The LPA Newsletter
August 2007
Dear Fellow Landlord,
Last week, I was approached by an LPA member who asked me very seriously, "John, how can I eliminate tenant problems forever?"
My answer came quickly as I advised him how to screen carefully, run credit reports, read and use LPA Leases and Essential Forms..... Then I realized that all those things will greatly reduce tenant problems and help to run a more efficient management operation, but we still will be confronted with new tenant problems as time goes on. I thought some more about it and must admit that some of my tenant problems were a result of poor decisions on my part. I learned that whenever we break one of our own rules, we live to regret it. So, think carefully before deciding to break any of your "landlord protection" rules.
In this newsletter:
Free Download: I'd like you to have a fairly new LPA Essential Form,
Criminal & Credit Background Release Form
Landlord Do's & Don'ts After the Tenant has Moved
Bill Bronchick's article, "Lease/Option vs. Contract for Deed"
Recent Tenant Excuses
Recent Success Quotes
Please e-mail us if you have any questions or would like to add or share any material / information. Have a safe and successful summer.
John Nuzzolese
John@theLPA.com
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Do you have what you need for a Criminal Background & Credit Check?
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The fact that the tenant has nothing to hide and is willing to release credit and criminal (if any) history to you shows good faith and cooperation in the screening process.
This form can be used in addition to the LPA Rental Application or independently for the purpose of tenant screening authorization.
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Landlord Do's & Don'ts
After the Tenant has Moved
What The LPA says you should do and shouldn't do:
DO wait until the tenant has moved completely out before returning any deposit money.
DON'T have a "walk through" with the tenant before move out to determine the condition of the rental. Tenants like to do this to reassure themselves that they will get all their security deposit back. Instead of calling it a "walk-through", I like to call it the "AMBUSH" because that's really how it is when you are put on the spot. The tenant is still in possession of the rental and is insisting on getting the full deposit back.
DO Obtain the tenant's forwarding address to send any security refunds or bills.
DON'T allow the tenant to leave without first giving you a forwarding address. We usually obtain this with the Tenant's Notice to Vacate form.
DO Prepare a Security Settlement Statement to send to the tenant as soon as you've assessed the condition of the property and charges against the security deposit.
DON'T wait until the tenant calls you demanding the return of the security deposit before sending your prepared settlement package.
DO be prepared with your Security Settlement Challenge Crusher letter in case the tenant wants to try to pursue the deposit money.
DON'T feel you have to keep explaining the findings to a tenant who doesn't agree with the written settlement.
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Lease/Option vs. Contract for Deed
by Attorney William BronchickLegalwiz.com
Many investors are generally familiar with the concepts lease option and contract for deed (aka "installment land contract"). Many investors confuse the two, and this article will help you understand the tax, legal, and practical issues between the two.
Lease Options
First, let's start with the lease option, which is really two things, a lease and a purchase option. A lease is a contract for the use and possession of land, creating a landlord/tenant (or "lessor/lessee") relationship.
A purchase option is a unilateral agreement wherein the optionor ("seller") agrees to give the optionee ("buyer") the exclusive right to the purchase the leased premises. The option price is generally set at a fixed price at the inception of the lease, although it does not have to be. At any time during the option period (which generally corresponds to the lease period), the tenant can exercise his option to purchase.
An option is not the same as a regular purchase contract, which is a bilateral agreement. A bilateral contract legally binds both parties to the agreement, whereas an option only binds the seller. An optionee is not bound to buy; it is his option do so (or not to do so).
A lease with option arrangement is not a sale, but rather a landlord–tenant relationship. In rare cases, a court may re–characterize the transaction as a sale if it looks like a sale. Furthermore, the IRS does not classify a lease option as a sale until the option is exercised (see, Tax Court Memorandum 1999–11).
Contract for Deed
A contract for deed (aka "installment land contract") is an agreement wherein the buyer makes installment payments on an arrangement similar to an automobile financing. The seller holds legal title to the property as security for payment, while the buyer has "equitable" title. When the buyer pays the full amount due under the contract, the seller delivers legal title to the buyer....
click for the full article...
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Landlord Tip:Have proof you have sent written notices.
I have on many occasions seen tenants deny they received written notices from the landlord. One of the best ways to prove a notice was sent by Certified Mail is to include the Certified Mail Article # on the document and also send a copy by regular mail, and also keep a copy for yourself. Having the article # on the document shows that the notice you sent was the same as the notice you say you sent.
Just pick up a pile of certified mail postcards and receipt slips so you can prepare them before going to the post office. - The LPA
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Tenant Excuses
"My husband sells cars and he didn't sell many this month." - Sandy, NJ
"My daughter was married this month and that set us back big time. You know how it is." Yes, I do know how it is. Without the rent paid, I can be subject to a late fee from my bank and you will have to pay the late fees in your lease. My late limit before eviction attorney status is 10 days. - Steve S, Ronkonkoma, NY
"Yo. I’m just gonna have to get you the rent between the 15th and the 20th. Then we’ll be back to normal. Thanks. And this is a one time late payment flashback." Can’t pay rent, but can go to L.A.? Eviction notice will be waiting for you. - Kevin B. Pittsburgh, PA
"We already paid this month. On the 1st, a man came to the house and told my son he was the landlord!"
First of all, you've never paid that early in the 2 years you've been living there. Second, Your lease states that rent is only to be paid to me and nobody else. Third, you mean to tell me you left your son who is 7 alone and responsible for $1,300. cash ??? - Al P., NY
"This month I got mugged, got into a car wreck, and missed work for a few days with poison oak. I’m going to L.A. next week and can be back working and sending you [the rent] on the 15th. You cool with that?" This tenant has been on time with rent one time in the past year (last month!) - Kevin B. Pittsburgh, PA
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Quotations...
"Success is how high you bounce when you hit bottom."
- General George Patten
"Don’t confuse activity with accomplishment." - Submitted by Dale Kelsey
"One of my biggest fears is having a tenant with more landlord - tenant knowledge and expertise than I have." - John Nuzzolese
"If we command our wealth, we shall be rich and free. If our wealth commands us, we are poor indeed." - Edmund Burke: Statesman, political theorist and philosopher
"How much did your last tenant problem cost you?"
- John Nuzzolese
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