5 ways to collect on a judgment

Written by Laura Agadoni on . Posted in edited, For Landlords, Laws & Regulations, Leases & Legal, paid, Rent & Expenses, Screening

Collecting on a JudgementThe bad news: your tenant left owing you money.

The good news: you just won a money judgment in court against that tenant.

Time to celebrate?

Not really.

Although you’re supposed to get the money your tenant owes you after you win a money judgment, actually getting the money is another matter.

It’s not always easy to collect money on a judgment.

The court’s job ends with the judgment. Collecting on that judgment is on you. Your ex-tenant might pay you immediately, and if so, great. Now it is time to celebrate. But what do you do if they don’t?

Related: How to file a small claims lawsuit against your landlord or renter

1. Ask for it

This simple solution often works. Draft a letter to your ex-tenant requesting the money.

  • Let this person know what they owe you.
  • Tell them if they don’t pay by X date, you will begin a collection process.
  • Mention that if you begin a collection process, the transaction will appear on their credit report.
  • You might wish to remind your ex-tenant that having a collection on their credit report will make it difficult to rent another place or to obtain a mortgage.

Many tenants, not wanting their credit affected, will pay.

2. Garnish wages

Almost every state allows wage garnishment, a process that allows creditors to take up to 25 percent of a debtor’s wages until the debt is paid. You must know where your ex-tenant works to do this. You might have this information on the application your ex-tenant filled out. The rest of the procedure varies by state, but typically, you do the following:

  • Go to your local courthouse and ask for a garnishment order.
  • This goes to your ex-tenant’s employer.
  • The employer then withholds money from your ex-tenant’s paycheck until the debt is paid to you.

3. Garnish bank account

Similar to wage garnishment, you must know something about your ex-tenant—in this case where they bank—and ideally, their bank account number. You might have some bank information on the application your ex-tenant filled out, or you can get the information from a cancelled check. If your tenant paid you by check, then you have it. If not, you might be able to find someone who has received a check by your ex-tenant. You then go to your local courthouse and follow the procedure for garnishing the bank account.

4. Request information from the court

If you don’t know where your ex-tenant works or where they bank, you can request a formal procedure at your local courthouse, usually called a “debtor’s examination.” Your ex-tenant might then be ordered to fill out a form that lists their employer and bank information. Or they may be subpoenaed to appear before the court at a hearing to answer your questions. You will have the opportunity to find out the information you will need to collect money:

  • Where they work
  • The contact information of their employer
  • Where they bank
  • Their bank account number

5. Hire a collection agency

You’ll have to pay to use a collection agency, but recovering some of your money is better than receiving nothing. Unfortunately, the odds of a collection agent being successful in collecting money your tenant owes you are not that good. But you can increase your chances by hiring a recommended and reputable collection agency that specializes in working with landlords. Ask your lawyer, accountant, or other professional you know for a referral.

Related: The problem with collection agencies

The bottom line

Sure, you can collect on a judgment. But there’s no guarantee you’ll be successful or whether it will be worth your time and effort to pursue the money. Only you can make that determination based on how much your tenant owes you and on how busy you are. In most jurisdictions, you have between five and 20 years to collect. So if you’re not up to the job now, or if your ex-tenant has no assets at this time, you might be able to collect your money in the future.

The best course of action is to screen your tenants before renting to them. There’s no guarantee you won’t be burned when you screen tenants, but your chances of renting to a deadbeat tenant are lessened. Keep in mind that the Cozy tenant screening process is free for landlords, and I highly recommend it.

Related: 6 Ways to Find Your Deadbeat Ex-Tenants

How to screen a foreign-born or international rental applicant?

Written by Nicky Goulimis on . Posted in For Landlords, Screening

FlagsAs a landlord, one of your primary goals is to find high-quality tenants, often leveraging a credit check service to determine creditworthiness. But it’s not always easy, especially if your applicant is a with a foreigner or international student?

What happens if they don’t have a Social Security number?

What do you do when you have an applicant who recently moved to the U.S. and doesn’t have a Social Security number? Or they were recently issued a Social Security number, so there is limited US credit data behind it?

