Run Your Retreat Like a Landlord
by Penny Pincher.
You are probably not going to like this advice because I’m going to sound like a statist. But it is a fact of life that we live in a nanny state. I am only advising that you protect yourself from the state (while it lasts) and from your paying guests by doing things by the book. BTW, since this is a nanny state, I also have to put a disclaimer here and say that I am not an attorney and nothing I say here should be construed as legal advice. Please consult an attorney if you want legal advice.
Background: I have been a landlord for almost 15 years now. I was also involved with two real estate clubs when I was more active in the business. I used to have 9 units. My business has since contracted down to the house I live in, but I still have tenants.
I suggest that you should run your house/retreat like a professional landlord if you are going to let people in to live with you who are not part of your immediate family unit. Use/modify a rental contract, and spell everything out. If someone fails to hold up their end of the bargain, you can evict them. This would work best now – in a partial collapse where government is still in place but people are poor (like we have now or worse). Even if there is nobody to help you enforce it, a contract would spell out exactly what the expectations were, in writing.
You can find a sample rental contract at I do not have an affiliate relationship with them. I have used their credit-checking service and am happy with it. If you google around you can also find roommate agreements that you can modify to your liking, if you want to rent just a room. Always check landlord-tenant law in your state and local jurisdictions to make sure you do it right, or your tenant can get the upper hand in court from you making an honest mistake.
Failure to make a formal written rental contract with someone who is paying you (in whatever form) to stay at your house does not mean there is no agreement. But it will be harder to prove what that agreement is in court, should you have a disagreement with your guests/tenants. Also the absence of a written contract does not exempt you from all the landlord-tenant laws. It is better to protect yourself with a written contract.
Criminal background checks are a good start, but also do a credit check. And pass on the cost for these to your applicant with an application fee. Someone unwilling to pay an application fee for the cost of a background check might have something to hide, or might be broke or unwilling to help out around the retreat, and you have just saved yourself some trouble by screening them out at the beginning.
If someone starts trying to bargain down the rent or get terms on the security deposit before you even agree to rent to them, that is a sign that they will quickly fail to pay you, or that they will constantly try to bargain you down or trap you into giving them free rent during the term of the lease. Therefore do not agree to early move-ins (i.e. move-ins before the term of the lease begins), reduced rent, or any concessions to your terms, even if it means you have a vacancy for longer. Also, respond immediately to any breaches of the contract (e.g. slow pay, partial pay, tenant gets an unauthorized dog or waterbed), or you might forfeit the right to evict based on future similar breaches. A deal is a deal. Do not let your tenants welch on it without consequences, or you will get walked all over.
If a tenant is allowed to move in before the terms of the lease begin, this can cause you to have problems too. You can fix this by adding an addendum to the lease that they sign, that adjusts the beginning of the lease and spells out the cost of their living there the extra time. Even if it is one day early, letting them move in without your agreement being in effect yet results in you not being protected.
You should have your tenant sign a statement of condition before they move in. This would list all the flaws in the rental space that they see when they move in (scuffed floors, knobs missing, etc.). This protects you if they trash the place and claim for example the floor was scuffed or there were holes in the wall already. In some states if you don’t get a statement of condition before they move in, you would have to return their entire deposit and then sue for damages, instead of keeping part of the deposit.
Failure to pay rent and other breaches of contract only compound as time goes on. It is better to start an eviction process immediately upon their first breach of the contract, if they pay up you can stop the process if you want. If they miss a month of rent and get into not paying the second month, it is very unlikely they will ever pay you back and you lose more money the longer they stay occupying that space that you could offer to someone else. You can send a reminder letter first if you feel like being nice, but don’t give them more than a week to cure the problem before starting the legal process.
Back to screening:
Credit records are indicative of how well someone holds up their end of a contract. You especially want to look at eviction records (they’ll show up there), and if they were a renter, check the land records to see if their landlord reference actually owns the house/apartment building they say they lived at. Check their ID to see if it matches their professed current/last address.
If everyone in a group applying to rent has a brand spanking new looking ID they might be fake IDs. There might be a way to check them using employee databases, on the other hand maybe it’s considered “profiling” to question an ID that looks legit. Ask your lawyer. I once had a bunch of tenants all of whose ID looked brand new turn out to be meth-cookers using stolen identities. Fake ID’s have been for sale on Silk Road, and anyone with an underworld connection might have access to them in person as well.
