Thursday, December 19, 2013

THE SNOWBALL EFFECT…WHY NOT TO RUN ONLY ONE SCREENING REPORT

This time of year is financially tough on most people. As a landlord, you may be tempted to give possible tenants a break. By screening only one applicant (instead of each adult on the application) the screening fee is greatly reduced, but so then, is your security. This seemingly small moment of generosity quickly turns into an overwhelming problem.

Let’s just look at the facts:

  • If your possible tenant is having trouble paying a screening fee, they are probably going to have trouble paying you rent.
  • If your tenants get to pick and choose who among them get screened, then it is very easy to hide a criminal record or bad credit.
  • If you are selective about whom you screen and to what degree, you are opening yourself up to a possible Fair Housing lawsuit.
 
At RSI we advise all of our clients to screen each person over the age of 18 who will be residing on the property. That means that on any given application you would screen each person in a married couple, all roommates and any adult children. A consistently applied screening practice is the key factor in vetting nightmare tenants and avoiding a possible lawsuit.

When moved toward generosity, consider options that won’t leave you unprotected. Offer your tenants a discount on the first month’s rent if they pass your screening standards and are invited to sign a lease. Or you may want to welcome tenants to the community and draw attention to local attractions by giving gift cards to local stores and restaurants. It is in this way that you will be able to rest easy…assured that the best possible tenants are living on your property…and those tenants do not feel plowed under by screening fees.

For more information on best screening practices visit the Rental Services, Inc. website at: www.erentalservicesinc.com

Monday, November 25, 2013

A LANDLORD IS LIABLE FOR FAILING TO PROTECT THEIR TENANT…


Criminal behavior is generally viewed as an unpredictable event, and therefore, outside of a landlord’s control. Courts have consistently ruled that it is unjust to hold a landlord accountable for failing to prevent a crime. However, recently an Ohio Appellate Court did just that when they found a landlord liable for failing to protect their tenant from a violent crime.

In this case, the victim’s complaints against another resident’s un-leased roommate were ongoing and the lack of an appropriate response led to a verdict of negligence. The manager of the apartment complex listened to the victim’s repeated complaints of harassment and advised her to file a report with the police. As the situation escalated, the manager requested that the other resident’s boyfriend, against whom the complaints were being filed, complete a rental application and submit to a background check. The manager did not perform a criminal records search with the information collected on the submitted application, but did deny tenancy based on the fact that the boyfriend’s credit report did not meet the facility’s standards. The manager did not follow-through with an eviction.

The boyfriend was still living at the apartment complex when he broke into the victim’s unit and then proceeded to beat and rape her in the presence of her young child. He was ultimately sentenced to nine years in prison. A civil suit against the apartment complex will proceed to trial before jury.

A great deal can be learned from this tragic case. As a landlord it is fundamental that you are available to assist in the removal of any potential safety threat. This process begins with an initial, consistent, and thorough screening process. At RSI we advise all of our clients that criminal history, credit history, eviction history and Social Security verification are essential to screening potential tenants. Additionally, anyone over the age of 18 living on the rental property should be screened—no matter what extenuating circumstances may come into play. Required criteria for approved residency should be well outlined and these standards should be upheld consistently either through denied tenancy or, when necessary, eviction.

For more information on establishing rental criteria and good tenant screening practices visit the Rental Services, Inc. website at: www.erentalservicesinc.com 

Tuesday, November 5, 2013

How to Create a GOOD Rental Application…

The first step in obtaining a good tenant for your rental property is to procure a good rental application. There are several questions that are, essentially, required on every application in order to perform the most basic background check:

-Full Legal Name (spelled correctly) and any aliases

-Date of Birth

-Social Security Number

-Current Address and Phone number

A good rental application will also cover the following areas:

-Contact information for the applicant’s current and previous landlords. Additionally, they should be asked to include information about when they lived at that address, the rent amount paid and reason for leaving.

-Contact information for the applicant’s current and previous employer. Additionally, they should be asked to include information about dates of employment, salary earned or hourly wage, and whether they were (or are) working full or part-time.

