Tag Archives: background checks

Cook Eviction Stats Part 7: What does this mean for tenants?

I’ve spent the past 6 sections of this study focusing mostly on what the Cook County/Chicago eviction statistics mean for landlords. It’s time to focus a little on what they mean for renters. I’m not a lawyer, and I’m not going to tell you how to win your eviction case. There are far better resources than me out there for saving your bacon. This article is focusing on the numbers.

A lot of you have been involved in eviction cases.

7 out of every 100 apartments in Chicago will be the subjects of eviction cases each year. Given that apartments often house more than one person, this means if you’re a renter in Chicago, you’ve got quite a bit more than a 7% chance of winding up involved in an eviction suit.

This is what we're talking about here. It's undignified, it's obvious, and it's humiliating. And a lot of you have been through it before.

This is what we’re talking about here. It’s undignified, it’s obvious, and it’s humiliating. And a lot of you have been through it before.

By comparison, 8% of married Illinois residents wind up in divorce each year, according to the census bureau.[1] You probably know several people who have gotten divorced last year. This means that you may well know even more people who’ve been involved in an eviction case, although they’re probably not going to admit it to your face.

It costs a landlord quite a bit of time and money to file an eviction case. They’re not usually going to do it if a tenant hasn’t given them good reason to do so, and they’ve exhausted every other possible means of solving the problem. Eviction means they wind up with a vacancy on their hands, and usually one in worse condition than one where a tenant moves out of their own free will. However, if they’re gaining no income from a deadbeat tenant, it eventually becomes more cost effective for them to incur a short term vacancy.

There are a few basic things that a human being needs to survive. Food, water, air and shelter are the big ones. If you’re not earning enough money to remain in your apartment, there are plenty of steps you can take to get out of your lease before the court has to mandate that you do so. If a renter has allowed their shelter-related problems to spiral downward to the point of eviction, what does that say about their ability to prioritize?

This exists. It was mentioned in the New York Times. I don't even.

This exists. It was mentioned in the New York Times. What is this I don’t even….

Chances are good that you will get involved in partnerships with strangers at some point in the near future. It may be a business relationship, a roommate situation, or a dating scenario. Cook County makes it relatively easy for you to check if a person has been evicted before. Perhaps you should take a few minutes to for fact checking before you saddle yourself with a scrub.

You have slightly less than 40% chance of not getting evicted.

62.7% of filed eviction cases in Cook County wind up with the landlord getting the tenant thrown out of the apartment, with many of those cases tacking on an order to pay the back rent. It’s easy when looking at that percentage to envision the other 37.3% of cases involving renters proudly facing their landlords in court, delivering the smackdown of righteousness, and maybe getting their landlords slapped with fines for daring to drag everybody down to the 1st District courthouse.

This is not a picture of you in eviction court. Sorry.

This is not a picture of you in eviction court. Sorry.

I’m not saying that doesn’t happen sometimes.

However, those other cases could have had any of the following, less exciting conclusions:

  • The landlord and tenant settled out of court.
  • The tenant’s lease expired and/or they moved out before the court date.
  • The landlord accepted a partial payment of the balance due, and had their case thrown out.
  • The landlord forgot to show up for court.

Half of those causes are clerical errors, and will probably wind up in a re-filing of the same case at a later date. As for the other half? Well, the point of filing an eviction case is to get a tenant out of an apartment before the lease ends, and sometimes to force them to pay back rent. If those goals are accomplished in any other way, then the case doesn’t need to go all the way to its conclusion. I’d say less than 10% of the tenants who are taken to eviction court wind up “winning” their case at the point that they’re standing in front of the judge.

Even if you win your case, there are repercussions.

There’s been a recent trend with the weak economy where people just stop paying their rent or mortgage and wait for the axe to fall. Renters who are reading this series may be doing so with an eye towards this kind of strategic delinquency, hoping that the eviction proceedings will take long enough that things will turn around for them before the sheriff comes to call. Here’s the thing: your credit will recover in time from everything else you can do to it, but an eviction filing will follow you forever regardless of the verdict.

