A mortgage broker, his wife, and their attorney have been sentenced for a fraud scheme involving foreclosed homes.

The Pennsylvania broker will serve five years in prison for the massive mortgage fraud scheme that resulted in at least 35 fraudulent mortgage loans worth more than $10 million, according to prosecutors. His wife was sentenced to home detention. Together, they are ordered to forfeit $400,000.

The couple’s attorney also faces prison.

According to prosecutors, the defendants targeted financially distressed homeowners facing foreclosure, falsely promised them help in saving their homes, engaged in real estate transactions with straw purchasers, and obtained dozens of fraudulent mortgages. The defendants took whatever equity the homeowner had left, funneled it through shell corporations they controlled, used some of it to pay the new mortgages, and put the rest of the equity into their own bank accounts.

The defendants promised financially distressed homeowners that they would find an “investor” who would help them save their home. The defendants would then either purchase the home themselves or arrange for a straw purchaser to obtain a fraudulent mortgage and then transfer title of the homeowner’s residence to the straw purchaser. They obtained the fraudulent mortgages by submitting false documents to mortgage lenders and making false claims about the purchasers’ finances.

The defendants also concealed from the lender the fact that the homeowner was going to continue to reside in the home and that the mortgage payments were going to continue to be made, in part, by the distressed homeowner and funneled through the straw purchaser.

The husband and wife brokers each acted as straw purchasers for 10 homes. They also recruited at least seven other persons to act as straw owners in order to obtain additional fraudulent mortgages.

An attorney was convicted of soliciting and referring distressed homeowners to the couple and using fraudulent bankruptcy filings for some of the distressed homeowners to delay foreclosure until the brokers had obtained an investor and a mortgage. Another defendant handled the closings for the real estate transfers, falsifying the settlement statements and manipulating the information provided to the lender in order to hide the nature of the scheme until after the loan was funded.

Charges came after the case was investigated by the FBI, and the Pennsylvania Department of Banking.

American Apartment Owners Association | Company Website |  Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.

A lawsuit challenging numerous amendments to New York’s rent stabilization regulations was filed by major real estate organizations representing thousands of residential property owners.

The lawsuit seeks to overturn the amendments, challenging the authority of the new Tenant Protection Unit, created by Governor Cuomo. The apartment owners contend that the status of TPU is in question, since the state’s legislature has rejected the proposed funding of the watchdog agency on two occasions since it was enacted in 2011.

The suit claims there is no legal authority for establishing the TPU, which, despite the lack of any complaint by a tenant, audits individual apartment improvements that owners undertake to improve their properties.

The rental owners also contend that the Governor had no authority to create the TPU in the first place – and even if such authority existed, the TPU, as it currently functions, violates constitutionally protected due process rights of building owners by demanding that they reduce or refund rents without affording them an opportunity to be heard or appeal the TPU’s decisions.

The second component of the lawsuit challenges many of the 27 amendments to
the regulations made by DHCR on the grounds that those amendments either conflict
with the State rent laws or constitute a violation of the separation of powers. For example:

The newly adopted regulations contradict the strict four-year statute of
limitations created by the State Legislature in 1997 relating to rent overcharge claims by tenants and record-keeping obligations for property owners. In fact, the newly adopted regulations now allow rent challenges to be brought at any time, by any tenant, and encompassing any time period throughout the entirety of an apartment’s rental history;

The amendments authorize tenants to stop paying rent, without the approval of any agency or court, if they do not believe that the property owner has properly documented improvements made to their apartments prior to the tenant taking occupancy;

The law creates obstacles which prohibit property owners from collecting legally authorized rent increases for major capital improvements and vacancy increases;

The regulations re-prioritize violations so that minor, even unintentional acts carry the same punishment as more severe actions.

The suit was filed by the Rent Stabilization Association, the Community Housing
Improvement Program, and the Small Property Owners of New York, along with individual property owners. The organizations represent owners and managing agents of thousands of large, medium and small residential apartment buildings throughout the five boroughs that include approximately one million rent stabilized apartments.

RSA President Joseph Strasburg adds, “Property owners will not sit by and watch
as their constitutionally protected property rights are trampled upon by government at the behest of tenant advocates.” RSA Chairman Aaron Sirulnick warns that it is small property owners who are the most vulnerable, and that the regulations will hamper efforts to preserve affordable housing.

American Apartment Owners Association | Company Website |  Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.

Running a criminal background check on every adult rental applicant under serious consideration is a must-do for any landlord who wants to protect profits.

Failure to run a criminal check can increase landlord liability, especially if the new tenant hurts others, and increases the chances that an applicant will become a problem tenant.