-Information on any other occupants who will reside on the property including their name and age.

-Information on any Criminal or Felony Charges

-Information on any Evictions

-Information on any Bankruptcies

-Whether or not they are a registered Sex Offender

An authorization of release will be required to run any background check on the applicant(s). This authorization should state that permission has been given to screen credit reports, character information, verify rental history, employment history, bank information, public records and personal references as necessary to authenticate information set forth in the application. It should be signed and dated by the applicant.

After receiving an application, be sure to check that the form is completely filled out. You should also cross reference the information provided with the applicant’s photo ID (in addition to confirming that the ID photo matches the applicant). Inaccuracies or wrongly entered information could delay the screening process or signal a red-flag about the applicant’s honesty.

For a free sample of a great rental application, visit www.erentalservicesinc.com

 

Thursday, October 24, 2013

HOME TEST-DRIVES ARE HAPPENING IN THE HOUSING MARKET…COULD THE PATH BE PAVED FOR THE NEXT BIG TREND IN THE RENTAL INDUSTRY?


A new trend in the housing market allows potential home buyers to spend time in a home before buying it…a test drive of sorts. This movement has become increasingly popular; the practice already occurring in markets from New Jersey to Colorado.

The arrangement usually allows for around 12 hours (all day or over-night) in the home without the pressure of a hovering realtor or homeowner. Home buyers are able to relax, listen for noisy neighbors, leaky pipes, air traffic or drafty windows. They seem to love the idea as they are able to make a more informed decision and get a real feel for life in that particular space.

Would the same principal work well for the rental industry? Having the option available may be a powerful draw for potential renters and displays a healthy confidence in the quality of the rental property itself. As a property owner or manager, there may be a few concerns about how to best protect your investment while allowing access to your property. Would any prescreening be necessary?

Rental Services suggests that if you decide to jump on the band-wagon and head down this path, that at a minimum, you require the interested renter to complete a rental application and conduct a background check to verify their identity and lack of criminal record.

Tuesday, October 15, 2013

Protect Yourself From Discrimination Lawsuits....

Documented Criteria is Essential when Screening Possible Tenants

 
It is not only fundamentally important to screen possible tenants in order to protect your property, but how you outline your screening criteria can be essential to protecting yourself.

As a landlord, you need only accomplish one easy task, do it consistently, and you can avoid the headache and financial drain of this legal vulnerability.

Document your screening criteria. Though your criteria may vary greatly from another landlord’s criteria, all documented criteria should:

1.)   Comply with federal, state and local laws in addition to fair housing requirements. Information specific to Colorado can be found at: http://www.coloradoattorneygeneral.gov/sites/default/files/uploads/identity_theft/CoConsCreditRepAct.pdf.

If you are not certain that your criteria are in compliance with regulations, be sure to have an attorney review the screening document and offer advice.

2.)   Depend on quantifiable and verifiable data to effectively eliminate personal views or unintentional bias.

3.)   Be written clearly with easily identifiable expectations

4.)   Include an effective date in addition to effective dates for any changes or additions made to the criteria.

5.)   Be IMPLEMENTED CONSISTANTLY. This is huge. Documenting the screening criteria is only going to protect you if you follow the criteria with every applicant.

As you outline your specific criteria, remember a tenant will only be accepted if they meet your criteria. Be comfortable with your standards. Know that they are in place for a good reason and be able to explain your reasoning to possible tenants.

RSI offers sample rental criteria to its clients.  Contact us if you would like more information.

Monday, October 7, 2013

Low Income Housing Limits to Be Waived For Colorado Disaster Victims

Issue Number:    IR-2013-79

Inside This Issue:  Low Income Housing Limits to Be Waived For Colorado Disaster Victims

WASHINGTON — The Internal Revenue Service announced today that it is waiving certain limitations for projects financed with low-income housing tax credits or exempt facility bonds so that owners and operators of these facilities anywhere in the nation can provide housing to victims of severe storms, flooding, landslides and mudslides in Colorado that began Sept. 11.