Immigrants are everywhere

This challenge is only growing. Immigrants make up nearly 14 percent of the U.S. population, and are expected to drive 74 percent of all U.S. population growth by 2065. Each year, 2 million immigrants arrive in the U.S., and 75 percent of these new arrivals are looking to rent. 45 percent of foreign-born arrivals are college educated; they often move to the U.S. for jobs, command high salaries, and have good credit history overseas.

Foreign credit doesn’t mean bad credit

The highly educated foreign-born tend to command higher incomes and have prime or super-prime credit. However, because they can’t carry over their credit history from their home countries, they have thin credit profiles in the U.S., and are locked out of the U.S. rental market. And while they are credit-worthy and make for high-quality borrowers, it makes it difficult for new-to-country residents to rent an apartment.

In turn, it makes it challenging for landlords to rent to these ideal tenants. Landlords are forced to go through a highly manual, tedious process to pull together disparate documents to understand the applicant’s creditworthiness, often relying on things like utility bills, income statements, bank statements, and alternative data that may be in a foreign language and currency.

There is one company that provides international credit reports to independent landlords. Nova Credit is a cross-border credit bureau that provides instant access to international credit profiles.

Nova Credit pulls data from leading international credit bureaus such as Experian, TransUnion, Equifax, CRIF, and Circulo de Credito. It’s free for property managers, and allows for real-time screening of international resident applicants.

Similar in format to a standard U.S. consumer credit report, the data is post-processed to be compliant with U.S. regulation and is standardized across countries.

The Credit Passport includes:

  • U.S. equivalent credit score
  • Aggregate risk attributes
  • Tradelines and repayment history
  • Derogatory marks
  • Aggregate statistics
  • Additional data such as bureau notices, inquiries and employment history

By accessing international credit reports, landlords can better identify high-quality, foreign-born applicants. By unlocking foreign credit data in the U.S., property managers and landlords are able to:

  • Increase occupancy rates. Convert highly qualified applicants seamlessly to maximize net operating income (NOI).
  • Reduce operational costs. Decrease the amount of time and money spent manually screening applicants.
  • Improve risk management. Distinguish between good and bad tenants to ensure great long-term tenants across your portfolio. In turn, you can better manage risk and reduce bad debt across your portfolio.

Accessing an international credit profile also benefits foreign-born applicants. New-to-country applicants may also be able to remove approval conditions such as paying a higher deposit, securing a guarantor / co-signer—or worse, being overlooked entirely because of a lack of U.S. credit history.

Harnessing new technology and reliable data, international credit profiles can help save time and money for property managers and tenants alike. It’s a win for both parties.

What to do if the deposit doesn’t cover the damage or unpaid rent

Written by Laura Agadoni on . Posted in edited, For Landlords, Laws & Regulations, Leases & Legal, Move-in/Move-out, paid, Rent & Expenses, Screening, Security Deposits, Step 13 - Return Deposit

You did the right thing in collecting a security deposit. But what happens when that deposit isn’t enough to cover damages or unpaid rent?

Most landlords collect a security deposit equal to one month’s rent at move-in time to cover any damages or unpaid rent at move-out time. But if there were extensive damages to the property or if the tenant left without paying last month’s rent and there were damages, you’re out some money, and that isn’t right.

You have options, though. Let’s explore them.

1. Communicate with your tenant

To legally withhold the security deposit, you must, in most states, send a letter to your tenant explaining why you are holding some or all the deposit. And you must do so within the time limit specified by your state. You can find your state law here.

Here’s a template for documenting and itemizing deductions from the security deposit.

Send this document or one like it to your tenant to let them know why you are withholding some or all the security deposit.

If they still owe you money beyond the security deposit, you’ll also need to send a demand letter.

2. Send a demand letter

Along with sending the itemized list, you need to send a letter asking for what your tenant owes you, called a “demand letter.”

Here’s a sample of a demand letter you can send a tenant who owes you money.

3. Decide whether you should go to small claims court

You might receive the money owed to you after sending the demand letter. But if you don’t, send the letter a second time, attaching the first letter along with the second. If you still get nothing, you need to assess whether it’s worth your time and effort to take your tenant to small claims court.

Related: How to file a small claims lawsuit against your landlord or renter

The upside of going to small claims court is that you’ll likely win a judgment against your tenant if you can prove to the judge that your tenant does, indeed, owe you money. You get your money (theoretically anyway: see about being broke below), and you get satisfaction in that you were not taken advantage of.