On the other hand, having a strict crime policy can attract good tenants who place safety at the top of their apartment-hunting wishlist.

To get the most out of your criminal background checks, it’s important to keep these tips in mind:

1. Criminal reports, unlike credit reports, usually are not indexed using specific identifying information like the applicant’s Social Security number. That means you will need to rely on other information to link possible criminal reports to your applicant. Your rental application should include the date of birth, the party’s full legal name and any alias names, as well as previous addresses.

2. Criminal reports are available on both state and national levels. The advantage of the national reports is catching applicants who may be providing incomplete information on the rental application regarding their whereabouts.

3. Tenant screening reports are best when used together. For instance, using the Previous Address Tenant History, you may be able to identify addresses — and possible criminal convictions — in places the tenant has failed to reveal.

4. Criminal reports can be supplemented by leasing policies that discourage those with criminal tendencies from applying. For instance, participating in a Crime Free Multi-Housing program and advertising that policy to applicants can reduce the risk of attracting the wrong ones.

5. Be aware that, in some areas of the country, criminal checks are regulated. Oregon recently passed new restrictions on what landlords can do with the information from criminal background checks. Nonprofit agencies that assist ex-cons with re-entry into communities have lobbied for more tenant-friendly laws across the country. Be sure to stay on top of your local rental laws.

6.  Make sure you require the same level of screening reports from all applicants. If you scrutinize the ones you suspect are most likely to have a criminal background, but let others slide altogether, it will look like discrimination

American Apartment Owners Association | Company Website |  Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.

California Senator Mark Leno joined San Francisco Mayor Ed Lee, other elected officials, tenant advocates, labor groups and business leaders to introduce legislation closing a loophole in the Ellis Act that allows speculators to buy rent-controlled buildings in San Francisco and immediately begin the process of evicting long-term renters.

Aiming to mitigate the negative impacts of a recent surge in Ellis Act evictions in San Francisco, Senate Bill 1439 authorizes San Francisco to prohibit new property owners from invoking the Ellis Act to evict tenants for five years after the acquisition of a property, ensures that landlords can only activate their Ellis Act rights once, and creates penalties for violations of these new provisions.

“The original spirit of California’s Ellis Act was to allow legitimate landlords a way out of the rental business, but in recent years, speculators have been buying up properties in San Francisco with no intention to become landlords but to instead use a loophole in the Ellis Act to evict long-time residents just to turn a profit,” said Senator Leno, D-San Francisco. “Many of these renters are seniors, disabled people and low-income families with deep roots in their communities and no other local affordable housing options available to them. Our bill gives San Francisco an opportunity to stop the bleeding and save the unique fabric of our City.”

Ellis Act evictions in San Francisco have tripled in the last year as more than 300 properties were taken off the rental market. This spike in evictions has occurred simultaneously with huge increases in San Francisco property values and housing prices. About 50 percent of the city’s 2013 evictions were initiated by owners who had held a property for less than one year, and the majority of those happened during the first six months of ownership.

“We have some of the best tenant protections in the country, but unchecked real estate speculation threatens too many of our residents,” said Mayor Lee. “These speculators are turning a quick profit at the expense of long time tenants and do nothing to add needed housing in our City.”

Enacted as state law in 1985, the Ellis Act allows owners to evict tenants and quickly turn buildings into Tenancy In Common (TIC) units for resale on the market. In San Francisco, the units that are being cleared are often rent controlled and home to seniors, disabled Californians and working class families. When these affordable rental units are removed from the market, they never return.

Senate Bill 1439 will be heard in Senate policy committees this spring.

American Apartment Owners Association | Company Website |  Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.

It’s often necessary to draft a list of rules and regulations for tenants to be used in conjunction with the lease agreement, especially in multi-unit rentals.

Otherwise, landlords and tenants are left to sort out the day-to-day management issues without any written standards. That can lead to conflicts, and claims of harassment or discrimination.

While the rules sheet is usually incorporated into the lease agreement, landlords who use a separate set of tenant rules often will reserve the right to change those rules from time to time. This is usually done by making a revised list, and then demanding tenants sign the new one.

But can a landlord change the rules mid-lease? Not surprisingly, the answer depends on the rule that is being changed.

The lease agreement is a contract, a bargained-for exchange where each side gets some things, but gives up some things in return. So, in order to determine whether a rule can be changed mid-lease, you need to decide whether the new rule changes the terms and conditions of the bargained-for rental agreement.

That means anything that materially changes the way the tenant lives day-to-day, or costs the tenant more money, may not be subject to change via the house rules.