Because of the widespread devastation to housing caused by storms and flooding, the IRS will temporarily suspend certain limitations for qualified low-income housing projects that house people displaced by the storms and flooding. The action will expand the availability of housing for disaster victims and their families. Further details are available in Notice 2013-63 and Notice 2013-64, posted today on IRS.gov.

The IRS recently announced other relief available to affected taxpayers in the presidentially declared disaster area.

Friday, October 4, 2013

HOW TO CHOOSE THE RIGHT SCREENING COMPANY….

As with most things, there are many options available when it comes to screening possible tenants. Today landlords have even more options then ever before and the results and effort required can range greatly from a good ol’ gut check to having tenants supply their own credit reports or digging a little deeper and having a screening company verify application information. You may feel overwhelmed and unsure about how to get the best information for the least amount of money.


Having been in the industry for 29 years, RSI employees have seen it all. We have heard countless horror stories about how massively other screening measures have failed a given landlord. And while we always say “go with your gut” the advice is constantly balanced with the addendum “be sure to check the facts”.


Here is a step by step guide to accomplishing exactly that:


1.)    Do not put all the power in the tenant’s hands!

Many new screening companies offer tenant driven background screening. The setup process is less ominous, however, as a landlord you are completely dependant on the applicant submitting their request for information. You do not want to miss out on other potential renters while waiting for an applicant to move forward on a background check.

2.)    Make sure your reports are accurate.

Online screening companies that are not able to provide manual interpretation are going to result in screening reports with the most inaccuracies. To clarify this point, imagine this scenario: Your applicant’s name is John Smith. There are thousands of John Smiths with the same birthday as your applicant. When you submit a request for a background check on John Smith the computer pulls information from a database which includes reports for any John Smith with that birthday. The computer is not able to weed out the information that does not apply to your John Smith. A screening company with a trained investigative staff is able to pull through those records and report only the applicable information…and that is exactly what you want.

3.)    Get the bases covered.

There are four major musts every screening report should include:

Social Security verification insures that your applicant is actually who they claim to be. Make sure that you are also checking valid photo identification and that the information on your tenant’s application matches the identification provided (name, birthday, and address if applicable). Criminal Record searches (including sex offender records) can be either state specific or nation-wide. Make sure you get information about limitations in the nation-wide database for your particular state. Colorado records, for example, are more accurate through the state specific database. A nation-wide criminal search would not provide complete records for Colorado residents—don’t waste your time or money with weak searches! Eviction Record searches are very important for one basic reason: If a possible tenant has had one eviction, they are more likely to have another. The eviction process is the worst case scenario for a landlord; taxing to your finances, time and property. Always avoid renting to a previously evicted tenant. Finally, be sure to include credit information in your screening. A Credit Report will paint a complete picture about an applicant’s ability to pay rent and their history for paying on time. Additionally, we recommend that you (or your screening company if they have the capacity and training to do so) always make reference phone calls to verify employment and rental history with previous landlords.

4.)    Have backup.

Should you have a question about report results or an issue during the screening process, you will want to be able to reach a resolution quickly and with positive results. Hire a screening company with a good customer service record and well trained personnel who are easily reachable at a moments notice.


By choosing the right screening company, and screening for accurate and useful information, you can be confident that you are welcoming the best possible resident into your rental property.

 

Wednesday, September 25, 2013

Boulder Landlord-Tenant Q & A w/ Attorneys

City of Boulder Community Mediation Service sponsors Q&A for landlords and tenants affected by the flood

The City of Boulder Community Mediation Program is hosting a Q&A session with local landlord –tenant attorneys on Thursday, Sept. 26 from 5:30-7:30 p.m. in Council Chambers, 1777 Broadway.

Attorneys will be on hand to answer flood-related questions and explain legal rights under the Colorado landlord tenant law including the warranty of habitability.

The program is free and open to the public.  Flyer is attached.

For more information, contact Community Mediation Service at 303-441-4364.