But there are downsides to small claims court as well.

It’s time-consuming.

You need to prepare your case, organize the evidence, learn how to go to small claims court, and attend the hearing in the town in which your rental property is located.

Your tenant might be broke.

If you win a judgment, you still need to collect on that judgment. If your tenant has no money and no job, you won’t be able to collect.

You might not have the evidence.

If you didn’t keep proof, such as how your property looked at move-in time compared with how it looked when your tenant left, you might not be able to win in small claims court.

You pay filing fees and might lose pay by taking time off work.

Filing fees are usually less than $100 and you get them back if you win your case, but if you don’t have a strong case and lose, you need to be prepared to lose your filing fee. And depending on how valuable your time is, if you need to take the day off from work, you need to factor that cost in as well.

Your tenant could file a countersuit.

Whether your tenant has a case against you or not, they could file a countersuit. If you haven’t done everything by the book, you actually might go home owing your tenant money.

But if you can say “yes” to the following, you should seriously consider going to small claims court:

  • Your tenant owes you a significant sum of money.
  • You have proof of what you are owed.
  • Your ex-tenant has a job or a source of income.
  • You have the time and energy for small claims court.

If you don’t think you’ll get much or any money, you might want to write this off as a loss and move on.

Try to prevent excessive damages in the first place

It’s good to know what to do if you’re owed money, but it’s even better to prevent this situation from happening in the first place. Here are three measures to take to help avoid being out any money.

1. Conduct regular inspections

One way to help prevent excessive damage to your rental property is to perform periodic inspections. It’s important to strike the right balance between keeping tabs on what’s going on with your rental property and not becoming intrusive to your tenants. It’s typical to inspect your property at least once a year. Some landlords do this twice a year or even quarterly.

Related: How Often Can a Landlord Inspect a Rental Property?

If you notice a problem, such as a tenant sneaking in a pet or an extra tenant or two, or if you notice a dying lawn or a water stain on the ceiling, you can nip the problem in the bud before a small issue becomes an expensive problem.

2. Have a walk-through a month before move-out

The time to do a walk-through is when the tenant is moving out or immediately after they move out. (You do that, right?) A walk-through lets you know whether you will need to withhold any of the security deposit.

But you can also do a walk-through about a month before your tenant moves out. At that time, you can go over with your tenant any items that need fixing. By doing the walk-through a month in advance, you give your tenant a chance to fix any problems so they can get all or most of their deposit back.

3. Screen tenants

A great way to help ensure you don’t lose money is to get good tenants in your property in the first place. And the way to do that is by tenant screening. Of course, screening doesn’t guarantee a perfect landlord/tenant relationship, but it helps immensely.

I use Cozy to screen tenants. I require a background and credit check on all applicants. The applicants pay directly to Cozy for this service, and I receive the information to review, which helps me decide whom to rent my properties to.

Bottom line

Making repairs because of damages tenants cause and being out rent for a month or more from a tenant who stiffed you are risks landlords take. Knowing what to do if this happens to you and helping prevent this from happening in the first place lessens your risk of losing money.

Standard questions to ask on a rental application

Written by Kathy Adams on . Posted in edited, For Landlords, paid, rental application, Screening, Step 6 - Applications & Screening

Questions to ask in a rental applicationIf you’re new to the rental business, setting up something even as basic as a rental application may seem a bit daunting.

Cozy makes the process easy, offering a secure online application link for each applicant and co-applicant. Whether you choose to use Cozy for your applications or opt for your own homemade version, these standard questions help you make informed decisions about potential new renters.

1. Personal information

Getting personal information is an absolute must on every rental application; after all, you need a way to contact the applicant and verify a few basic details. In this section, the applicant fills out their name, contact information, and date of birth. A Social Security number is not required.

Related: Do Landlords Need to Collect Social Security Numbers?

2. Employment and income history

This section asks for the applicant’s employment status and several years of work history. Ask for the current (and recent) employer’s name, the applicant’s start date, title, and monthly pre-tax income. Also ask for a work contact to verify employment. Include space for additional income information. This comes in handy for the self-employed or for those with other income sources or side jobs.

3. Residence history

Ask the applicant to include residence history for at least the past two years, including the current home. For each location, the applicant should list the approximate move-in and move-out dates. Also ask for the landlord’s name and contact information.

