What’s a landlord to do?

Nobody likes to see an episode of Cops being re-enacted on their property and it is assuredly upseting to see that a tenant has put your property at risk, but it is important to  realize that you must still follow the law with regard to the terms and conditions of the lease.  Here are a things to consider before taking any concrete action.

• If you are lucky enough to get to the property before the police leave, try to find out the nature of the offense without interfering with the police as they work.
• If you can, get the detective’s card and or a copy of the incident/offense tracking number so that you can secure a police report.
• Try to find out if the police have damaged the property so that you can take actions to repair the damage.  The police will not reimburse you for the damage to the property, but you may still have recourse against your tenant.
• If you have a camera with you take pictures of the damage so that you will have evidence if you need them for court.
• Once the police leave, determine if the door can be properly secured.  The Police have a tend to use methods of entry that could leave the door inoperable.  Sometimes they will remedy this by nailing the door shut for you.  Whatever happens, you should make sure that your property is secured.
• If you have to replace the door and the lock, leave a note for the tenant so that they know how to get in touch with you, if they make bond and need to get back in to the unit.  You do not have a right to remove the tenant immediately simply because they are arrested.

Once the drama has died down, as a landlord you are left with a decision about what to do next.  The first question is whether you would like to continue the landlord tenant relationship.  If you do not wish to continue the relationship you should assess whether you have grounds to evict the tenant or not. Hopefully, your lease addresses drug and criminal activity on the premises.  If it does not, consider including a provision prohibiting illegal activity of any kind in all of your leases and/or updating your rules to include similar provisions in the interim.

If the tenant does not return within a reasonable time because they are unable to make bond, consult the terms of your lease concerning abandonment and/or non-payment of rent.  If the tenant has not returned in time to pay rent, issue a timely notice of termination and immediately follow up with an eviction as soon as the termination notice expires. If the tenant has no plans to return or cannot be released, send a notice of termination based on the abandonment, wait 14 days and file an eviction.

But what happens if the tenant comes back?

If your tenant returns, it is important to remember that the tenant may not be guilty of any offense.  Have a conversation with the tenant about his or her future plans. Perhaps the offense was a misdemeanor with no real jail time likely to be imposed.  Remember that if the tenant is innocent and you do not evict them, you may gain a loyal tenant for years to come.

As more people begin to shy away from buying for fear that home values will continue to decrease and others enter the rental market because they cannot afford a mortgage or have been foreclosed upon, landlords stand to profit from a larger pool of prospective tenants.  As such, landlords who are financially able to increase their holdings will benefit and those who were once looking at empty units may now be fully occupied or able to increase rents.

All of this good news for Alabama landlords should also come with a word of caution.  Landlords should learn from the mortgage industry’s failure when it comes to investigating prospective tenants.  One of the causes of the mortgage industry bust was the failure to properly determine if borrowers were good credit risks.  Too many loans were given to people who simply could not afford the homes they were buying.  The result, as we all know now, was disaster.

The same risks exist for landlords who do not properly investigate their tenants before renting.  The best way to avoid an eviction is to properly screen applicants.  Failure to do so can be costly as unpaid rent and eviction costs mount.

Here are four tips for landlords who wish to take advantage of the housing crisis without taking unnecessary risk:

1. Require all prospective tenants to fill out an application.  The application should give you enough information to investigate rental history, income, credit and criminal background.
2. Call all references given on the application and be wary of people who have no rental history at all or long gaps,  Those gaps could mean that they are being untruthful, have spent time in prison or have been evicted.
3. Run credit checks on all prospective tenants.  There are many websites available that will run credit checks for you and then make a recommendation  about whether you should rent to an applicant or not.  Other sites will allow you to pull the credit reports directly and make your own decision.  The difference between the two is largely in the cost of start up and the amount of information you are willing to provide about yourself. The sites that provide recommendations are open to anyone, but direct access to credit reports requires the landlord to undergo a background check before being given access to credit files.  Running credit checks also means that the landlord must provide the applicant certain disclosures about the reason for a denial based on credit and an opportunity to view their credit report. The advantage to pulling your own credit and criminal history would be that there are some situations where the applicant has a good reason for having bad credit, like a medical crisis.  Which ever option you choose, credit checks are invaluable decision-making tools.
4. Get copies of all prospective tenant’s pay stubs for at least two months.  This allows you to evaluate whether the tenant can, in fact, afford the property.  You should always require the actual documents, because applicants may not always share their true income or their obligations.  This information also will help you determine where the applicant works, information you will be glad you had in the event that you later need to garnish their wages after an eviction.