In all of this analysis, I’ve not really addressed one glaring issue: the fact that I could pull eviction statistics going back to 2004. In fact, if you visit the website of the Cook County Clerk of Court, you’ll find that you can search through online case records going back to at least 1991. In other words, some of those records are old enough to drink.

In order to find out about a low credit score, someone would need your permission and a lot of your personal data to pull your credit report. By contrast, if the state of public records access remains consistent, anyone and their brother can dig up that information without you knowing. That includes future potential roommates, landlords, business partners and employers. Yes, it’s possible for a researcher to see that your case was dismissed. But that’s because it’s possible for them to casually breeze through all of the details of your case.

Now, some of you will react to this with outrage at the courts for making the data public. However, the public records are available because the courts are paid for by the taxpayers, and we have a right to know how our money is being spent. If you want to avoid having the details of your eviction lawsuit made public, don’t get involved with one in the first place.

(more…)

  1. [1]US Census Bureau: Marital Events of Americans: 2009

Dear Piggy: Questions from the Readers

I’m writing this on Tuesday night at 7pm. I’m deliberately avoiding watching the election results. So you guys get an omnibus of nine questions that have come in from the readers.

I didn’t show up for eviction court in Cook County. What will happen?

Generally if one side shows up for eviction court and the other doesn’t, the present person generally “wins” the case – for now. So, if the tenant appears but the landlord does not, then the landlord has to start all over again and re-file a new case. If the tenant doesn’t show up but the landlord is present, it’s a bit more complicated. The landlord will have to prove that the tenant was served with proper notice of the court date. They will also have to prove that the tenant has committed the offense that is causing the eviction case, be it non-payment or some other behavioral problem. A landlord in this case will probably get possession of the unit but no money judgment. However, the landlord should not rest on their laurels – many tenants in this sort of situation will “lawyer up” and get the case reopened before the sheriff can actually come around to evict.

If my landlord takes a utility bill addressed to me out of mailbox is he responsible for paying it?

First of all, if the landlord takes anything addressed to you out of your mailbox, she has committed mail fraud. This is a federal offense punishable by a minimum prison sentence of five years.

As for the financial repercussions. If your bill is tied to your name and your social security number, your credit score will bear the brunt of it going unpaid. So regardless of whether or not you think the landlord has “claimed responsibility” for paying the bill by taking it, you have a responsibility to ensure that the bill gets paid on time. I would get a backup copy from the utility company’s online account system and pay it anyhow.

However, if you don’t pay your heating bill and your pipes freeze and burst, your landlord will bear the cost of repairing the damage. The repair bills will certainly exceed your security deposit. So the landlord has a vested interest in ensuring that you’re current on your heating bills, but generally not to the point of paying it themselves. A smart landlord, though, would find out the status of payment in another way or just deal with repairing the damage afterwards. In my opinion, it’s better to be able to bring an air-tight damage suit against a tenant after the fact than to incur a five year stay in a federal prison.

Is a two flat in Chicago bound by the landlord tenant ordinance?

For two-flats, if the landlord lives in the building it is exempted from the Chicago Residential Landlord Tenant Ordinance but is covered by the Illinois state ordinance (PDF) instead. If the landlord does not live in the building then it is covered by the Chicago ordinance.

My tenants’ apartment is disgusting. Can I ask them to clean for showings?

Well, technically, yes. And according to the CRLTO they have to comply.

CRLTO Section 5-12-040 Tenant responsibilities.

Every tenant must:

(a)     Comply with all obligations imposed specifically upon tenants by provisions of the municipal code applicable to dwelling units;

(b)     Keep that part of the premises that he occupies and uses as safe as the condition of the premises permits;

(c)     Dispose of all ashes, rubbish, garbage and other waste from his dwelling unit in a clean and safe manner;

(d)     Keep all plumbing fixtures in the dwelling unit or used by the tenant as clean as their condition permits;

(e)     Use in a reasonable manner all electrical, plumbing, sanitary, heating, ventilating, air conditioning and other facilities and appliances, including elevators, in the premises;

(f)     Not deliberately or negligently destroy, deface, damage, impair or remove any part of the premises or knowingly permit any person on the premises with his consent to do so; and

(g)     Conduct himself and require other persons on the premises with his consent to conduct themselves in a manner that will not disturb his neighbors’ peaceful enjoyment of the premises.

