Red flags to watch for: How to identify ‘professional tenants’ who scam landlords

Profession tenants is a term we use for rental applicants and renters already in the unit who exploit housing providers, delay evictions with false claims, and manipulate the system for personal gain. Worse yet, these unscrupulous individuals are prone to bring an affirmative lawsuit against the landlord.

They have become increasingly sophisticated by taking to the Internet to learn about tenant protections. They are quick to point them out when conflicts arise in the rental relationship and they face eviction.

We want to avoid these professional tenants like the plague. Fortunately, several indicators can alert to potential trouble.

By far, tenant selection is the biggest determinant of a harmonious, successful rental relationship, or a rental relationship from the depths of hell that costs landlords many thousands of dollars in unpaid rent, damages, or even litigation.

It is also true that the best predictor of dysfunction and nuisance behavior is prior acts of dysfunction and nuisance. With that being said, let’s launch into some of our soliloquy.

Providing rental applicants with specific screening criteria

Under California law (AB 2493), landlords must provide prospective tenants with written screening criteria at the time of the application submission if the landlord intends to charge a screening fee.

This law was designed to ensure transparency in the application process and allow tenants to assess their eligibility before paying any fees to be considered a qualified candidate for the unit; the applicant should not pay a fee to be vetted for a rental when they know that they have no chance of checking all of the boxes necessary to qualify.

Such criteria might include:

• Income requirement is that gross income be at least 3x’s the monthly rent.

• A minimum credit score, say 700.

• At least two years of rental history.

• No history of evictions or violation of the lease.

• Proof of at least six months of rent payments.

• A criminal background check (when permissible by law).

• Etc.

What should also be included in the written screening criteria is that all applicants are welcome. This is the first line of defense when weeding out professional tenants.

 

An upside to spelling out explicit screening criteria is that prospective tenants are less likely to claim they were discriminated against if they failed to meet the stated criteria. Housing providers can confidently state that they have a zero-tolerance policy for housing discrimination, and the prospective tenant’s application was denied solely because they did not meet the qualifications.

Providing false identities

It has become more prevalent for impostors to pose as someone else when applying for a rental, making it imperative for housing providers to do some sleuthing to know who they are renting to.

Of course, the prospective tenant should ask for a driver’s license. The tenant can refuse or state that under California law, they do not have to provide a driver’s license. They are correct. But landlords are also on solid legal ground in denying a tenancy when one is not produced.

If you’ve had any children who wanted to get into a bar, you know that state-issued ID can be forged, so we should dig deeper and ask for utility bills, cell phone bills, and banking statements. These types of documents are difficult to manufacture.

Beware of rental applicants who have become inventive in purporting to be someone else. Take, for instance, a landlord who evicts a tenant, obtains a judgment, and seeks to recoup past rent, only to discover that the Social Security number provided was that of a relative.

Lying about the place of employment

It is not unheard of to have applicants lie about where they work. On the rental application, the landlord is often impressed by the applicant’s professional stature and hands over the keys. Later, they find that the tenant is not employed by the company they purportedly work for.

When housing providers discover that their tenant does not work where they say they do, it is too late. This should have been identified in the screening process. Fortunately, the applicant’s place of employment (if any) can be ascertained before the tenant occupies the unit.

When evaluating the worthiness of a rental applicant, don’t rely on the phone number given on the application, as there may be a friend waiting on the other line to verify employment and give a rave review. If the prospective tenant claims they work for XYZ company, do a Google Search on XYZ company to obtain their official phone number.

Gaps in rental history

When someone submits a rental application that captures their prior tenancies, be on the lookout for periods that are unaccounted for. Were they evicted during this unexplained time frame? Were they in prison? These gaping holes in rental history is a red flag.

Under a relatively new law (AB 2747), housing providers are required to offer tenants the option to have their on-time rent payments reported to a national credit reporting agency, empowering renters to boost their credit scores. If a tenant elects to have their positive rent payment history reported, however, nothing prohibits landlords from reporting missed rent payments that future landlords can identify.

