500 = 333.

Next we take 333 and divide it by 40.  The first number of the answer is an “8.”  You should take that number and add “1″ to it to get the month of the individual’s birthday.  So in this example 333/40 = 8.325  We take the first number of the answer which is  ”8″ and +1 to get “9″ which corresponds with the month of September.  So Jane was born in the month of September in 1937.

Obviously this  information is most beneficial if the applicant whose ID you are looking at (and whose application you are reviewing) is using someone else’s DL or has “doctored” the DOB on the DL for some reason.  I’m certainly glad that the bouncers at the bars at UW-Madison did not know this information back when I was in college or I might have had to spend more time at the movies or the library : )

More (and More) Legislation Introduced That Will Affect Landlords

Nov 11

Posted by Tristan R. Pettit, Esq. in Collections, Legislation | No Comments

I’m not sure if it is just me but it seems like more and more legislation is popping up that affects landlords.  Maybe it is just because I am paying more attention to the rental industry then I used to — kind of like buying a new jacket, bike, or car and then noticing from that point forward how many other people also are wearing that same jacket, riding that same bike, or driving that same car.  Who knows?

Set forth below are 3 new pieces of legislation that will affect landlords and the rental housing industry in general:

1.     2009 Assembly Bill 543

This bill would bar any landlord from requiring certain payments and from making certain claims against a deceased tenant’s estate.  If passed this bill would prevent a landlord from making a claim against his/her deceased tenant’s estate for any rent owed under the lease  that becomes due after the deceased tenant’s personal belongings have been removed and the keys have been returned to the landlord.  Additionally the proposed bill precludes a landlord from requiring payment from a tenant or including a contrary provision in his/her lease in an attempt to circumvent the above.

Under current law, a landlord is able to file a claim against a deceased tenant’s estate for rent due under the lease if the landlord was unable to re-rent the unit.  I have to admit that after reading this bill for the first time I couldn’t believe that this issue was worthy of having a new statute created addressing it,  but I then remembered that over the last 6 months or so I have received at least 5 telephone calls from landlords that have had tenant’s pass away during their lease and who had questions about what they could and could not do with respect to the rent owed under the lease – so it must be more common then I first thought. 

2.     2009 Senate Bill 352

This proposed bill would require any plaintiff wishing to file a small claims lawsuit that has filed more than 20 small claims lawsuits in the prior year to pay an increased filing fee and would also limit the amount that that plaintiff can sue for to $5,000o or less, but at the same time the bill would also allow any plaintiff that has filed less than 20 small claims lawsuits in the prior year to pay a reduced filing fee and sue for up to $10,000.

Essentially, under this bill, if a plaintiff bringing a small claims action has filed 20 or fewer small claims actions (money judgment, attachment, garnishment, or to enforce a lien) within the prior 365 days, then the amount claimed may not exceed $10,000 and the plaintiff must pay a filing fee equal to 150% of the regular fee (or $33).  If the plaintiff filing a small claims lawsuit has commenced more than 20 small claims lawsuits (money judgment, attachment, garnishment, or to enforce a lien) in the previous 365 days, then the bill would limit the amount that can be sued for to no more than $5,000 and requires the plaintiff to pay a filing fee equal to 200% of the regular filing fee (or $44). 

The plaintiff must also include in their complaint a statement specifying how many small claims actions they have filed in the previous year.  Additionally, the plaintiff will also have to file an Affidavit with the Clerk of Courts indicating how many lawsuits they have filed in the prior year.  If a person misrepresents this information the court is required to award the opposing side $250 in damages and reasonable attorney’s fees.

I’m not sure who came up with this idea or how they think it is fair to penalize a person for legally using the court system in the past, but the concept of equal access to the courts seems to have fallen by the wayside under this bill.  Many large landlords and management companies that are attempting to collect debts from ex-tenants will be greatly affected by this bill.  This proposed bill DOES NOT apply to eviction actions but it DOES apply to any small claims lawsuit that is not an eviction, such as money judgments, attachments, garnishments or lien enforcements.