The pertinent bits here are items (b) through (e) above. As always I recommend that landlords try to negotiate a more calm & reasonable resolution to the problem before they throw the book at their tenant. However, in a worst case scenario the landlord can present the tenant with a 10-day “cure or quit” notice which mandates that they clean up their act within the next 10 days or their lease will be terminated.

However.

If the tenant does not comply with the notice then the landlord will have to evict them in order to enforce the notice, so obviously this is not terribly effective when it comes to an apartment that will probably be empty in a matter of weeks anyhow.

Here’s my personal thoughts on the matter. If a tenant has such poor housekeeping skills that the apartment is “disgusting,” I highly doubt that their cleaning efforts under duress will be too impressive. Chances are you will need a few days or even weeks to get the place cleaned up in between tenants, so why bother wasting your time showing a dirty apartment? It won’t rent at a top price, and you’ll have to show it many more times to find a tenant. Besides, the only tenants who will probably like a messy apartment are also messy, so you’ll wind up with a self-perpetuating cycle of filth. Here’s what I would do instead.

  • Explain to the tenant that the apartment is too messy to show in its current condition.
  • Explain that the condition of the apartment has been noted in their file.
  • If your lease doesn’t already allow for specific cleaning costs, provide the tenant with the prices for a deep clean by a professional maid service and make sure that they know you will have to deduct that cost from their security deposit.
  • Hold off on showing the apartment until it’s empty and clean.

Can I pretend that my friend was my past landlord?

This is called “fraud.” It’s a bad idea, although tenants with poor rental history (or tenants who assume that their landlord hates them for any reason) do it all the time.

Will you get caught? That depends on if your landlord verifies ownership of your current address or not. It’s very easy to do. If you get caught, I’d personally not be surprised if your landlord rejects your application.

If you don’t get caught before you sign the lease, you’re pretty much in the clear. Even if you wind up in eviction court and the landlord accuses you of falsifying the application, it’s his neck on the line for not doing enough research.

Courtesy of the Encyclopedia of Chicago History.

What’s the difference between redlining and steering?

Redlining and Steering are both practices that violate fair housing law. Redlining was originally a mortgage lending term which drew a “red line” around certain neighborhoods. Applicants that didn’t fit a particular profile would not be granted loans to purchase property within the red line. Steering occurs when members of certain demographic groups are “steered” towards neighborhoods that are known to be dominated by that same group – e.g., Asians being shown only properties in Chinatown.

So basically, Redlining keeps people out of a neighborhood. Steering pushes them into specific enclaves.

Both are illegal.

Can tenants watch TV at any time of night?

I’m guessing that this is really a noise question. Look up to where I quoted the Chicago Landlord Tenant Ordinance above. As long as the tenants aren’t disturbing their neighbors’ peaceful enjoyment of their homes and apartments then the tenants can do whatever they want. However, if neighbors are complaining that the noise from the TV is affecting their sleep, health or ability to use certain rooms of their house, then the landlord may need to step in.

Of course, the tenants should try to work out the noise issue between themselves before escalating it to involve any authority figure, be it the landlord or the police. The landlord’s only recourse will be a written reprimand or, in the worst case scenario, a 10-day “cure or quit” notice followed by an eviction case.

When can you charge a late rent fee in Chicago?

Illinois and Chicago do not have “grace periods” for rent payments. Therefore, unless a lease specifies a grace period, rent is late on the day after it is due and fees can be assessed at that time. Also, bear in mind that while the IRS may count the date of postmark, a landlord doesn’t have to. As for what time late fees should be assessed, that’s up to you. I personally recommend giving the benefit of the doubt and assessing late fees when business opens the day after rent is due. I know some landlords who assess late fees as soon as midnight passes, though. Either could technically be claimed as valid, but the former is more likely to hold up in court.