Tuesday, September 17, 2013

Trash Receptacles for Flood Debris

Sept. 15, 2013 - City, County to Provide Trash Receptacles for Flood Debris at Various Community Locations
Sunday, Sept. 15, 2013
Media Contacts: 720-564-2935 (EOC Media Line)
City, county to provide trash receptacles for flood debris at various community locations
The City of Boulder and Boulder County have been working collaboratively to place trash receptacles ("roll-off" containers or Dumpsters) at various locations to collect flood-damaged debris. Delivery begins Sunday, Sept. 15 and will take two to three days. Initial locations are listed below.
Residents are encouraged to use this resource for safe removal of spoiled food, damaged carpet, household materials and other flood-related debris. The trash receptacles will be emptied daily and will remain in place for a limited period of time, based on need.
Materials that CANNOT be placed in the receptacles include:
  • Electronics, such as computers, monitors and televisions. By state law these cannot be disposed in landfills. They can be recycled at various locations in the county including Western Disposal or the Eco-Cycle Center for Hard-to-Recycle Materials (CHaRM) at 5030 "Old" Pearl St. (1 block north of Pearl Parkway off 49th St.). 1-800-GOT-JUNK or Green Girl Recycling offer collection services for electronics.
  • Hazardous waste, such as paint, motor oil, car batteries and pesticides. Residents can take these materials to the Boulder County Hazardous Materials Facility at 1901 63rd St. This facility is open additional days on Monday and Tuesday, Sept. 16 and 17, and will then revert to its regular Wednesday to Saturday schedule starting on Sept. 18. For more information on residential and business services, visit www.bouldercountyrecycles.org
  • Refrigerators, freezers, air-conditioners, and other appliances that require Freon removal. Facilities that accept these items for special handling include: Western Disposal Services, CHaRM, and Bizzy B’s.
  • Lawn mowers and other equipment containing gasoline. Gas must be removed prior to recycling. These items can be recycled as scrap metal at Western Disposal or CHaRM. In addition, Western Disposal will continue to offer curbside recycling, composting, and trash pick-up services, assuming that crews can access the streets. Their transfer station at 5880 Butte Mill Rd. will be open Sunday Sept. 15, from 8 a.m. to 5 p.m, and will then resume their Monday to Saturday 7 a.m. to 5 p.m. schedule.
Initial community flood debris collection locations:
  • Foothills Community Park parking lot, 800 Cherry Ave., Boulder (opens Tuesday 9/17)
  • North Boulder Park parking lot, 9th Street and Dellwood Avenue, Boulder
  • Salberg Park parking lot, 825 Elder Ave., Boulder
  • Harlow Platts Park parking lot near playground, 1360 Gillaspie Dr., Boulder
  • Mapleton Ball Fields parking lot, (entrance just west of 30th Street) 2998 Mapleton Ave., Boulder
  • Valmont Park parking lot, south of Valmont Road, 3160 Airport Rd., Boulder
  • Scott Carpenter Park parking lot, 30th Street and Arapahoe Avenue (30th Street entrance), Boulder
  • East Boulder Community Park, south parking lot, 5660 Sioux Dr., Boulder
  • Martin Park parking lot, 3769 Table Mesa Dr., Boulder (Park and parking lot is accessible by turning east on Eastman Drive off of Broadway)
  • Chautauqua Park parking lot, 846 Baseline Rd., Boulder
  • Intersection of Broadway and 28th Street, across from Gateway Fun Park, Boulder
  • Flatirons Golf Course parking lot, 5706 Arapahoe Ave., Boulder
  • Eaton Park parking lot, east end of Nautilus Drive, Gunbarrel/Twin Lakes area
  • Carter Trail, east side of Carter Trail south of Bluegrass Court, Gunbarrel/Twin Lakes area, near 75th Street and Jay Road.
  • Twin Lakes, south side of Twin Lakes, west of Twin Lakes Inn, next to open space, Gunbarrel area
  • Spine Road, Deerfield subdivision. Wellington Drive, north side of road across from 4412 Wellington.  East of Pembrooke, Gunbarrel area
  • Cardinal Lane, south of Robin Drive on east side. Close to 63rd and Niwot, Haystack area.
  • Left Hand Grange Park on 83rd north of Niwot Road, Niwot
  • Eldorado Springs Fire Station, 4300 Eldorado Springs Rd., Eldorado Springs
  • Eldorado Springs Pool, 200 Eldorado Springs Dr., Eldorado Springs
  • Intersection of Marshall /Highway 93, informal park and ride  
 

