When Does a Guest Become a Tenant?

Written by Jimmy Moncrief on June 6, 2016

New roommates, visiting family, new boyfriends, and live-in nannies are all common scenarios. But when does a guest become a tenant?

What’s the Difference?

There is a thin line between what defines a guest and a tenant. Guests can be a huge liability if they start acting like tenants.

Some landlords would respond by saying “a tenant is someone who is one lease”. While true, this doesn’t account for guests that have taken up residence in your rental without your permission. Built into the tenant’s right of quiet enjoyment, guests are certainly allowed, but rogue tenants are not.

It’s extremely important for any adult occupant who is living there, to be on the lease. Otherwise, there is no legal accountability for them.

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Examples of Tenants vs. Guests

	TENANT	GUEST
College Kids	Returning home for the summer or because they dropped out	Returning home for Weekends, Spring/Winter Breaks, but always goes back to school.
Elderly Parents	Moving in with children because they can no longer take care of themselves	Visiting children for a brief few weeks, or to help with a new child
Boyfriend, Girlfriend or Friend	Spending most days and nights there – for weeks/months at a time	Only visiting during the day, no matter how frequent
Hired Help, Nanny or Farm Hand	Living on the property	Only on-site during normal business hours
Au Pair	Living on the property	By definition, they live with the family, so they will always be a tenant.

Warning signs that a guest has become a tenant:

• Guests who pay rent
• Guests are receiving mail at the property
• Guests that spend every night at the property
• Guests that have moved-in furniture or pets
• Guests that make maintenance requests

Other Considerations

1. State laws are different regarding this issue, so be sure to check outLandlordology’s state guides to research this issue for yourself.
2. This issue of how long a guest can stay should be addressed in your lease, such as no more than 10-14 days in any six-month period. 14 days should be enough time for any one friend or relative to visit in a six month period.

Related: 

• How to Handle Rogue Tenants and Long-Term Guests
• How to Get Rid of Squatters

Should You Add the Guest to the Lease?

Again, it’s extremely important, and an industry best practice, for any adult occupant who is living there, to be on the lease. This is so 1) they are obligated to the lease, and 2) you know who is living there.

Confrontation is Uncomfortable

Most landlords I talk to prefer to ask the current tenant to add the new roommate to the lease. Yes, this is an uncomfortable conversation, but it’s also an opportunity to talk about renewing the lease at a higher rate and for a longer term!

The alternative is to serve the original tenant with a lease violation notice, and threaten to terminate the agreement.

Factors to Consider

Many of the factors that you should consider when trying to convert a guest to a tenant are:

1. length of stay;
2. existence of a lease or other “special contract for the room;”
3. receipt of mail;
4. access to cooking facilities;
5. degree of control over the space (such as whether the person has his or her own key);
6. whether the person has another residence; and
7. the extent to which the person has made the dwelling his or her home for the time being

At the end of the day, give it the “Duck Test“:

If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.

Take Preemptive Action

This whole situation of a guest becoming a tenant is fairly easy to avoid if you have a candid conversation with the current tenant explaining what is and is not allowed. The issue should also be addressed in your lease, and you could even ask your tenant to initial beside the lease portion that addresses this issue.

If you accept rent from a guest, you might have initiated a landlord-tenant relationship. If that is true, your new tenant might now have the same rights as any other tenant and will not be easy to remove, as a simple trespasser can.

It’s also a good idea to consult an attorney before the issue actually warrants one. That way, you can proceed with the right course of action as directed by the attorney.

Related: Never Accept Rent from a Non-Tenant

What Others Have to Say

“Depending on the individual state laws with respect to the issue, once someone has started receiving mail at an address they have established residency. That can be done without someone actually occupying a property. If the guest spends more than half a month at a place they could also be considered a tenant at that point as well. Our lease forbids more than 14 nights in a month for anyone not named on the lease for this reason.”
— Brian Levredge, First Property Management

“For us, it’s not a big deal so long as the tenant on the lease still lives there and is current with the rent. We don’t allow our tenants to sublet without written permission which normally involves a new set of paperwork.”
— Aaron Kinney Mobile Home Park Owner 

Summary – Prepare, don’t React

This very important issue will probably come up if you are a landlord for any length of time. The time to prepare for this situation is before it happens, notwhen it is happening.