Will my cat stick to my radiator?

Not unless you physically attach him to it.

Cats are generally smart enough to move away from dangerously hot objects like stoves and radiators. A radiator heated by steam (212 degrees F) will not get hot enough to melt fur (300-400 degrees F depending on humidity). It might give him a little burn the first time he touches it, though, so use caution around kitty the first time the radiators come on.

Chicago Luxury Apartments Explained for the Rest of Us

Will we soon be seeing articles like this about Chicago?

A Peculiar Answer to a Housing Shortage

The apartment rental pundit blogs are buzzing lately about the future of the Chicago market. In 2011 the Depaul Institute of Housing Studies announced that Chicago would be short on affordable rentals for the next 20 years if we were to start building more stock right at that moment. This year ground has been broken and/or plans announced for the construction of thousands of new apartments in downtown Chicago . However, most of these are luxury skyscrapers. To the outside observer one would surmise that these developers have missed the point. Why would they build a rash of $2000/month 2 bedroom apartments when “affordable” is somewhere around half of that amount?

The answer lies in the availability of funds for projects of this nature. Banks have become far more stringent in lending to any potential homebuyer. For those looking to use borrowed funds to build large scale apartments the available funds are even scarcer. A construction loan large enough to fund the construction of affordable apartments would be due back in full after 5-7 years. While this would be theoretically possible if the units were sold off as condominiums, the “get rich slowly” model of business that accompanies a rental-oriented business model is focused on steady, ongoing cash flow, not immediate gains. A landlord renting out the units at $1000 per month would take far longer to pay off the construction loan than a developer who sold off the units at $200k each.

Unless a landlord has a standing line of credit or large amounts of cash on hand, building affordable apartments remains a pipe dream. The only major source of money to build apartments is coming from REITs, and they’re only interested in one thing – getting big cash flow coming in as quickly as possible. (more…)

10 Unexpected Reasons Why Tenants Get Rejected

The “Landlord’s Applicant Rejection Kit” actually exists, and is published by Nolo.com.

According to Chicago’s fair housing laws, a landlord cannot use a tenant’s race, color, sex, gender identity, age, religion, disability, national origin, ancestry, sexual orientation, marital status, parental status, military discharge status or source of income as a reason to select or reject their application. They can’t use any of those as a basis for showing or refusing to show them an apartment. Most tenants are aware of these laws and most landlords follow them to some extent or another. They may not know all of the specific protected classes for housing, as Chicago has more than other cities and states, but they do the best they can.

High credit scores, verifiable income of a reasonable amount and a clean prior rental record remain the holy trinity of landlords’ criteria for approving a renter. They allow a landlord to make a decision on the main issues that matter without risking a fair housing lawsuit. However, in the interest of protecting their buildings and minimizing maintenance costs a landlord may use some secondary, non-protected criteria in addition to the big three. Today we’re reviewing some of those surprise factors that could kill your chances of landing your dream apartment so that you can plan around them. (more…)

Sometimes You Can’t Tell

Note: due to the recent conviction of James Holmes, this article is receiving some new visitors. Welcome! Please bear in mind that this was written 3 years ago.

A great investment! Instant cash flow! Buy it today! (Strong constitution required.)

Paris is for … Landlords?

1690 Paris Street is a 129 unit apartment complex on 111,115 square feet of land. It has 11 buildings containing roughly 12 units each. It has a sweet 3.9% vacancy rate, convenient location, and the units have, according to the sales flyer I have here, been maintained well over the years by a “hands on” owner.

It was listed on the market for two months the autumn of 2010 for $6.4 million. They tried again in early 2011 at the same price. It nets about $519k per year for an 8.06% CAP rate. I can’t tell if it changed hands or not.

It’s also probably it’s current owner’s worst nightmare come true.

