How to Deal with 4 Categories of Problem Tenants, #4: The Rule Breaker

Over the past few weeks, we’ve talked about how to deal with 3 of the most stressful kinds of problem tenants for landlords: Slobs who trash rental properties, Hotel Guests who expect everything done for them, and Professional Tenants who try to avoid paying rent altogether. In our fourth and final part of this series, we’re looking at the most emotionally-draining tenant of them all: tenants who love to break the rules, whether it be lease clauses or federal laws.

Rule or law-breaking tenants are the worst-case scenario of the rental world. They range from holding huge parties that trash your property or using it as a headquarters for their unregistered business, to converting your property into a meth lab - a classic Breaking Bad situation.

So what can landlords do to prevent these tenants from occupying their properties, or deal with it when they discover shady activities taking place?

Extensive Tenant Screening

The best way to avoid these situations is: don’t let criminals into your property in the first place! Almost all landlord-tenant problems can be solved with a thorough screening process, and this one is no different. Go beyond the usual financial background check to find out an applicant’s behaviors in their prior rental. 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 took place? If you have a PMC hired, they should be able to dig deeper than just standard screening requirements to help spot any concerning indications.

Detailed Lease Agreements

Aside from screening extensively, have clear lease agreements and knowledge of the state laws in your area - what’s allowed, what’s not, and how you as a landlord should respond to any illegal or off-limits activities. By being armed with legal knowledge and grounds, you’ll be better able to protect yourself and handle problematic tenants in court.

But with so many types of rule-breaking tenants in the world, how can you protect yourself from each kind? Let’s look at some different problem scenarios you could run into with tenants who either violate lease clauses, or outright break the law, and how to prevent and handle each one:

1. Rule Breakers:

The Home Entrepreneur

Especially now, in the WFH era, tenants might try to run their business from home. This should be forbidden in your lease, but in itself this isn’t illegal, unless it’s a violation of local zoning ordinances - which most tenants aren’t even aware of. Either way, if an injury or incident happens with one of their staff or customers, they might even include you in the lawsuit! Furthermore, residential mortgages sometimes prohibit businesses from being located in the property, so this could put you in serious financial, as well as legal, trouble.

Depending on the type of business, you as a landlord might have some liability exposure. If they're not doing anything illegal or have no liability issues, it may not be a problem, but running a daycare or dog-sitting business from your rental is a different story, since there’s lots of potential for liability and damage to the property.

PREVENTION:

1. Mention in the lease that any business, whether registered or unregistered, will not be allowed in the property. Lay out in detail the consequences if they break this clause.

2. Set a limit to how many occupants may be on the premises at one time.

3. Check with your insurance company regarding your coverage for claims relating to an unauthorized business.

SOLUTION:

1. Give tenants a strict time frame within which to cease operations and provide proof of a physical office address that ISN’T your rental.

2. Document all communications.

3. If they don’t change before the allotted time is up, begin the eviction process immediately.

The Pot Farmer

Growing a small amount of marijuana for personal use may be legal in many states, but that doesn’t mean you have to allow it in your property. The same goes for smoking it. But what can you do to prevent people from cultivating their own indoor pot farm, or lighting up inside your rental?

PREVENTION:

1. Add a clause in your lease that forbids indoor gardens of any kind (this will also protect your floors and window sills from water stains left by ordinary house plants).

2. Make sure you say the property is no smoking, and include a penalty fee for violations.

SOLUTION:

1. If weed is legal in your state, send the tenant a written warning informing them that they’re in violation of your indoor garden or smoking clause, telling them to desist, and imposing a penalty for noncompliance.

2. If they persist, write to the tenant that they’re in violation of the lease agreement and begin eviction proceedings.

3. If weed is illegal in your state, you can file a report with the police.

The Party Host

House parties in short-term rentals are a trend that’s been growing, even during the current health crisis. Raucous crowds of young people (some minors) gather to consume large amounts of alcohol and maybe even illegal drugs on your property.

Some police already arm themselves with heat-sensitive guns to scan houses for these large, illegal parties. Some states have also taken more serious action, like passing legislation specifically to outlaw them and treat violations as a second degree or Class B misdemeanor. 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.”

This is an actual issue in our community. So what should you put in the lease agreement to protect yourself and your property from becoming the next rave location?

PREVENTION:

1. Do thorough screening prior to accepting any short-term rentals. Check if they’ve rented other places recently, and look for past reviews from property owners.

2. Put a clear limit on how many guests are allowed at a time in the property.

3. Stress that underage drinking, drug use, or disorderly conduct is considered an illegal activity.

4. Put detailed consequences and actions that you will take if they break the rules.

SOLUTION:

1. If the party still pushed through (or is already ongoing as we speak), call up the police to take care of the situation. If illegal activities (underage drinking, narcotics, etc.) are discovered, you can have the guests removed right away.

2. Refer to the rules in your short term rental listing to prove you took every reasonable step to prevent the party and reduce the risk of being held liable.

2. Law Breakers:

Definitely evict any criminals that you catch breaking the law in your rental properties. These tenants find it easy to break lease agreements - they’ve already done worse things than that! Whether they’re using, producing or selling drugs in your rental, or even running a sketchy pornography ring, you need to make sure you spot the signs and take action immediately.

Common signs you should pay attention to are:

• - An excessive number of people coming in and out of the unit
• - Tenants frequently walking up to parked cars or dropping off items by the curb
• - Consistent commotion during the wee hours of the night
• - Broken locks, windows, door frames, etc.
• - Suspicious pipes, needles, or any other paraphernalia

PREVENTION:

1. Have a comprehensive lease agreement with a zero-tolerance policy towards criminal activities of any kind, making it grounds for immediate eviction (even if they’ve paid their rent).

2. Install motion-detecting lights around the property.

3. Prevent your tenant from making too many copies of the unit key/access, even if they say it’s for their close friends or family. (Opt for the type of keys that cannot be duplicated by a regular locksmith, too.)

4. Visit the property frequently to observe if anything is suspicious.

SOLUTION:

1. Document any evidence you find.

2. If you’ve verified that your tenants truly are engaged in criminal activities, call the police and evict them immediately.

3. While the property is vacant, take extra precautions against trespassers. Former clients of your criminal tenant could come back looking to score, and you don’t want them to find your place totally unguarded.

4. Out of all problem tenants, the law-breaker is the most dangerous. Don’t try to confront them personally, as you could be putting yourself at risk by trying to handle it yourself. Once the police are involved, then you can begin your own proceedings - in writing, not in person!

Illegal tenants are more common in lower-demographic areas than in higher-demographic neighborhoods, but no matter where your rental properties are located, you should always be prepared to deal with extraordinary cases like these. All of the situations we’ve outlined here constitute a landlord’s worst nightmare, but armed with these tips, you can protect yourself and respond quickly to minimize the damage any rule-breaking tenants might cause.

And with that, we’ve come to the end of our four-part series on how to deal with problem tenants!

What’s the worst kind of tenant you’ve ever had? How did you manage the situation?

Image Courtesy of: Juliana Stein