Source: Landlordology

The Renters Insurance Perk Few People Know About

Most tenants don’t see the value in having renters insurance, in part because they are unaware of a coverage it provides: loss of use.

Along with coverage for personal property and liability protection, in the event a lawsuit is filed against a policyholder, renters insurance helps cover loss of use, or sometimes additional living expenses, if a home becomes uninhabitable. That might not sound like a good perk, but it could save a renter a lot of money.

Say a tornado or hurricane destroys a renter’s home and they can’t stay there until it is repaired. The cost of food and to stay in a hotel until they can return or find a new permanent residence could be thousands of dollars. A renters insurance policy could offset that financial burden during a time that would already be emotionally and financially stressful.

Coverage for additional living expenses is essentially the same across all renters insurance policies. As long as a home is deemed unfit to live in by a recognized authority, the loss of use coverage will activate. Companies typically provide a stipend each day as needed, up to a limit stated in the policy.

Most cover up to $2,000 or 20% of the policy’s personal property coverage, whichever is greater. Assuming a typical personal property limit of $25,000 that would mean $5,000 of expenses covered.

In addition to a hotel stay and meals, some policies will also cover atypical travel costs incurred as a result of the temporary relocation. It doesn’t have to be a subway or train ticket. Increase expenditure on gasoline might qualify.

Renters who live in areas subject to natural disasters are not the only ones who might find loss of use coverage beneficial. No matter how careful someone is, they might only be as careful as the neighboring tenant. A fire in an adjacent apartment, or even another free-standing home, might damage another residence and cause it to be uninhabitable.

Considering the coverage of renters insurance, it is relatively inexpensive.

The average annual renters insurance premium in the U.S. is $188 – far less than the average homeowners insurance premium at $952. It’s much cheaper because renters policies do not cover the housing structure itself, which is the responsibility of the landlord or owner.

Source: huffingtonpost.com

How Landlords Are Fighting Back Against the World’s Filthiest Tenants

It isn’t hard to find lots of disturbing news stories about sleazy landlords—you know, the ones who turn off the heat in the dead of winter and water in the dog days of summer, and haven’t fixed or painted anything since the Ford presidency. And social media is rife with tenants complaining about such unscrupulous behavior. But what happens when the shoe’s on the other foot and it’s the renters who are causing trouble?

A new Facebook page called Disgusting Renters is giving embattled property owners their own space to vent frustrations about unsanitary tenants who leave their rental apartments looking like crime scenes, natural disasters, or special “Director’s Cut” episodes of “Hoarders.”

The page, which may prompt sensitive readers to don hazmat suits just for viewing purposes, is filled with photographic evidence of the stomach-curdling filth and grime left behind by these odoriferous occupants.

Created in April, the page already has more than 2,400 likes and dozens of vivid posts. Here are a few of the highlights (or is it lowlights?), carefully (and euphemistically) described to not completely gross you out, dear reader:

• A photo of a kitchen with a recliner in the middle of it, amid a several-foot-high selection of snack bags, empty soda cans, and even less palatable trash.
• A picture, simply titled “Wow,” showing a former yard taken over by any number of coolers, construction pails, and what appears to be a partly functioning aquarium.
• A bare mattress atop a soiled wooden floor with this description: “Bird feces all over the floor. The smell is horrendous.”
• An artfully shot photograph of hundreds of roaches swarming over a bathroom wall and toilet.

OK, we’ll stop right there. Sorry if we went too far with that last one.

The page was created by Milton, FL, landlord Craig Morgan, 47, after the mobile home he and his wife rented out was trashed by his tenants, a couple and their kids.

“It was horrible: bird feces, dog urine, dog feces,” he told ABC affiliate Weartv.com. (We’re sensing a pattern here.) “Trash left all over the floors, front porch.”

He told realtor.com® the flea-infested home had to be gutted and was sold last month at a $25,000 loss.