The rules are a place for logistics, like acceptable conduct in common areas, a prohibition against leaving laundry unattended, or where to place the trash. The term ‘rules’ is a misnomer; they’re more like guidelines than actual rules.

More significant changes, like a smoking ban, or new parking fees probably require an amended lease, not just a rule change. That way, the tenant has the right to negotiate, and the change can only happen if they agree. That would be the case even if the lease allows the landlord to change the rules from time to time.

This practice is not only safer from a legal standpoint, but far more likely to bring about the tenant’s compliance, which is the ultimate goal anyway.

American Apartment Owners Association | Company Website |  Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.

It seems easy. Your renter is a deadbeat, and you want them out of your property. So why does it take so long to evict a tenant?

Unlike signing a lease agreement, a legal process so informal sometimes it’s done online, an eviction is a court process. A process that can be as acrimonious as a divorce.

Tenants are afforded legal rights that, when abused, can be used to delay the eviction for months.

First, the tenant has the right to contest the grounds for the eviction. The landlord will claim that the lease was broken, or a law was violated. Either way, the judge must be convinced that there is good cause to boot the tenant. If the judge grows sympathetic to the tenant, they may continue to live in your rental unit.

To begin the eviction process, notice must be given to the tenant — even if they disappeared or are refusing to accept service of the notice. If there is the slightest defect in the notice, it’s thrown out. A new one must be served, and the clock reset.

After being notified of the pending court case, the tenant has the right to challenge the eviction. While that commonly consists of a sweeping denial of whatever they are accused of doing, the tenant also can raise defenses at this time. That means challenges to the habitability of the unit, failure to make repairs or unfair treatment. Often, this is the first time any of these complaints have come to light.

If the tenant has made a reasonable-sounding denial, the landlord must then go to court and prove each aspect of the eviction claim. Without sufficient documentation, that won’t happen.

If you’re successful, the order you receive is just that — an order for the tenant to vacate. Now come the logistics. That order must be served, and a move-out date and time scheduled with the local sheriff’s office. More time spent.

Many courts separate out the eviction order process from any claim for unpaid rent or damage to the property. The logic is to speed up the eviction, but the effect is more time and money spent returning to court to pursue a judgment against the deadbeat tenant.

And finally, if money is owed, it must be collected.

If all that has you wondering how to avoid these consequences, then you’ll understand why some landlords negotiate the return of the rental unit by offering some incentive for the bad tenant to vacate — cash for keys. Maybe that sounds like giving in to a ransom demand, but from a purely business standpoint, it may be cheaper in the long run.

An important precaution is to run a tenant check, including a prior eviction report, on each applicant.

It should be clear just how important it is to have the right landlord forms, so your lease is airtight when you need it, and your rental application contains the clues that will lead a collection specialist to the money that is owned to you.

Lastly, keeping contemporaneous records on all applicants and tenants is the only way to protect yourself if you do wind up going to court.

American Apartment Owners Association | Company Website |  Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.

Touted as a major victory for New Jersey tenants, Governor Christie signed into law a bill that gives tenants the right to collect lawyer’s fees and costs from landlords when they are successful in court.

The rule applies if the landlord has reserved the same right in the lease. The new law applies to all leases entered into on or after February 1, 2014.

Prior to the enactment of the law, landlords could reserve the unilateral right to be compensated by tenants should the landlord prevail in any legal action.

According to Matt Shapiro, President of the membership-based New Jersey Tenants Organization (NJTO), this new law is the most important advance in tenants’ rights in many years. “New Jersey has some of the best tenants’ rights laws in the country, but, until now, not when it came to these unfair legal fees,” said Shapiro. “Nearly every lease in the state has one of these clauses giving the landlord the right to sue for legal fees and costs in addition to whatever else he’s suing for, but it’s been a one-way deal.”

The NJTO successfully argued that the  a one-way legal fees provisions could be intimidating to tenants, who had little bargaining power to change the terms of the lease agreement.

According to Shapiro, a major advantage of the new law is the requirement that landlords inform tenants of the requirement by using bold print in the same clause that gives the right to landlords to collect legal fees.

“Now tenants will finally have a fair shot at having their day in court,” Shapiro says.

American Apartment Owners Association | Company Website |  Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.

1) Be Prepared
Ah yes, the Boy Scout Motto, “Be Prepared”.  It is very applicable to surviving tax season. How can you get prepared?  Start with completing your tax organizer.  We send these out to our clients in early January.  This will contain all of the prior year information.  Some clients don’t like filling out the tax organizer.  That’s fine. Just organize your records as best as possible. Try to get all of your material together.  Finally, schedule an appointment with your CPA early during tax season.