4. References

A reference section helps you verify that what the applicant claims is true. Ask for at least two references, such as coworkers, former landlords, college professors, or former bosses.

5. Emergency contact

This information isn’t necessary to rent an apartment, but it could be vital in the event of an emergency later on. Here, the applicant lists the contact information for a nearby family member or close friend.

5. Pets

The pet section lets the applicant list any pets they plan to bring into the rental. If your rental allows only small dogs, for instance, include extra space to list a dog’s breed or size. Use this section to inform applicants of pet-specific rules at your rental, too.

6. Bankruptcy

Though not a requirement, you may wish to ask whether the applicant has filed for bankruptcy in the past seven years. Include space for an explanation below the question in the event the applicant indicates a bankruptcy. Note that bankruptcies show up on a credit report for up to 10 years.

6. Evictions and refusal to pay rent

These questions are optional. Asking the applicant whether they’ve ever been evicted or refused to pay rent can help screen potential problem tenants. If they indicate “yes” to the eviction question, ask why it happened. Refusing to pay rent or refusing to pay on time is also worth an explanation. Typically, rent refusal happens during a landlord/tenant dispute, so it’s good to know the tenant’s history in this area. Several rent refusals could indicate a potential for future disputes.

7. Crimes

In this section, the applicant indicates convictions for felonies or misdemeanors, including drug-related convictions. Parking and traffic violation information isn’t necessary here. This information will show up on a background check.

8. Smoking

Ask about smoking. This is also a good place to list the smoking policy for your property or region. If your property has a designated smoking area, mention it here as well.

Related: How to Remove Cigarette Odor from Your Rental Property

Additional screening information

It’s a good idea to require applicants to undergo further screening, such as credit reports and background checks. Note that the Cozy application covers these as well. With Cozy, applicants click links to purchase either report, with an option to refuse either one. If an applicant refuses, they are offered space to explain the refusal.

The bottom line

Getting the same information on all your applicants makes the process fair and helps you compare applicants. Have requirements set up ahead of time, such as a certain credit score, income level, and debt load, and then when you review applications, you’ll be able to offer your rental to the most qualified applicant.

How to automate landlord responsibilities

Written by Sarah Block on . Posted in edited, For Landlords, Leases & Legal, Maintenance & Renovations, Move-in/Move-out, paid, Rental Advertising, Screening, Software, Step 1 - Perform Research

Landlord automation - life's a beachWhen I became an accidental landlord in 2011, all I knew for sure was that I needed a tenant, and fast.

Over the years, I have learned how to manage my properties through systems and processes that practically automate all landlord responsibilities. Since then, I like to say “life’s a beach” . . . or at least that’s true for my life as an independent landlord. Today, I’ll share my landlord automation secrets.

Step 1: Finding a tenant

The first thing I do with my rentals is to take great pictures that showcase the properties and surrounding towns. I write ads that help prospective tenants see themselves in that environment.

Related: How to Write an Attractive Property Listing in 8 Steps

From there, I create a Google Drive folder and put photos and ad descriptions in it as well as a Google calendar for showings.

This is where the automation comes in.

  • Post your ad through syndication sites like Apartments.com and Cozy’s Property Listing portal.
  • Use an app like Calendly to automate scheduling showings, which populates on your Google Calendar.
  • If you want, you can even automate showings by using smart technology like Rently that allows prospects to schedule the showing from their smartphone and open the door for them. I wouldn’t recommend doing this one though if there are current tenants. Also, there is no replacement for meeting a prospective tenant in person.
  • The rental application can be done online for free with Cozy’s rental application. The application includes a background and credit check, which is always recommended.

Step 2: Set up lease and rent collection

Creating a lease and rent collection system is the most important step. If your lease isn’t legal or your payments aren’t automated, that is potential money out of your pocket.

Have an attorney create your first lease, ensuring that it is compliant with your local area.  This lease can be customized for all other tenants. So, it is a one-time cost that will save you big money throughout the life of your rental.

  • Use DocuSign to have the tenant sign the lease and store on Google Drive or your Cozy portal, providing access to your new tenant.
  • Set-up automatic rent collection with Cozy’s rental payment portal. It’s free for both the landlord and tenant as long as they pay with an ACH. A bonus: Cozy automates late payments.

