How to Deal with 4 Categories of Problem Tenants, #4: The Illegal Rent

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Illegal tenants are the rats of the rental housing world. They nest in your properties and use it as a hub to carry out their evil plans. They range from hosting disruptive parties in the unit to, in the worst case, converting your rental property into a meth lab—a classic Breaking Bad situation.

So what can we, as landlords, do to prevent illegal tenants from occupying our properties?

Types of Illegal Tenants and How to Prevent Them

Arming yourself with legal knowledge and grounds gives you an edge against any problematic tenants in court. But as they say, an ounce of prevention is better than a pound of cure. Learn the types of illegal tenants and how to protect yourself against them.

The Trespasser

Trespassers are people who illegally occupy your rental property. They are different from squatters because, surprisingly, squatters have rights—and are considered a landlord-tenant issue rather than a crime. The quick and dirty way to differentiate a squatter from a trespasser: squatters claim to own the property while paying for utilities, while trespassers illegally enter a property without claiming ownership.

Ward off trespassers by investing in security systems such as CCTV cameras, alarm systems, and smart locks.

The Tenant Smuggler

Some tenants allow their friend to crash on their sofa for months or secretly get another roommate to split the monthly rent without a landlord’s permission is a classic case of tenant smuggling.

A rock-solid lease agreement should prevent any cases of tenant smuggling. For example, tenants must list their names and information and the consequences for overstaying “guests.”

The Shady Entrepreneur

Tenants conducting business within your properties without your purview isn’t strictly illegal. However, if an incident or injury occurs, you, the landlord, can face legal consequences even if you have nothing to do with the incident. Additionally, if the business violates any Michigan zoning laws, you’ll also face legal consequences.

Preventing under-the-table businesses can also be remedied within your lease agreement. Ensure you include clauses prohibiting conducting business within your rental property and limiting the number of occupants.

The Hard Partier

In the city of Frankenmuth, Michigan, they have an ordinance that says:

“No adult having control of any residence shall knowingly allow an open house party to take place at said residence if any alcoholic beverage or drug is possessed or consumed at said residence by any minor where the adult failed to take reasonable steps to prevent the possession or consumption of the alcoholic beverage or drug at said residence.”

Besides the obvious property damage results, a rowdy party can bring legal consequences to your door. In fact, police officers carry heat guns to scan houses for large parties.

Avoiding party-happy tenants comes down to good screening and lease agreements. Ensure you conduct thorough reference checks and include clauses that limit the number of guests and prohibit disorderly conduct and underage drinking.

The Dangerous Criminal

Now we’re dealing with the worst of the worst. We’re talking about your Heisenbergs planning to grow a drug farm in your backyard.

Besides a robust background check, your lease agreement can protect you from criminal activities. Prohibit your tenants from creating copies of your keys to deter people from entering your rental property without your knowledge. Additionally, conduct frequent visits and install motion detectors and other security systems within the premises. Lastly, in the event of discovering drug activity, Michigan law requires landlords to submit a Drug Activity form.

Extensive Tenant Screening

Your first solution is to weed them out. Almost all landlord-tenant problems can be solved with a thorough screening process—and this is no different.

Go beyond the usual financial background checking because you need to know their behaviors in their prior rental. In fact, walk the extra mile and get in contact with their past landlords and ask the right questions:

• - Did they abide by the rules and agreements?
• - How did they break/keep them?
• - Were there any illegal activities that happened?

Remember, when screening your tenants, you must abide by the Fair Credit Reporting Act (FCRA) and the Fair Housing Act. But, if you want to learn more about proper tenant screening etiquette for a Michigan landlord, you can read more from our Tenant Screening guide.

Extensive Lease Agreements

Aside from screening extensively, arm yourself with clear lease agreements and knowledge of the state laws in your area. Furthermore, it’s essential to keep yourself updated on the latest regulations. After all, using outdated leases is as good as having nothing at all. So, keep yourself knowledgeable on the latest Michigan Tenant laws—how much you can charge in your application fee, what’s allowed, and the consequences of a contract breach.

To learn more about crafting the most bullet-proof lease agreements, you can study our 5 of the Most Important Lease Agreement Clauses guide.

Protect Yourself, Your Property, and Your Tenants From Illegal Activities

The last thing you want to do is to stain your reputation because of illegal tenants. You’ll scare away good-quality tenants who prioritize safety, leaving you with a less desirable tenant pool to fill up the vacancy with. So make sure you keep your reputation squeaky clean.

If you are overwhelmed with managing your properties and dealing with difficult tenants, there’s no better time to get a property manager to take care of everything. Message me directly for more info.