2) Be Patient
Expect delays from the Internal Revenue Service (“IRS”).  This is nothing new.  We can’t really blame them. It really comes down to Congressional action. Or inaction as the case may be.

Also, expect amended Form 1099′s. This seems to be happening more frequently, particularly later in tax season. If you have had amended 1099′s in the past, let your CPA know.  They may want to complete your returns but request that you don’t file them until later in the filing season.   This may avoid having to file an amended return. It’s like what any veteran carpenter will tell you, “measure twice, cut once.”  Well said.

You may be asking yourself “Where’s my K-1?” People who have invested in Partnerships or Subchapter S corporations need their K-1 to report their portion of the profit or loss on their individual income tax return.  Unfortunately the K-1 forms are not due until April 15, the same day the individual income tax return is due. Don’t wait for your K-1′s. Give all of the tax material you have to your CPA and let them get started on your return.  You can just forward the K-1 to them when you receive them.  This will increase the odds of your return being filed on time.

3) Be Proactive
While you need to be patient, you also need to be very proactive. While 2013 may be in the books, it’s time to start addressing your tax planning for 2014.  This could be something as simple as maximizing your contribution to your 401(k) plan at work.  Taxpayers are allowed to contribute up to $17,500 into their 401(k) plan in 2014.  Taxpayers age 50 or older can contribute an additional $5,500 in a so-called ‘catch up’ contribution for a total of $23,000. Or perhaps your employer has added a Roth 401(k) plan feature to the existing 401(k) plan.  This might be something you should consider allocating a portion of your 401(k) contributions to.

American Apartment Owners Association | Company Website | Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.

With all the benefit of smoke-free rental housing, you may have decided a smoking ban is right for you.  There are several how-to guides to lead you through the process, but there are a few things you should know before you adopt your smoking ban:

1. To be enforceable, the no-smoking policy must be outlined in the lease agreement. Many landlords choose the easy option of attaching a Smoke-Free Lease Addendum to their existing lease. We’ve provided a sample of such an addendum in our post How to Draft a Non-Smoking Lease Agreement.  Note that the addendum is signed by the tenant.

But don’t stop there.

In addition to adding that lease addendum, it is important to re-read your lease agreement and all other attachments, looking for contradictions or omissions. For example, does your lease also provide for a smoking lounge or permissible places to smoke?  Does that contradict the Smoke-Free Addendum? If so, the contradiction must be resolved or the policy may fail.

Do your house rules include the smoking ban?

Review your remedies in the lease.  You need to have the right to evict a tenant who violates the smoking ban.  Be aware of any policies that require a warning before you take action against a tenant, particularly if that warning must be made in writing.

2. While the heart of the smoke-free policy is in the lease, in practice, it is easier to enforce those provisions if you make the non-smoking policy crystal clear to tenants from the very start.

Include “no-smoking” in your rental ads to discourage applicants who aren’t sure they can comply with the policy. List your vacancies in smoke-free rental listing databases to increase the odds of finding applicants who embrace the smoke-free policy.

Reiterate the smoking policy when you speak with prospects.

Include no-smoking signs around the property.

3. A sample smoke-free lease addendum may only cover tobacco smoke — cigars, pipes and cigarettes. If you want to include smoking cannabis or other “herbal” cigarettes, it is best to be clear in the addendum.

Enlist the help of a landlord attorney if you want to be sure your new lease is ironclad.

American Apartment Owners Association Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.

The owner and manager of an apartment complex in Kansas City, Missouri have agreed to pay $20,000 to resolve a complaint that they discriminated against a tenant with a disability.

The allegations stem from the tenant’s request to have a live-in caretaker.

According to the charges, the landlord’s policies required a tenant to remain in an apartment for six months before adding another person to the lease. The tenant told the apartment management company that her sister was willing to move into the apartment and provide the necessary care. The woman’s doctor documented her need for the accommodation, but the management company denied her request.

HUD, which pursued the claim, further alleged that the woman was forced to vacate her apartment and move to different housing out of state because of the management company’s refusal to grant her request.

The Fair Housing Act requires housing providers to make reasonable accommodations in their rules, policies, practices or services when needed to provide persons with disabilities an equal opportunity to use or enjoy a dwelling.

“When it comes to residents with disabilities, the rigid application of the same rules you apply to others can result in the denial of housing opportunities,” said Bryan Greene, Acting Assistant Secretary for Fair Housing and Equal Opportunity.

The owner and management company have agreed to pay the woman $20,000, adopt and implement a reasonable accommodation policy, and provide fair housing training for all employees that interact with tenants.

American Apartment Owners Association Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.