“I’m not doing any more rentals,” says Morgan, who owns a barn building business. “That sealed it for me and my wife.”

He urges other landlords to take precautions to make sure things like that don’t happen to them.

This is often easier said than done, especially for regular folks renting out a spare room or an investment home, says Stephen White, CEO of RentPrep, a Buffalo, NY–based company that provides background checks for landlords.

Potential tenants should be screened as carefully as possible before they move in, he recommends (not surprisingly given his line of work). Landlords should also check on the properties at least twice a year to make sure everything is as it should be and the tenants aren’t, say, rat collectors.

“Check the condition of the premises to catch conditions early before it’s too late,” White says. “The worst-case scenarios we see are infestations or things that have been let go for way too long.” He even describes a testing kit available to ensure that there are no working meth labs on the property.

The longer a problem goes unattended, the more it often costs to fix. And getting rid of horrible tenants can be extremely difficult as the eviction process can be both lengthy and expensive.

In the worst-case scenarios, landlords should consider offering problem tenants cash—usually recommended to be about a month’s rent—to get the hell out. And particularly embattled property owners can even add a cash bonus if the renters don’t do any further damage, such as flushing concrete down the toilet (true story).

“You don’t want to reward bad behavior, but at some point you have to stop the damage and try to minimize your losses,” White says.

Source: realtor.com

How Landlords Can Manage Troublesome Tenants in Their Investment Property

Question: How can I manage a troublesome tenant living in my investment property?

Answer: By Carolyn Parrella, Executive Manager, Terri Scheer Insurance

Attracting the wrong type of tenant can make or break an investment experience for landlords. While bad tenants are the minority, they can cause major headaches for landlords. Tenants can become troublesome when they fail to pay their rent on time, break the lease agreement or cause damage to the rental property.

Bad tenants may leave investors out of pocket, so it’s important to try to minimize the risk of malicious damage and loss of rental income.

Regular property inspections

Regular inspections are essential to ensure the tenant is looking after the property. Regular inspections can make it easier for landlords to quickly identify if and when any damage to the property has occurred, whether there are any maintenance issues that need attention or if there are any concerns that may pose a legal liability threat.

Any issues identified should be dealt with promptly to send a clear message to the tenant that you care about the property and value their concern for its condition. If a tenant’s requests for repairs go unanswered they may begin to question their own commitment to the property and become more careless about it.

Good relationship with tenant

Maintaining a positive relationship with your tenant can help to ensure they remain cooperative throughout their lease agreement.

Listening and carefully considering requests for changes to lease conditions and responding quickly to queries or concerns helps build rapport. Requests to change lease conditions should be carefully considered and if rejected, sound reasons should be provided in writing.

Where routine maintenance needs to be undertaken, working with the tenant to determine the best time for the work to be undertaken is also good practice.

Troublesome tenants may avoid communicating with landlords, if they haven’t been looking after the property or paying their rent on time. This should send warning bells to landlords that there could be issues with the tenancy and they should act promptly.

Enforce lease agreement

Having a clear lease agreement in place may help to ensure tenants are meeting their obligations.

Lease agreements can be tailored to meet specific needs and may include pet or smoking policies.

Landlords should regularly check and enforce their lease agreement to ensure tenants are doing the right thing. Tenants should be made aware of any breaches to the lease agreement, while landlords should deal with the breach promptly to minimize any risk to the property.

Deliver notices on time

If a tenant falls behind in their rent, the sooner you know about it, the sooner you can attempt to resolve the issue and mitigate any financial loss.

Even if you are aware that your tenant is suffering from financial hardship, it’s still important to send breach notices on time and according to regulations.

If you delay sending the notices and you later have to make an insurance claim for loss of rent, your claim may be reduced.

In the first instance, a breach notice should be sent to the tenant for non-payment of rent and arrears should be monitored daily until the tenant pays their rent or the issue is dealt with accordingly.

Tailored landlord insurance

Despite your best efforts to attract and retain suitable tenants, there are still risks associated with owning a rental property.

Even the best tenant can accidently damage a property or endure financial hardship leaving them unable to pay rent. Specialised landlord insurance is essential and can provide cover for landlords should an unforeseen insurable event occur.