Check the address on their ID to find the owner and then check the court records of the owner, to see if they evicted your guest (or someone else at the time he said he left, if your guest was shacking up with someone else)
I had a prospective tenant use her friend as a “landlord reference” and it turned out that she and her friend were evicted together from somewhere else a few years prior, and her friend didn’t own the house in the reference. I rejected her application for lying.
Lying on an application should be a basis for instant refusal to rent to/accept someone into your community, or for eviction proceedings if discovered later. So should any kind of drug or criminal history. I will not rent to people with histories of drug convictions, stealing or fraud of any kind, pet or trash complaints, violence, recent evictions (5 years), damage lawsuits from their previous landlords, or sex crimes. Bruised credit might be OK, but it has to be not a chronic problem. People with chronic credit problems will have a long continuous history of credit card shutoffs and car repossessions and the like. People who had a “bump” of hard times will have all their troubles clustered at one time period in the past and will often also have medical bills on their credit report from the same time period.
Write down what your standards are for renting to someone and put it in a file. You can make exceptions to let someone rent who doesn’t quite meet your standards, but you cannot reject any applicant who meets your standards (because of Fair Housing law). Therefore make the standards high. Beware Fair Housing screeners. They have two applicants, one of whom is a protected class, apply for the same rental with similar applications to try and catch people not following the law.
Always send a written rejection form with the reason for the rejection to any applicant you reject. Keep a copy on file. You should give out a copy of your standards at the time of application.
Prospective tenants can be good at lying and appearing confident and with-it. They can drive nice cars and wear nice clothes, and their kids can be quiet and look neat during the showing, but they can still be criminals, or slobs who don’t pay. My meth-cooking tenants showed up in an Escalade, with their very quiet kids in tow, looking like they just came from church. They might have people they intend to move in behind your back, and they might be the one person in their group with a relatively clean background – a front man if you will. None of this will get any better in a collapse.
I do realize this is coming from dealing with strangers as a landlord, but if you rent to/admit relatives or friends to your retreat you have the additional problem of looking at them over the Thanksgiving table after things go bad. Sometimes friends and relatives expect you to give them things as a gift, or cut them a deal. Then people get disappointed if you don’t let them mooch. Do not skip background checks or getting a rental contract because you don’t want to offend your relatives or friends. If they balk, reject their applications. Perhaps they intended to mooch.
As a landlord, I had to jump through some hoops to be able to run people’s credit. The same hoops are not necessary to run someone’s criminal history but you do need written permission from them in my state, and they also receive a letter from the state that you ran their criminal history. YMMV.
The hoops to run credit are: You have to get an inspector from the credit bureau you are going to use to come into your office (or home office) and in that office you need lockable file cabinets and your computer must have a password and/or your office must be lockable. Nobody else in your household can have access to the computer you receive credit reports on. Your office can not have a bed in it. It also has to be a separate room that is not common space like a kitchen or living room. I had to have the locks changed on my file cabinets so that I could lock and unlock them and show the inspector this. And of course, there is a fee for the inspection.
There are several services out there that will run people’s credit and criminal histories for you for a price, once you are set up. They can help you arrange the inspection from the credit bureau etc. They also have forms you can use to get permission from your prospective tenants.
If you accept rent from anyone, and if your house is older than the 1970’s (I think it’s 1976?), then any time you scrape or sand paint on that building you need to have it done by a lead paint certified contractor. I had to take an 8 hour class, take a test, and then pay the EPA $300 to register as a “Firm” in order to paint (or do practically any work at all to) my own 2-family that I live in. The penalty if they catch you is as high as $37,500 per day. If it’s just that you are renting rooms to relatives, the likelihood you will get busted for un-nannystated scraping is low; but if you have possible “professional tenants” who are looking for a way to screw the Man, you should do it right. (Another tax, basically. Grr.)
I also suggest if you intend to rent out rooms or space in your retreat that you join a local landlording advocacy group. Most regions have an Apartment Association or a REIA (Real Estate Investors Association) or something like that. You could ask at the state level if you can’t find a local one, and they will steer you in the right direction. Ask your local Bar Association who is the attorney in town who does all the evictions, too. The advice and support of peers in the business can be priceless.
If you take shortcuts on any of this, then it may be your word against someone else’s in court, and you may be forced to continue housing someone who is not paying you, or worse, you might get in trouble with a regulatory agency. Protect yourself with knowledge of the law in your area and the proper paperwork. A collapse may consist of economic trouble, and the government may get more controlling and nosy as we go, rather than fall away so that we can make up our own more sensible rules. It has been the trend so far.