Signing the lease paperwork and handing over the keys sounds simple enough so why is it that so many problems happen when the tenants move out and their idea of what they moved into does not match your own? Did you have a detailed move-in process checklist completed? You didn’t? You didn’t think it was necessary because they were so nice, or you just ran out of time, they were in a hurry to move in, you were in a hurry to move someone in? Whatever the reason, this simple task is often overlooked or not completed in a satisfactory manner.
When Tenants Move Out
I recently met some new clients who had moved in their own tenant and they basically gave him a free month of rent and no security deposit requirement because the condition of the property was not ideal.
So what happens when the tenant moves out? He can claim that the place was a mess when he moved in and thus he doesn’t need to leave it clean. They gave him a free month of rent for that too, but did they complete a move-in inspection sheet? Not at all. What happens if that is not done? Well if you have to hire someone to restore the place, you cannot recover any of that money you have to pay if they never completed a move-in inspection sheet.
Tenants in these circumstances will pay you if they want to be kind to you, but they do not have to pay a thing because you cannot prove a thing. Meticulous documentation is absolutely necessary — all parties must sign a move-in inspection form and show that everyone is in agreement on the condition of the place. In my state of Washington, I also know that it is not legal to collect a security deposit if you do not complete a move-in inspection sheet. With this particular tenant, I looked over the lease and I did not see anything where a credit was given for the home condition, so they can claim whatever they like. No one has any documentation.
Tenant Move-In Process
I have found it often difficult to coordinate the documenting of the move-in inspection sheet and the lease signing because sometimes the new tenants are not even there locally when signing the lease, and sometimes there does not seem to be enough time to do both. It happens. In an apartment complex the process is easier because you do not have to get into a car and drive somewhere, but when you are managing many properties over many cities, that task can seem difficult at times.
I have found myself failing to do things properly and then wish I had done better in the beginning. Now I am meeting everyone at the property instead of my office to sign lease paperwork. I am doing the move-in inspection first before signing any lease paperwork then following with the lease paperwork so that it is fully complete without exception.
The lease paperwork will also state the following:
- Every occupant that lives there
- What the prorated rent is
- A receipt for the security deposit
- The term of the lease
- What will be accepted as far as payments
- All of the rules and addenda required for that state and age of property
- Whether there are any pets and what fees are paid for any pets and what is nonrefundable.
If something is not spelled out at move-in, then it will undoubtedly cause potential arguments later.
The money should be deposited into the trust account within one business day of receiving the deposit, once the lease is signed. Different states may have different requirements, but it is a good rule to follow. Be sure to set up the account into the system with all information. I have them complete an emergency contact form before lease signing so that I can reach them through other people if necessary. I also do not accept a partial deposit. The trust account should agree with what the lease deposit states, and if they do not have enough money to move in and pay the required deposit, then don’t rent to them.
Tenant Screenings Are Vital
Hopefully you have done a tenant screening too. You are allowed to set whatever criteria you want as long as it is followed consistently and it is not discriminatory. For my own tenants, I require:
- three times the rent in gross income
- a credit score of 650 or higher
- no criminal history
- a year of positive rental history
- no more than two occupants per bedroom
Your own criteria can be more or less restrictive, as long as the tenant or tenants understand it before they apply. Make sure they sign the rental criteria sheet, whether it is on hard copy or online, and explain it to them. If an applicant cannot meet those requirements, then I will require an extra deposit or a qualified cosigner and sometimes I cannot rent to them at all. If I can’t rent to them, I will need to send them an adverse action letter similar to what you might get if you are denied credit, and describe why they are not being rented to.
Making Judgment Calls
Because I work for the rental owners, if a tenant is denied due to a situation that is no longer relevant, then I will pass the screening report onto the owner and let them decide if they will choose to waive the denial and rent to them anyway. Some applicants are suitable to rent to even if they are denied. For example, they may have lost their job and became unemployed and lost their home as a result. Now they are employed again and can afford the rent easily, but they will be denied because of the foreclosure.
People have to live somewhere, and sometimes you just have to use some common sense and see if they are going to be good renters for you based on what is going on in their life now, not what may have happened two or three years ago. I will always require an applicant to pay any back rent to formerd landlord if that shows up on a screen. I feel that if they do that, then they are taking care of business and deserve a second chance if everything else shows they are worthy.
Putting time into this process and taking it seriously will help you to move in a tenant you will want to keep.
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