Landlord insurance policies can provide cover for malicious and accidental damage, loss of rental income and the landlord’s legal liability.

Source: yourmortgage.com

Should You Invest in Rental Property?

Rental properties sound ideal at first: If you purchase a turnkey property, and then you get good tenants, acting as a landlord certainly can be an ideal way to make some extra money (especially if you buy in an ideal rental market). However, if you choose to take on a rental that requires a renovation, unexpected expenses can arise; plus, most landlords won’t have ideal tenants every time. There are many pros and cons to owning rental properties, and jumping right in can be tempting, but it can also be a disaster. Before you make a decision, it’s a good idea to look around for ideal properties, ask advice from other landlords, consider the financial implications of your decision, and determine whether you really have the time and energy to become a successful landlord. Here are the pros and cons to consider before purchasing a rental property.

The pros

Obviously, owning a rental property (or multiple properties) can add to your income. According to Money Magazine, the best ways to make more money on your rental properties include decreasing vacancy, minimizing turnover, using late fees, and adding additional services.

Becoming a landlord also gives you a chance to decide how involved you want to be in your job. If you are taking on rental properties as your full-time job, you may be confident that you can handle everything yourself. On the other hand, if you are hoping to keep working at a separate full-time job, you might prefer to hire a property manager, or at least use contractors for issues that are time consuming. The good thing about owning rental properties is that you can definitely determine how much you want to work, and that isn’t a possibility at many jobs.

Rental properties can also give you peace of mind as you grow older. If you purchase rental property, and you hold on to them for many years, you can later sell them and make money later due to home appreciation. You can also benefit from tax benefits.

The cons

Owning rental properties isn’t always a smart financial idea. Finding tenants often requires more than simply putting up a sign on the lawn; especially if you live in an oversaturated rental area, you may have to spend a great deal of time and money on advertising. In order to attract the best tenants and have a wide pool of applicants, you may need to pay for newspaper, magazine, or even social media advertising.

In addition, you will want to carefully screen potential tenants (you will want to besure to ask for their social security number, employment, income and credit history, references, and past evictions), and if you end up with a bad tenant you could face bounced checks, lack of income, and damage repair. If you can’t find a tenant or the property has to be repaired over a significant amount of time, you will also lose money. You also may face legal ramifications.

Owning rental properties can also require a lot of time. You can delegate some or all of the responsibilities, but you will have to pay someone else to do it (which means loss of rental income). At the minimum, if you choose to do everything by yourself, you will need to attract tenants, fill out paperwork, fix problems, perform regular maintenance, and handle phone calls and rental fees; these things alone can take a good deal of time.

Decision time

Should you invest in or purchase income property? Consider your stage of life before you do. If you are extremely busy, rental property ownership won’t necessarily be the best idea for you unless you are willing to hire help. Also, you will need to take out a loan unless you have a lot of extra money lying around, so you also need to consider your credit standing.

Your personality and abilities should also be considered: Some people would enjoy the social aspects of being a landlord, but others would not be able to go after tenants who owe money or need to be evicted. According to Landlord Station, a good landlord will keep good relationships with tenants, complete repairs quickly, maintain the property and keep renters safe, and keep the grounds clean. If you think you can do these things, then investing in a rental property might be the right choice for you.

Source: cheatsheet.com

– See more at: http://www.american-apartment-owners-association.org/property-management/real-estate-investing/invest-rental-property/#sthash.hgVVk5gb.dpuf

Apartment Complex’s Demand That Tenants ‘Like’ It On Facebook Backfires

A Utah apartment complex that ordered its tenants to “like” the property on Facebook is now backpedaling as the Internet lashes out against the bizarre requirement.

Tenants at City Park Apartments in Salt Lake City spoke out against the policy after finding a “Facebook addendum” taped to their doors last Thursday. Those who did not “like” the complex within five days of signing their lease would be found in breach of the agreement, KSL News reports.

Residents also had to let City Park Apartments post pictures of them and their guests on its Facebook page, and were forbidden from posting any negative comments about the complex on any public forum or page.