Related:  The landlord’s guide to rent collection

Step 3: Move-in checklist

Think of a new tenant moving in like a new employee starting a job. There is an onboarding process.

  • Start with a move-in inspection with the tenant. Have the tenant sign it. This will be gold when the lease is up if there are any issues. You’ll have proof the tenant agreed the unit met their expectations. On the other side, if an issue needs to be resolved, the tenant can fill out a maintenance request, and the entire process is tracked.
  • You can track any tenant onboarding and maintenance expenses for tax purposes and write them off during tax season using the landlord portal.
  • Build a small team of contractors that you can rely on. You will need a handyman and a cleaning crew for maintenance and turnover needs. Having this team in place from the beginning saves you time throughout the lifetime of the rental.

Related:  The perfect tenant move-in package

By taking a small amount of time upfront to set up systems, processes, and automation, being a landlord becomes much easier. While landlords jest that owning rentals are anything but passive income, it can be much more passive with a plan in place.

How to get your landlord’s approval to sublet

Written by Laura Agadoni on . Posted in edited, For Renters, paid, Rent & Expenses, Rental Advertising, Screening, Security Deposits

Permission to subletYou just found out you need to be away from home for an extended time. But you’re still in the middle of your lease period. Subletting your rental would be the perfect solution … but what will your landlord think?

Related: A renter’s guide to subletting your apartment

When you sublet, although you’re still a tenant, you act as a landlord by leasing your rental unit to someone else—a subtenant. Whether you’re allowed to sublet your rental is usually addressed in the lease, and you typically have one of three options:

  1. You are not allowed to sublet—game over, end of story. Don’t do it!
  2. You are allowed to sublet. Go for it—you have free rein!
  3. The norm—You are allowed to sublet only after obtaining written consent of the landlord. (Landlords typically want to screen subtenants.

But what if the lease doesn’t say anything about subletting?

A rarity, but if your lease is silent on the issue, check to see whether your state has any laws on the books about subleases. And more important, just ask your landlord.

Keep in mind that your landlord can refuse your request to sublet your rental, particularly if they have a good reason. With that said, there are ways to help ensure you get your landlord’s approval to sublet.

1. Find a suitable subtenant

It’s best to ask someone you know and trust. A dependable person you can rely on both reassures the landlord and gives you peace of mind that this person will uphold their end of the bargain—paying the rent on time, taking care of the property, and following all other lease terms.

If you don’t know anyone who wants to sublet, you can still find a suitable subtenant.

  • Tell everyone you know that you’re looking.
  • Post on social media and Craigslist.
  • Ask if your roommates will do the same—they’re the ones who’ll be living with this person, so it benefits them to find someone.

If you do post the unit online, make sure you list the benefits (basically whatever it is that you like about it). Also include photos, and of course, your contact information.

If you’re having a hard time finding someone, lower the rent or offer to pay utilities. Even if you need to subsidize part of the subtenant’s rent, it will be cheaper than paying all the rent and probably cheaper than breaking the lease.

2. Screen potential subtenants

You can sign up with Cozy as a landlord and have your subtenants apply. (If you are already signed up with Cozy as a tenant, you’ll need to use a different email address.) Request that applicants allow a credit and background check. This lets you know whether they have a criminal record and how they handle finances.

Ask for references, and call them. Ideally, you will speak with their employer and their current landlord.

3. Get your roommates on board

If you have roommates, make sure they’re okay with your subtenant. You don’t want to cause any drama before you leave by surprising your roommates with a stranger suddenly living with them. If your roommates approve your subtenant, have them sign a form stating so.

4. Draw up a lease between you and the subtenant

A written lease makes everything clear, protects both parties, and eliminates your-word-against-theirs types of scenarios.

Here are some must-haves to put in the lease:

  • The dates the subtenant will be renting the unit from you
  • The amount of rent they will pay
  • Whether they will pay the rent to you or directly to the landlord
  • Who will pay for utilities

Also provide your subtenant with a copy of your lease so they will know all the particulars of your rental situation.

A note about rent: You can continue to pay the rent to your landlord even if you have a subtenant, and your subtenant would pay you. This way, you know that rent is being paid. You can also choose to let your subtenant pay the landlord directly. But if your subtenant doesn’t pay, the landlord could evict you (unless you pay rent pronto plus any late fees).

