Do you use criminal records in your tenant selection process?

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If so, you’ll want to read this.

 

All levels of government should adopt requirements making it clear [that housing] cannot be denied to those with a criminal justice history, unless there is a legitimate public safety reason for doing so.”

-Deborah De Santis, President and CEO of CSH (Corporation for Supportive Housing)

ball-and-chain

 

In November last year, HUD released a memo specifically addressing a practice employed by many rental property owners and managers – the use of an applicant’s criminal records to determine eligibility for rental housing. Just today, HUD released additional guidance for housing providers, further clarifying the memo. That’s when the news media picked it up.

As expected, you’ll hear much talk out there on both sides of the issue. Some claim it’s government overreach. Others celebrate efforts to provide needed support to those reentering communities from incarceration. In my view, as a housing provider, if you’re using clear and objective criteria for evaluating rental prospects, you’re not likely to run afoul of HUD’s position. In simple language, it says:

  • Housing providers should have policies that apply to everyone, and are evenly enforced.
  • An arrest history is not the same as conviction history. Simply because someone was arrested for a crime does not mean he/she committed the crime.
  • If a housing provider considers criminal background when evaluating potential tenants, the housing provider should not have a blanket “one-strike” rule that fails to take into consideration the type of crime, the length of time since the crime was committed, and the applicant’s actions/activities since the crime.
  • Applicants should have the right of “due process” when it comes to the landlord’s qualification criteria. In other words, the applicant should have the opportunity to explain extenuating circumstances, and have the landlord reconsider its decision.
  • Some crimes can be “one-strike” offenses, provided the housing provider is able to justify their policy protects the safety of others, and/or the property.

One important piece of HUD’s guidance on this issue is contained in the following excerpt from HUD’s FAQ on the matter:

…when owners make the decision to reject an applicant on the basis of a criminal record, the owner must provide the applicant with a written rejection notice.  This notice must state the reason for the rejection, advise of the applicant’s right to respond to the owner in writing or to request a meeting within 14 days to dispute the rejection, and advise that persons with disabilities have the right to request reasonable accommodations to participate in the informal hearing process.

Since most of us already provide written notices to prospects when we deny their applications to rent, this shouldn’t be much of a burden. We simply need to remember to inform the prospect of his/her right to request a meeting to dispute a rejection based on criminal history. So far, our credit reporting agency has not, to my knowledge, amended our “Adverse Action Notice” to include such a provision. Until they do, should the need arise, we’ll be adding language to comply with HUD’s rule.

How do you view criminal background information when evaluating a prospective tenant? Will this new guidance change your policies or procedures? If so, how?

 

 

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Nevada Property Managers – Consent to Act

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32251852This topic seems to come up very frequently, in my Nevada classes. “When should I present the Consent to Act form?”

 

Although there are varying opinions on this subject, I’ll share mine. And, should your view differ, please don’t hesitate to comment on this post. Sharing information and opinions is a vital component of our success as Nevada Property Management professionals!

 

As a matter of personal/office policy, I never introduce the Consent to Act form.

Continue reading “Nevada Property Managers – Consent to Act”

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Additional Insured vs. Additional Interest

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This is a subject near and dear to my heart, as I’ve been chasing insurance companies for the better part of the last two weeks, struggling to get proper evidence of coverage for my owner/clients’ properties. What continues to surprise me, is the fact that the insurance companies often play as though they don’t understand what we want. simple-handshake

In part, our property management agreement (PMA) states,

“LIABILITY INSURANCE – Owner shall obtain and keep in force adequate insurance against damage and against liability for loss, damage, or injury to property or persons which might arise out of the occupancy, management operation, or maintenance of the Premises. Liability insurance shall be adequate to protect the interest of both Owner and Agent.  Owner shall furnish Agent with proof of fire insurance policies in force and shall obtain adequate vandalism coverage for the Premises.  The deductible required under all such insurance policies shall be Owner’s expense. Owner agrees to name Agent as an “additional insured” on its liability and fire insurance policy, and furnish Agent with certificates evidencing such insurance within ten (10) days of the execution of this Agreement. In no event will such liability coverage be less than $500,000 in value. Said policies shall provide that notice of default or cancellation shall be sent to Agent as well as to Owner, and shall require a minimum of ten (10) days’ written notice to Agent before any cancellation of or changes to said policies.”

Continue reading “Additional Insured vs. Additional Interest”

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Marketing Property Management Services

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FanfareIf you’ve been in this business for a while, you’ve probably noticed how competitive property management has become! It seems that everyone is a Property Manager! It’s a much bigger challenge than it used to be, to attract and keep a good client base. A solid marketing campaign, consistently applied, will set you apart from your competition.

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Here are a few proven tips…

Continue reading “Marketing Property Management Services”

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Owner: “Why Can’t I Talk to My Own Tenant?”

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Owner/Tenant Conversations

A common frustration among property managers all over the country is the difficulty posed when owner/clients start communicating directly with their tenants. From the owner’s perspective, it’s difficult for them to understand why this would be a problem. After all, it’s their rental property! The tenants are their tenants, right?

 

“Just because I have retained a professional property manager, shouldn’t mean I can’t interact with my own tenants.”  This is what our owners often believe, and it’s one of the most damaging beliefs they can hold.

Continue reading “Owner: “Why Can’t I Talk to My Own Tenant?””

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Growing a Property Management Business

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I had to chuckle this morning, when I read an article talking about how easy it is to expand your real estate business by adding property management services.  Easy, huh? I beg to differ.

 

Although it’s certainly true, the steady income of property management activity is enticing, setting up and running a property management operation is entirely different than running a real estate sales business. Yes, your real estate pre-licensing education may have provided the minimum training you are required to have in order to be a property manager (some states require specialized licensing for property management), but did you learn anything about the business of managing investment real estate? If more than an hour of your pre-licensing education was dedicated to property management activity, I’d be surprised.

 

The article claims, “…agents are already familiar with 99 percent of the real estate law they need to know. The other one percent can be found easily.” Seriously? Let’s look at that a bit more closely.   Continue reading “Growing a Property Management Business”

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Clearing the Confusion: Trust Accounts in Nevada

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Within the last week, I have had no fewer than 4 Nevada Property Managers ask me the same question.

 

“How do we maintain a contingency fund for our owners, if the Trust Account has to be zeroed out every month?”

 

It seems there may be some misinformation floating around out there. Let’s clear it up!

 

First things first… the “operating” Trust Account – the account where you hold the property management owners’ money – does not have to be “zeroed out” at all – everContinue reading “Clearing the Confusion: Trust Accounts in Nevada”

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Announcing: Truckee Meadows Property Management

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It gives me tremendous pleasure to announce the opening of my new company, Truckee Meadows Property Management, a division of Cook & Company, Ltd., specializing in property management of single family homes in the Sparks, Spanish Springs, and Reno areas.  Continue reading “Announcing: Truckee Meadows Property Management”

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Questions from Property Managers – Part 2

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Thoughts on Tenant Selection

Last week, my blog addressed a few of the more common questions raised by Nevada Property Managers. This week, I’ll address a couple of questions received from a California landlord, as they pertain to managing residential rental property throughout the USA.

 

Screening Tenants

I am a landlord renting out a single detached home in California. I have received 5 applications to rent in the last couple of weeks, and I have two questions about the rental process.  Continue reading “Questions from Property Managers – Part 2”

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