“I don’t want to be forced to be someone’s friend and be threatened to break my lease because of that,” tenant Jason Ring told KSL News. “It’s outrageous as far as I’m concerned.”

While residents were predictably angered, so were many social media commenters. Since issuing the addendum, City Park Apartments has racked up overwhelming negative reviews on Yelp — where it currently boasts a one-star rating — as well as on ApartmentRatings.com. An unofficial Facebook page for the complex also shows a 1.1-star rating. Some Facebook and Yelp users are going so far as to call the policy fascist.

A tenant lawyer who spoke to KSL News said the addendum was likely illegal because it potentially discriminated against the elderly, the poor and people who simply choose not to have a Facebook account.

The controversial addendum was intended to “provide some protection to [the apartment complex’s] residents and its owners from usage of photos on its Facebook page from all community events,” the Law Offices of Kirk A. Cullimore, representing City Park Apartments, told The Huffington Post in a statement on Tuesday.

The addendum that appeared on residents’ doors “went beyond” what the complex intended and was not carefully reviewed before its release, the firm stated.

“At no time was any resident in jeopardy of eviction or action from City Park for failure to sign the addendum or ‘friend’ City Park Apartments. City Park has not implemented the addendum nor is it requiring its residents to execute it,” the statement continued.

The complex also sent a letter to tenants on Tuesday to clarify that the addendum “went beyond the original intent,” according to a copy obtained by HuffPost. City Park Community Manager Ana Raphael signed the letter.

“While we openly encourage residents to follow the property Facebook page for announcements and feedback, this is not mandatory and an absence of engagement on Facebook in no way affects any residential lease agreement,” the letter stated.

Source: huffingtonpost.com

Why Screening Tenants Should Be Your Main Priority

I’ve been a landlord for what seems forever and I’ve been helping other landlords with their problem tenants for almost as long and it’s given me a ton of insight into the problems landlords get themselves into. They range from lack of paperwork to lack of follow up to simply being in over their head. But, one issue seems to stand out far more than anything else.

Tenant screening…

Deep down, I’m pretty old school, but the reality is life has changed. I really do want to trust people and have them do what they say they’ll do. Unfortunately though, we can’t depend on people as much as we used to and a hand shake isn’t worth what it once was.

Yet many trusting, unsuspecting and typically new landlords don’t quite understand that.

I know, we’ve all heard of that master landlord, the super successful guy who goes by his gut and somehow seems to never have any problem tenants or any issues with his property.

Well, he’s a myth, a facade or perhaps maybe not sharing the entire story.

I know.

Because I fit into the master landlord category and I’ve had tons of problems over the years!! And I don’t even just go by my gut, I diligently screen and still have problems, albeit far less than those relying solely on mankind being predominantly good and their gut!

After your first thousand tenants you tend to get a lot of systems in place, you have a much better understanding of who to keep an eye on, who to never let in and who looks like the ideal tenant, but it’s still not enough.

Bad tenants have gotten craftier, conmen have gotten more deceptive and often rules to deal with problem tenants have become convoluted, drawn out and open for endless appeal. All at your expense.

Yes there are skip tracers out there and processes to track down tenants after they left in an effort to secure judgments on them, yet none of these are a guarantee you will ever get paid and often even cost you up front to even try. Ultimately wouldn’t it be far simpler to make sure as few of them as possible ever made it into your property?

That’s why YOU, yes YOU (note I went all caps both times for emphasis just in case you thought I meant other landlords…), need to take control and makes sure you have a repeatable systematic and thorough process to screen tenants.

I’ve been coaching landlords for years now and that involves teaching them about screening, so I’d like to leave you with a couple tips to help you move forward with a screening process that can be a priority.

First, make sure you have an application form.

And on that application form you need to make sure you have spots for current landlord, previous landlord, current employer, previous employer where possible, and a couple emergency contacts.

These are all the people you’ll want to personally talk too so you have a true understanding of who the tenant is.

Second, you’ll want to have the ability to check credit/payment history of your prospective tenant.

