Landlord Hacks: Calling the Prior Landlord
Landlords who use just a credit report to background check their clients really bug me. Rental payments are very rarely reflected in a credit score. Experian has a specific credit score for rentals now but it only applies if the prior landlords have been reporting payment history to Experian. This does not happen in the real world.
I know that reliance on the credit report has become a quick and legal way to assess the chances of a tenant paying rent on time. However, when the [bleep] hits the fan many tenants will stop paying their bills, but keep paying the one thing that doesn’t show up on the credit report: their rent.
This is one of the reasons why renting is inescapable for many of the lower income residents of Chicago. They let their bills slide in favor of rent. So their credit score lowers. So it gets harder for them to get credit or better housing or a loan to purchase a home.
The surest way to verify rent payment has been practiced by landlords for centuries: pay a visit to the prior landlord and ask them. However, as with all things, the advent of the information age combined with fair housing legislation has introduced some complications to this ordinary business of checking references. Find out how to do this the proper way after the jump.
Rental payment data is confidential just like credit reports. Without written permission from a tenant to release payment history, a prior landlord will probably not be able to give you any information. In fact, at my last job we were not even permitted to confirm if a given tenant even lived in one of our apartments without written permission. There is no way to prove if the person calling is a landlord, or a stalker pretending to be a landlord.
So, make sure that you either have something on your application which expressly says “I give permission to [your name here] to verify my rental history,” or that you have a separate landlord background check form that does the same. If you have a very lengthy and detailed application a separate form is probably the better way to go so you’re not sending the entire application through to prior landlords as proof.
Back in the old days before the telephone, Landlord A would simply walk down the street to speak with Landlord B and find out the scoop. These days it’s more complicated. The phone number and contact info provided by prospective tenants may not be legit. After all, if I thought my landlord hated me for some reason I would just put down a friend’s name and number instead, or just say that I’d been living with family for the past several years.
Before you make the call, verify that you have the correct info. If the prospective is moving within the city, use my favorite county lookup site, Cook County Property Info, to confirm that the owner is as noted on the application. If the building is handled by a property management company, look up the company and make sure that it is actually within their inventory. If the address is outside of Cook County you can try to access county recorders’ offices via Google research, and you can definitely verify via Google Maps Satellite version if the property a) exists and b) looks like a building that’s likely to have apartments in it.
If you cannot verify ownership, give the tenant the benefit of the doubt and trust your gut. However, if you discover that the tenant has provided false data I would strongly recommend rejecting the application outright.
Assemble your questions
Landlords get a pretty bad reputation and tenants are (sometimes justly) frightened of what their landlord might say about them. I’ve had tenants refuse to give me their prior landlords number out of fear of retaliation for:
- Not vacuuming enough
- Having a baby while living in the apartment
- Not attending the graduation of the landlords’ children
- Complaining about a broken door lock
- Complaining about insufficient heat
- Coming home after 10pm
- Being a mean person in general
- Not speaking English
- Having a political bumper sticker
- Being a Yankees Fan (this one may be justified. Maybe.)
Needless to say these things are not normally the subject of a landlord to landlord reference check. In fact, most of them involve questions that landlords simply cannot ask one another in the course of a reference check. As is the case with employment references the list of questions must be restricted to objective questions that can be answered with either concrete numbers or yes/no answers.
Addtionally, for the sake of consistency you want to make sure that you always ask the same questions on every landlord reference check. You don’t want to be accused of screening one tenant more stringently than another. That’s a sure way to wind up in a fair housing lawsuit!
Here’s a crib sheet of the questions you can normally ask:
- What were the dates when the tenant lived in your building?
- What was their rent rate at that time?
- Did they make all rent payments?
- Did they ever pay late? (How many times and how late?)
- Did you have to serve them with any notices?
- Did you have to evict them?
- Did you offer them a lease renewal? (Note: do not ask if the landlord was “planning to offer a renewal.”)
- Has the tenant given notice of their move? If they are breaking a lease, what sort of penalty will be assessed?
- Did tenant observe all rules of the property?
If the tenant has already moved out, you can also ask:
- Did tenant incur any deductions for damages?
- How much did it cost you to restore the unit upon the departure of the tenant?
And if the landlord’s got few enough units you may be able to ask:
- Did tenant keep any pets?
- Did tenant have any houseguests that stayed for more than 2 weeks on a regular basis?
- Did tenant smoke in the property?
If the landlord has too many units they won’t have the detailed knowledge to be able to answer the last 3 questions with any certainty.
Get it in writing
It’s much better if possible to perform the background check using a written and emailed or faxed questionnaire. That way if there is any suspicion that either landlord engaged in illegal, discriminatory or retaliatory practices you will have a paper trail to the contrary. Additionally if your tenant has provided false landlord data on their application your paper trail will prove that you made a good faith effort but your tenant committed fraud.
Give it time
Landlords are busy folk. It’s rarely a primary job for the smaller landlords, and the larger property management companies get many requests a day. It can sometimes take a couple of days for a response, which can be a pain when tenants will go with the first landlord who waves a lease in front of their faces. It’s definitely worth waiting at least 2 business days for a reply if at all possible, though. The landlord reference check can often be the make-or-break decision factor for a borderline application, or it could uncover hidden disasters that the credit report would not have shown.
However, if it’s taking more than 2 business days to get a response and the applicant is universally strong in all other areas it may be okay to run without it, depending on your risk tolerance. Naturally if you’ve recently had to evict a tenant I would err on the side of waiting until you’re more confident in your own gut instinct again.
Pay it forwardWhen it’s time for your tenant to move on, make sure that you repay your debt to the landlording community. Your tenant may need your report in order to secure new housing. Or it may be that your info on a tenants’ late payments or heavy water usage is the only warning that the next landlord gets about a potential risk.
If you get a call asking for reference information please first make sure that you have permission to release the info, and then provide it promptly. Be careful though! If the new landlord asks you subjective questions you must resist the temptation to dish the dirt. You absolutely must not say anything that could be interpreted as retaliation or discrimination. Only reveal information that you can back up with a receipt, a statement, a judgment, written/emailed correspondence or similar documentation.
The whole process of renting has become extremely automated and cold, run by corporate property managers and credit bureaus based on algorithms and quality assurance guidelines. Increased reliance on credit scores and automated screening has made it almost impossible for some good, paying tenants to get apartments. It is possible for a tenant to spend their entire lease without ever interacting with the owner of their residence. Landlords pass the buck on background checks in hopes that they will also pass on the associated liability and let their property managers take the fall in eviction court.
At its core the act of providing housing to other people can be one of the more unique and fulfilling interpersonal relationships available. Admittedly there are some super crazy landlords and tenants out there who should probably be kept hidden from view. For the most part, though, private landlords can only become stronger by connecting with other landlords across the country. When it comes to your own investments, there is no substitute for doing your own due diligence, and the “trust but verify” approach must be your motto in all rental matters.