It’s a good idea to ask your subtenant for a security deposit. A usual amount is half or a full month’s rent.

5. Put in a written request to your landlord

Let your landlord know that you are taking this matter seriously by mailing (or at least emailing) them about your sublease proposition at least 30 days in advance.

Here’s what to put in the letter:

  • Your reason for needing to sublet
  • The start and end dates of the sublease period
  • The proposed subtenant’s name and current address
  • Your address (or a way of contacting you) during the sublease period
  • A copy of the sublease agreement and any roommate approval form

6. Wait for your landlord’s response

If your landlord doesn’t respond in a week or so, follow up. If your landlord won’t respond or refuses your sublease proposal for no good reason, you may need to contact an attorney or legal aid.

7. Understand what you’re getting into

You are ultimately responsible for your rental unit.

If you choose a subtenant who is irresponsible and skips out on rent, damages the rental unit, or becomes a nuisance to the point of violating the lease terms, your landlord can come after you for the money.

Make sure you have a clause in your lease with your subtenant that states they will be responsible for unpaid rent or damages they caused. That way, if your landlord sues you or keeps your security deposit to pay what’s owed, you can then come after your subtenant or keep part or all the security deposit if you requested one.

Note that the expectation is to return your subtenant’s security deposit. If you do keep all or part of their security deposit, you need to provide a reason.

A subtenant could save you from paying rent for a place you won’t be living in or from having to break your lease. If done correctly, the arrangement could work out well for all parties involved: your subtenant, your landlord, and you.

If you have tips for subleasing, please share them in the comments!

How to spot fake pay stubs and credit reports

Written by Laura Agadoni on . Posted in edited, For Landlords, paid, Screening, Step 6 - Applications & Screening

Fake credit reportsAs a landlord, you need to make sure you rent to tenants who can afford to pay the rent and who actually pay their bills, so you naturally check pay stubs and credit reports. You are doing that, right?

The problem is that some people aren’t completely honest when trying to rent a property. They might pretend they make more money than they really do by giving you a fake pay stub. Or they might try to give you a doctored credit report to make them appear creditworthy when they really aren’t. So how can you make sure what you’re learning about potential applicants is true?

Look at more than just the pay stub

People can simply go on the internet and use a template to make their own paycheck stub. And these paycheck stub generator sites are super easy to find.

The result?

The pay stubs look official, and people can enter any information they like. You won’t be able to tell just by looking at this type of fake pay stub whether it’s the real deal or not. Here are four better ways to verify income:

  1. Request a W-2 form. Employers prepare this form, which shows an employee’s gross earnings, deductions, and taxes. It’s possible to fake W-2 forms, too. But it’s a much harder process and involves an entire criminal enterprise of tricking payroll personnel. W-2 forms are a more accurate way to verify income than pay stubs are. You are far more likely to get fake pay stubs than you are fake W-2 forms.
  2. Look at your applicant’s bank account. Check to see whether the deposits match what they say their income is.
  3. Call their employer. First, find out whether they work where they say they do. Then ask whether the employer can verify that the applicant earns what they say they do. Not all employers will verify salary, but they can at least let you know whether the applicant works there.
  4. Request form 4506 from the IRS. With this form, you can see a transcript of a prospective tenant’s federal tax record.

Always run your own credit check

If a tenant offers to give you a copy of their credit report to “save” you from doing this step yourself or because they say they don’t want to ding their credit with a credit inquiry from you, politely decline. Why? It’s easy to fake a credit report, too.

The remedy is simple: you need to request a credit report yourself. I use Cozy for this service, and it works out great. The credit reports come from Experian, one of the three credit bureaus. If you use Cozy for your tenant applications, you can request that Cozy require all applicants to agree (and pay for) a credit check and a background check.

And bonus: Just letting applicants know that you use a screening service is itself a way of screening tenants. Applicants who can’t afford your place will probably move on or will be upfront with you about anything negative you might find.

Related: 6 Ways to Handle Applicants with Bad Credit

Bottom line

It would be nice to be able to instantly spot fake pay stubs and credit reports. But that just isn’t possible in many cases. You need to verify information by crosschecking and, ideally, using a screening service such as Cozy.

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