About to sign lease when you learn new info about a tenant - how would you handle?

[Stephen T.]

Hi

I have a renter lined up for my first rental property. At the beginning of January during the screening process, we spoke with current landlord and he gave a very positive recommendation for this tenant - pays on time, very clean, kids are great - she's a good mom keeps them in line, sorry to see her go, etc.

This evening I get a call from current landlord that tenant has not paid January rent and that he's just posted a quit notice for the nonpayment. The other day he tried to call her to give her a chance to rectify before posting the quit notice, and she responded to him with a nasty voicemail (he played it for me) explaining that the house will be returned in perfect condition next week, to take her security deposit to cover January, and not to harass her any further. He didn't need to tell me this, but he feels betrayed after giving the positive recommendation.

We have not signed the lease yet, but she did give us first, last, and security deposit the other day - we were going to sign the lease that day but I had something come up and my wife didn't feel comfortable signing it without me there (both of our names are on the lease as landlords). I have started getting notices that she's setup water, electric bills to her name starting next week. We're supposed to meet tomorrow to fully sign the lease and hand over the keys.

What would you do in this situation?

Steve

[Rick Bassett]

Consider:

It is the winter, if you pull the plug on her now, which you are entitled to do, then you will lose a months rent plus utilities plus your efforts of lining up another tenant.

She will certainly do this to you as well on the back end of her lease, you can pretty much count on that. You will lose the last months rent which you may or may not be able to get a small claims judgement against her for.

So it becomes a question of whether you want to take the 1 month rent hit now or later.

This is what I'd do (and have done in similar situations):

I'd take her now but only make the lease 6 months so that you can get it in-sync with the prime renting season going forward and get a better read on this tenant. Tell her that you want to get your lease in-sync with the summer rental season (that is your privilege) and you will renew it with her in late June for 8/1/14 - 7/31/15 assuming there are no problems (late payments, problems discovered in June walk thru, excessive drama etc).

I would also go back and take a hard look at the data that she provided on the application so that you have a better chance of finding her after she leaves in case you have to take her to small claims or housing court. Get good information on the Emergency Contacts (relatives especially). It is far easier to get this info now then after they have moved in.

This does a few things for you:

1) It lets the tenant know that you know how to run your business right from the beginning.

2) It gives you a 18 month tenant instead of a 12 month tenant as renewal will most likely happen unless she is terrible.

3) It gives you the information that you need upfront for when you have to chase her for the last months rent.

4) You get your rental unit in-sync with the prime rental season going forward.