Whether it’s through American Apartment Owner’s Associations credit checking service or a third party by checking your prospective tenants credit history you’ll have a clear understanding of their previous history of payments. Make credit checking mandatory, and warn tenants you do this as it may shorten your list of prospects!

Finally, never allow your new tenants in until you’ve been paid in full (and in cash, bank draft or money order) both rent and any security or damage deposits.

This last step will give you a better idea of your tenants financial status. If they can’t scrape enough money to deal with all of this in advance it’s likely they live paycheck to paycheck.

This can be a real danger to you the landlord as one tiny upset in their life, illness or a layoff as an example, can impact you directly.

While this is only a portion of all the steps I actually go through and teach, if you can at least implement this, I can guarantee it will help improve your landlord business going forward!

Do you have any tenant screening stories you’d like to share? Leave a comment and I’d love to hear them. Happy landlording.

 

Bill Biko – “The Educated Landlord” has been an active landlord for well over a decade and during that time has packed more enough experience in for dozens of regular landlords. From rooming houses, to rent to owns, furnished rentals and“regular”rentals, Bill has had around 1,500 tenants which has made him a master of systems and a master of evictions. To find out more about Bill or to get access to additional tips, articles and Bill’s “7 Questions Landlords Must Ask” visit www.TheEducatedLandlord.com

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College rental messes often caused by renters not understanding rental agreement

After 31 years in the business, real estate broker Todd Bohn said he can tell how someone was raised by how messy they leave one of his rental units.

“I don’t care if you’re from the U.S. or you’re from another country, (renters) all do the same thing depending on how responsible they are,” said Bohn. “The irresponsible ones tear up the place.”

With Idaho State University on summer break, many college student apartment leases are coming to an end. While most leave the apartment the way they moved in, clean, some landlords have to call in backup to clean the messes left behind.

Bohn has seen his fair share of messes. He said one time a white kitchen stove was completely back when his tenants moved out. Another time he said a white wall turned orange because of the food the tenant cooked.

In his experience, Bohn said a lot of the serious messes stem from the renters not completely understanding their role as a tenant or even the lease.

“They just don’t understand how contract law works. They don’t understand what’s expected of them by the landlord or even their roommates,” he said.

He also feels the tenants know this could have repercussions down the line, since landlords often report these things and evictions to the credit bureau.

“That’s going to follow them for years and years,” Bohn said. “It could affect their job, it could affect being able to purchase homes or cars.”

The biggest advice Bohn has for college or new renters is to go over the entire lease and ask questions if needed.

College renters aren’t the worst he’s dealt with, he said he’s evicted a family with good references in the past.

Source: localnews8.com

Millennials skipping renters insurance, survey says

Millennials rent, but they aren’t so keen on renters insurance.

A recent survey notes that 66 percent of 18-29-year-olds rent their current primary residence, compared with 37 percent of consumers overall.

Less than one third of millennial renters insure their household belongings against fire, theft and other possible casualties.

The reason: The survey, conducted for InsuranceQuotes.com, said 59 percent of millennials cited the cost of insurance.

Also, 61 percent said they lived in a secure property and didn’t really need insurance, while 43 percent said they didn’t have enough property to justify the expense of insuring it. Forty-one percent said they don’t understand the product.

Within the pool of all renters, 33 percent said they don’t understand the product — up from 27 percent who so answered in 2015.

This year, 26 percent said they don’t have a policy because they don’t know where to buy one.

The folks at InsuranceQuotes.com do have some answers for renters unfamiliar with benefits that insurance might offer.

First, for those who don’t know what the coverage covers, consider what it would cost to replace all personal belongings including clothes, books, electronics, furniture, bicycles, owned appliances and such. Make a list, total it up, and that’s what you stand to lose.

Then consider that the property would be insured, depending on the limits of your policy, even when away from home. And, the service continues, renters should consider buying liability insurance. If your dog bites a neighbor, and the neighbor sues, you would be covered within the limits of your policy. And if an event — a fire, for example — made your home unlivable, your policy would cover additional living expenses, again up the limits of your coverage.

Renters insurance is available through insurance agents or brokers, whether through a brick-and-mortar office or online.

Source: theolympian.com