1690 Paris Street, Aurora, Colorado. Home of James Holmes, who filled his apartment with so many booby traps and explosives that it took the bomb squad two days to clear it out with robots. An apartment building full of medical students who all made it their first choice in a rental search at some point over the past few years, thinking “I want to call this place home.” Now it’s a poster child for “worst case investment property scenario” making landlords across the country reach for the Xanax and hope that nobody in their buildings has done the same thing. (more…)

Why Credit Scores are False Prophets for Tenant Reliability

A credit score, according to the Fair Isaac Corporation, is calculated based on a weighted average as indicated below.

Source: http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx

This may come as a shock to landlords. See, landlords generally look at credit scores in hopes that it will give them an easy, quantifiable way of comparing one tenant’s reliability against another, without dipping into criteria that could put the landlord at risk of a fair housing suit. Unfortunately it doesn’t work that way.

Credit scores are a pay to play racket. They get higher only if you borrow and pay back assorted lenders repeatedly. In the modern economy it’s just shy of entrapment. The best tenant is one who doesn’t engage in risky borrowing beyond their means, and is likely to have a very thin credit history. Saying that you want only tenants with high credit scores in your apartment is like saying you only want high rolling gamblers handling your stock portfolio.

Looking at that chart above, and bearing in mind that the average tenant is younger, less experienced and less wealthy than a homeowner, a large portion of the chart can be ruled out while the info that the landlord really wants is only counting towards a third of the score. (more…)

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.

(more…)

10 Common First-Time Renter Mistakes

After I did first-time buyer mistakes for Monday it occurred to me that there’s other real estate virgins out there who might need a few warnings. Tenants, for example, are often the newest of all to the housing market, and they do tend to make some common errors that mark them as newbies in the apartment hunt. Whether this is your first apartment or your twelfth, avoiding these missteps will save you a world of grief.

It may be pretty, but can you cook in it? (Photo: ApartmentTherapy.com)

1. Choosing the prettiest apartment. I did this back in 2003. Found a lovely vintage apartment on the lakefront with crown molding, dining room chandelier, lots of space, and a shiny new kitchen. It was cheap, the landlord would accept my pet bunny, I rented it. I failed to take into account that the only bathroom was inside the bedroom. It turned out to be a very impractical location for me as I had a lot of overnight houseguests at that point in my life. Much like when choosing a spouse, it’s what’s on the inside that counts more than the apartment’s looks. Make sure the room layout and amenities suit your lifestyle.

Here’s one quick benchmark for practicality. Each of us has a ritual that we have to do on a regular basis at home, or the rest of the day doesn’t feel right. For me it’s my morning coffee and breakfast – I will NOT leave the house for the first hour or so after I wake up. For others it will be going through the mail right after they get home from work, or taking a pause from gaming to refill your water glass from the fridge. Figure out what you ritual is. As you go through each apartment, play out how that ritual will work for you in the new space. If it doesn’t work, nix the listing. (more…)

I’ll Title This Article Before it Runs (and other Deadline Disasters)

Tiny house with a red roof, next to a silver analog stopwatch.

Can an agent who ignores his own deadlines still adequately honor yours?

Real estate is a very time-sensitive business. From setting up the showings to closing the contract an agent needs to be able to plan ahead, use time as a negotiation asset, and track their clients’ deadlines. Failure to do so has all kinds of potential to cause you harm, cost you money or even lose you the entire deal.

They tried to warn us.

In January of 2010 the state of Illinois decided that 45 hours of lecture-based training was not enough for someone who’s selling your home or helping you to buy a home. For years that had been the minimum entry level training required for an Illinois agent to get their license. Effective May 1, 2012, the amount of training required has doubled to 90 hours, a mandatory interactive portion was added, and every real estate agent, from the smallest underdog to the biggest broker in the state, had to get a new license. In order to get the new license, they had to take some continuing education classes and pass an exam. It’s a 20 hour commitment at most – half a work week.

Realtors need 90 hours, but leasing agents (like those guys who work for apartment locators) only need 15 hours of training and can work for 90 days without having any license at all!