Also, was there any interruption in the timely reporting of rent payments? For example, there may be 7 months of notations that the tenant paid their rent on time, and suddenly, the reporting ceases for 5 months. Why? This should raise eyebrows and warrant further investigation.

History of being involved in litigation

Most people do not get mired in litigation, but problematic tenants often do. Many lawsuits that arise in landlord-tenant disputes can be discovered through a search of court records, specifically in local small claims or civil courts in the applicant’s current and former counties.

If this is too cumbersome, housing providers can utilize professional tenant screening services that include civil court records in their background checks.

If the rental applicant has sued their past five landlords or, conversely, has been sued, this is clearly a red flag.

Spotty credit report or the applicant furnishes their credit report

In today’s world, documents can be easily Photoshopped or otherwise forged. If a prospective tenant hands over their “fresh” credit report, our advice is to take it and throw it in the nearest wastepaper basket. Landlords should always run their own credit report.

[bulb icon] As a pro tip, ensure that the credit report matches up to the applicant’s cell phone number to ensure they are who they say they are.

What is harder to “doctor” is proof of rental payments for the past six months.

The rental applicant wants quick access to the advertised unit

Moving is a tumultuous event that normally requires careful planning. So when someone seeking housing needs to move in RIGHT NOW, it is a red flag. Why the urgency? Are they being evicted, or what else are they fleeing from?

Even if the rental applicant has cash in hand, landlords should be wary of desperate individuals who express the need, if not beg, to move in immediately.

Reluctance to provide references

We have said time and time again that despite all of the marvels of technology, there is no substitute for old-fashioned personal sleuthing. We cannot rely solely on technology. As Daniel explained several years ago, many evictions can be cloaked, making it imperative for housing providers to reach out to past landlords, as well as personal and professional references.

Offering to pay rent in advance

From time to time, there is a rental applicant who dangles a lot of money and wants to pay several months of rent up front. This may be a tactic to avoid a proper credit and background check. The question we have to ask is whether the individual has something to hide.

Although it may be enticing to accept the money, housing providers may be stuck with a nightmare tenant that is hard to evict.

Overly knowledgeable about tenant rights

Don’t get us wrong. Tenants should know the protections afforded to them under law. Indeed, in certain locales like San Francisco, Oakland, Berkeley, and elsewhere, tenants must be informed of their rights in writing. One of our clients once quipped that when renting out a unit, he would put a bookshelf in the corner just to put all of the requisite disclosures and packets in a convenient place.

But sometimes, we encounter prospective tenants who strike as “smarty pants” and like to cite laws, ask detailed questions about their rights, and prepare for “what if” scenarios as if they expect some acrimony later on in the rental relationship and will apply their knowledge of the law. This is a sign that the applicant will become an argumentative or litigious tenant.

Ensure that payment has cleared before the tenant moves in

Once the ideal tenant is found and payment is received, landlords are not done just yet; unless it is cash, the payment has to be cleared.

We are aware of several landlords who accept payment and hand over the keys, only to find that the payment bounces. We have even seen fake cashier’s checks and checks drawn on closed accounts. Will the police get involved in these instances? Don’t hold your breath.

The most stinging of all: Once a tenancy is established in a rent-controlled jurisdiction, the tenant is entitled to protections under respective ordinances, even if the initial payment made to gain access to the unit did not clear.

Scams continue after the tenancy commences

Hopefully, housing providers have done their due diligence in the proper selection of a tenant, leading to a long-lasting relationship with renters who make timely payments, maintain the unit in excellent condition, and are respectful of neighboring residents. Tenant screening is the first line of defense to avoid professional tenants who are likely to cause misery for landlords.

Yet this is not a perfect world we live in. In our next article, we’ll explore some potential scams that can occur after the tenant moves in. Be sure to subscribe to our updates to stay in the know.