Boulder Drinking Water

BARHA Members and residents of Boulder, BE CAREFUL with DRINKING WATER for now, even if they say it is OK.
There can be breaches and cracks in sewer pipes after flooding throughout urban areas, even if small, and certain waste-water plants in our area have been compromised, and when that happens, contaminated water can go anywhere, and follow any flow across flooded areas, parks,  on land or into any creeks, ditches, etc. and get into other water. 
Be careful with faucet drinking/cooking water for now, even if they say it is okay.
(You can fill 5 gal bottles at El Dorado or Indian Peaks...with El Dorado evacuation, might be easier to get to Indian Peaks on N Broadway across from YellowPine Rd or where N Bld Spruce Cafe is located....across Broadway from that...small funky little office on West side of Broadway, must go there first). Or whatever other way you can do to be safe. They recommend not using tap water for drinking, cooking, brushing teeth, at least.
 
Here is one example close to us, and doesn't mention other possible sewage pipe damage within network of all flooded urban areas:
The City of Boulder is reporting a significant breach in its main wastewater pipeline to the 75th Street Wastewater Treatment Plant.  As flood waters began to recede, staff had visual confirmation at about 8:20 p.m. of a breach southwest of the wastewater treatment plant.  There is no immediate threat to drinking water.
The breach is a result of flood waters destroying a section of pipeline northeast of 61st and Valmont, crossing Boulder Creek. The wastewater pipeline conveyed approximately 90 percent of Boulder’s untreated wastewater.
City officials have confirmed that an approximate 300-foot breach is allowing untreated wastewater to discharge directly into Boulder Creek.  There is no immediate threat to Boulder or Lafayette drinking water. Boulder’s drinking water is drawn from reservoirs upstream of the city; Lafayette has been drawing its drinking water from Baseline Reservoir and has not been drawing drinking water from Boulder Creek.
The City of Boulder has notified federal, state and local authorities and is working on a temporary bypass around the breach to restore wastewater flow to the treatment plant. Officials are advising residents to continue avoiding flood water, and residents are being asked to minimize discretionary indoor water use, such as washing laundry. Industrial users are being notified to minimize wastewater discharges until Boulder’s system repair is complete.
Boulder officials are working with local and national resources to deploy contractors to make the repair. The treatment plant is currently processing about 10 percent of the city’s wastewater through a second pipeline serving the Gunbarrel area.

Monday, August 26, 2013

COLORADO NOW AN ATTRACTIVE LIMITED LIABILITY STATE


The Colorado Supreme Court recently ruled that owners and managers of limited liability companies (LLC) now have less exposure to personal liability and no fiduciary duty toward creditors should the company become insolvent.

Limited liability companies are primarily governed by each state’s LLC Act and LLC operating agreement. It is in this way that courts across the nation are being asked to determine a standard for LLC accountability. This landmark ruling makes Colorado very attractive to potential owners and managers forming new LLCs and serves as a precedent for other states.

The rental industry in Colorado could stand to benefit greatly because of this appealing reduction to personal liability. Existing property owners operating under LLC can now take a deep breath and new property owners will be drawn to the state for its lower risk investment potential.

-H. Evans

Monday, August 12, 2013

EMPLOYEE BACKGROUND SCREENING STANDS STRONG FOR SAFER COMMUNITIES…


In April, the Equal Employment Opportunity Commission (EEOC) updated its approach to employee background screening.

Many anticipated that the EEOC would be implementing restrictions on the amount of information employers are allowed to monitor when hiring. Outright restrictions would have gone so far as to omit screening for a potential employee’s criminal history.

