When you own rental properties, there are certain things you need to do or not do to maximize profits while minimizing problems and stress those problems can cause. Some newer landlords may think it is okay to accept rent from a non-tenant because some money is better than no money if the tenant named on the lease is not paying.
There are a couple of problems with this approach. The first is that you do not know anything about the non-tenant. When you accept a rental application from a prospective tenant, you are getting permission to run a background check. You can utilize free people search engines to find background information on the individual.
When running a background check, you need to check their criminal and rental history to know if they have a history of paying or not paying past landlords. You can also get free tenant screening online with a property management software system like Turbo Tenant. Turbo Tenant will help you get the background information you need to make a decision about the applicant and keep the information organized for you for future use.
There are fair housing laws that prevent landlords from discriminating against race, gender, sexual orientation, and, and family demographics. For example, unless you are running a registered housing division for older adults only, you cannot refuse to rent to people with children. Likewise, you cannot refuse to rent to older people because you are trying to create a family-friendly apartment complex.
While you may argue you are not discriminating against anyone, but instead choosing the best tenants for the apartment, you need to be able to prove that. If an applicant wants to know why they were denied for the apartment, you need to be able to defend your decision, so keeping all your records and background checks are essential. Turbo Tenant will also allow you to record the timing of your background searches. This will enable you to argue you accepted the first applicant that passed the background check.
If you did not get a rental application, you do not have permission to run a background check and look up valuable information. You cannot legally run a background check on that person. You can use a free people search engine to get a lot of information that will include anything that is public record, including a criminal background. However, to get information on their previous landlords, you will need a release form.
The second reason you should not accept rent from a non-tenant is that it will set a precedent you may not be able to defend against legally. If you receive rent from someone that is not a tenant and then attempt to have them removed from the apartment, they can argue that by taking money from them, you had an unwritten lease agreement. This means to get the person out of your apartment; you will need to spend the money and take the time to go through the entire eviction process. Depending on where you live, that could take months and cost thousands of dollars.
Protecting yourself legally is why it is essential to have everyone living in the apartment on the lease even if they are not the primary on the lease. There is such a thing as squatter’s rights, which means you knowingly allowed someone not on the lease to live in one of your properties, you are essentially acknowledging them as lawful tenants. Again, if this can be argued in court, you will need to legally fight to have the person or persons removed from your property.