Normally licenses expire every 2 years on April 30. Half of the agents’ licenses expire in odd-numbered years and the other half expire in even-numbered years. Agents who have not taken their required education credits and paid the renewal fee get placed “on hold” and have to pay a penalty for renewing late.  In most renewal cycles, continuing education classes in April are jam packed with agents who have waited until the last minute. This time around, because of the new laws, every Illinois agent’s license expired on the same day – April 30, 2012. If they don’t take care of things they will lose the ability to practice real estate altogether. They will need to start all over again and take the 90 hour “Real Estate 101” classes. The stakes are much higher, the chances of getting a seat in a class much lower.

Every real estate agent in Illinois has known this is coming for two and a half years. We have all been bombarded by mailings, email alerts, phone calls and warnings from our office to take care of this important issue. We have all been made aware that if we don’t get a new license by May 1, we can no longer practice real estate and it will be very expensive in terms of time and money to resume business as usual.

30% of Agents Listened.

I’m writing this in early April to run on May 2, as I know that early May is always a mess. I have already completed the transition – in fact, I was finished with my continuing education credits by December 14, 2011 and had renewed my license by early February. Many agents will talk in their bios about how they “maintain awareness of current real estate trends through ongoing education.” They’re talking about continuing education classes here. I don’t even mention it in my bio as I think this should be a given for professional in any industry.  For all that agents claim to do the expected training, only 30% of my compadres have taken the necessary classes that will allow them to keep practicing real estate after May 1, 2012. First off, this means that it might well have been 2-4 years since your agent last had a refresher in the laws and restrictions that govern our business. But beyond that, let’s talk about how a last-minute agent can harm your attempt to buy, rent or sell a home.

(more…)

Tenant Hacks: How to background check your landlord

Magnifying glass looking at a house

Time to turn the tables.

Chicago Renters, I have to confess something – landlords these days hire as much for my skill in background checking as they do for my ability to market their apartments. Renters have this crazy reputation of being uniformly unemployed former sex offenders with bad credit who skipped out on their last lease. If you’re applying for an apartment chances are good that you will be subjected to a security check more thorough than those they apply to new police officers. I encourage this behavior – it helps to keep neighborhoods clean.

However, landlords have an equally unsavory reputation for being layabout shady shysters from foreign countries who are just a single late payment away from foreclosure and/or running off with your security deposit. It’s only fair that you should be able to do some background checking of your own, and fortunately a lot of the information is available free of charge.

When I’m representing renters I normally perform all of the following background checks as part of the service, but if you’re renting without representation in Chicago (or you’re working with an apartment locator instead of a real agent) you’ll have to do it yourself.

A quick disclaimer before we begin: this info pertains to Chicago renters only. Much of it works anywhere in Cook County, but if you’re renting elsewhere I’m afraid your situation is beyond my expertise. However, you’re welcome to try the techniques below and let me know if they successfully transferred to your state or city!

(more…)

Landlord Hacks: How to perform Criminal Background Checks on Tenants in Chicago for Free (or very little)

When you make a commitment to allow a stranger to use your investment it is worthwhile to find out how they are going to be a major drain on your time, resources, or the value of your property. A tenant with a habit of not paying rent on time will not suddenly start paying when they move into your building. Tenants with criminal records can cause other, stronger tenants to avoid your building or your neighborhood.

You owe it to yourself and your neighbors to run background checks on every tenant.

I’ve been background checking tenants for years now, and much of that time was spent working for a company that wanted to spend as little as possible in the process. Fortunately, Chicago residents have some relatively easy routes available to them for checking on a tenant’s history. This method can be time consuming, but if you’re willing to risk your investment on a stranger it is definitely worth the time.

There are many companies out there that offer background checks for a fee. However, I’ve found that their checks are not adequate, especially in the rental history verification area. You owe it to yourself to do your own research, especially when it’s so easy to do so.

First of all, you will need the tenant’s credit report in order to do this the right way. You do not need a score, though. All you need are the actual accounts, and a summary of their payment info. Therefore, you can ask your tenant applicant to provide you with a copy of their credit report, which they can obtain for free from annualcreditreport.com (and nowhere else). It doesn’t matter if they provide you with their Transunion, Equifax or Experian report. Got it? Great. Let’s get started.

(more…)