Does an employer have the right to pry into their employees personal lives, in order to establish a pattern of high risk behavior? If a person has a history of theft or violence, do we in the rental community owe it to our residents and staff to be aware of these potential threats and prevent such activity to the best of our ability?

Should the EEOC have moved forward with the restrictions, the safety of residents and staff in rental communities would have been greatly impacted. Instead, they recognized a company’s right to conduct consistent and unbiased, job-related background checks thereby ensuring a foundation for a safer community.

-H. Evans

Tuesday, August 6, 2013

THESE THINGS ARE NOT AS THEY SEEM…


It is the classic nightmare for rental property owners. You do everything possible to protect yourself and your investment from the unscrupulous renter…dutifully screen the applicant for any criminal history…any eviction history…you take a close look at their credit report…you call their references and verify employment and salary. Everything looks stellar, perfect and wonderful…until it isn’t.

The worst has happened and you ask yourself: HOW did this person get past all of my efforts weed out high risk residents? The answer is simple…criminals are not above stealing. Identity theft paints these criminals as stellar residents gaining them access to your rental property.

Avoid finding yourself mired in nightmare tenancy by following these three simple steps:

1.)    Obtain social security verification in all your screening reports

2.)    Check for valid photo identification on each applicant

3.)    Conduct regular inspections on your rental property to stay on top of any problems before they get out of hand

-H. Evans

Monday, May 13, 2013

Nobody wants to be sued!


Recently HUD issued a Final Ruling on disparate impact, which went into effect March 18, 2013.

If you’re not sure what disparate impact is let’s start at the beginning... Congress enacted the Fair Housing Act-FHA in 1968 and revised it in 1988 "to provide, within constitutional limitations, for fair housing throughout the United States." The key provisions prohibit discrimination on the basis of race, color, religion, sex, disability, familial status or national origin in connection with residential real estate transactions.

The courts have recognized two forms of discrimination. The first is Disparate Treatment. This is an intentional discriminatory act. The second is Disparate Impact. This is a practice that is seemingly neutral in its treatment of different groups but may result in one group of people being more harshly treated than another.

HUD’s Final Ruling on disparate impact states that a practice is deemed to have a discriminatory effect “where it actually or predictably results in a disparate impact on a group of persons or creates, increases, reinforces or perpetuates segregated housing patterns in protected classes.”

Disparate impact liability is established through a three part burden shifting test. The charging party has the burden of proving that a practice has caused, or will predictably cause, a discriminatory effect. If the charging party satisfies the burden, the respondent must then prove the practice is necessary. If the respondent proves necessity, then the charging party can still prevail if it can show that the respondent interests could have been served by another practice with a less discriminatory effect.

Let’s look at this example: If you review criminal justice statistics you will find that people of color represent 30% of the total population but they represent 60% of those currently incarcerated. If a property owner conducts a background check on a prospective renter that includes a criminal report and denies the applicant based on criminal information found in that report, they may be discriminating by disparate impact. Should this be a Fair Housing Violation?

I believe HUD is overstepping the law's authority and intent.

HUD has stated it will assess the discriminatory effect of using criminal background screening on a case by case basis.

During a recent meeting with Congressman Ed Perlmutter we discussed disparate impact and as he put it “the horse is out of the barn” since the Final Ruling went into effect in March. However he has assured me that he will look into HUDs reasoning. Congressman Perlmutter does agree that criminal reports are an important part of a rental background screening process. He also brought up the point of increased liability to the property owner if they don't screen applicants.

So the big question… Can you use criminal records as part of a rental background check? I believe the answer is YES. The liability issues are greater if you don’t screen applicants for criminal behavior. I would recommend having a policy in place that outlines a procedure for handling criminal records. The policy should take into consideration the severity of the criminal offense. Denying a sex offender makes sense, but denying someone for shoplifting could unnecessarily draw the attention of HUD.   

As Rental Services, Inc. learns more about HUDs intentions we will update this post.