3.     2009 Senate Bill 274

This bill would require a landlord to change the locks to a tenant’s unit, or allow the tenant to do so, within 48 hours after being requested to do so by the tenant, in situations where the tenant can demonstrate that the are facing an imminent threat of physical harm from another individual.  Under current law, a tenant is legally allowed to terminate their tenancy and vacate a rental unit (even if they are under a lease for a specific term that has not expired), if the tenant or their child can prove that they face imminent threat of serious physical harm from another.  This new bill appears to allow the tenant the option of staying in the property if they wish and having their locks changed rather than leaving.

Specifically, the bill would require a landlord to change a tenant’s locks, or give the tenant permission to do so, if the tenant requests the lock change and provides the landlord with a certified copy of one of the following documents: (1) an injunction order protecting the tenant or child from a person, (2) a condition of release ordering a person not to contact the tenant, (3) a criminal complaint alleging that a person sexually assualted or stalked the tenant or her child, or (4) a criminal complaint filed against a person as a result of an arrest for committing a domestic abuse offense against the tenant. 

The only exception in which the landlord would not be required to change the locks (or allow the tenant to change the locks) would be if the individual that poses a serious risk of physical harm to the tenant is also a tenant in that same unit.  If that is the case, then the landlord would not have to change the locks to the unit unless the tenant requesting the lock change can provide a certified copy of either (1) an injunction directing the other tenant to avoid the residence of the tenant who is requesting that the locks be changed, or (2) a condition of release ordering that the other tenant not contact the tenant requesting that the locks be changed. 

If a tenant requests to have her locks changed and meets the other requirements of this proposed bill then the landlord will have 48 hours in which to change the locks.  The tenant shall be resonsible for the cost of the lock change.

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LLC’s – PART 2: How To Insure They Protect You From Personal Liability

Nov 4

Posted by Tristan R. Pettit, Esq. in AASEW, LLC's | No Comments

In my October 28, 2009 post entitled LLC’s – Part 1: Why You Should Consider Using Them To Hold Your Rental Property,  I indicated that in the near future I would write a second post on LLC’s and include a link to the outline that I drafted and presented to the AASEW membership at the October monthly meeting.  My portion of the presentation on LLC’s focused on the following topics:

1.     General information on business entities (corporations, partnerships etc.) and how they are distinct from an individual person.

2.     How those general principles apply to LLC’s.

3.   What is “piercing the corporate veil” or “disregarding the corporate fiction” and what are the various tests and factors that courts look at when evaluating whether or not they should hold an individual liable for the actions or debts of the LLC under the “alter ego” theory.

You can read my outline here.

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MILWAUKEE’S RESIDENTIAL RENTAL CERTIFICATE PROGRAM VOTE PUSHED BACK 1 CYCLE

Nov 3

Posted by Tristan R. Pettit, Esq. in AASEW, City of Milwaukee, DNS, Legislation, Residential Rental Inspection (RRI) Program / Mandatory Rental Inspections / Landlord Licensing | No Comments

The Common Council did not vote on the passing of the city’s proposed Residential Rental Certificate Program earlier today as was planned.  Instead the Comon Council voted 9-5 to hold the proposed ordinance for 1 cycle (1 month) for further review. 

The proposed ordinance, which would require all rental property owners in the UWM-area and Lindsay Heights neighborhood on the north side of Milwaukee to pay an $85 fee per unit fee and submit to an internal inspection of in order to be able to rent out their property, passed out of the ZND committee last week by a vote of 3-2.  The proposed ordinance was to be voted on by the Common Council earlier today. 

In response to the setback of having the proposed ordinance pass out of committee the AASEW, who represents approximately 680 landlords in Milwaukee and the surrounding areas, retained legal counsel to review the ordinance for procedural and drafting errors.  Errors were found and were communicated to the City Attorney.  The AASEW  wrote to the President of the Commom Council and the various council members and pointed out its many concerns with the ordinance as written.

Prior to a vote being taken as to whether or not the ordinance should be passed, a motion was made by Alderman Donovan to hold the ordinance  for one cycle (1 month) to further review any problems and concerns.  This motion passed by a vote of 9-5.  It is assumed that the ordinance will be revised and then referred back to the ZND committee for an additional public hearing.

I will keep you advised as to what happens next.

For additional information on the proposed Residential Rental Certificate Program please refer to my earlier post.

Read Tom Daykin, of the Journal Sentinel, blog post about this change of events here.

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