How to avoid renting to deadbeat tenants

DEAR BOB: About a year ago, my wife and I bought a rental house. Our first tenant started out great, paying the rent on time and never bothering us. But about three months ago, he stopped paying rent. When I phoned him, he said he lost his job but had secured a part-time job, and the rent would be two weeks late. However, in two weeks, he didn’t have the rent. Long story short, we had to go through a nasty eviction. Fortunately, the house has greatly appreciated in market value since purchase so we are very happy about that. What can we do when renting to our next tenant to avoid a deadbeat and avoid discrimination? – Reg H.

DEAR REG: Your situation is unfortunately typical for inexperienced landlords. When you receive a written application from a tenant, accompanied by at least a $100 deposit, your first steps should be to verify income and run a credit report.

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Many cities have tenant verification services that will do this work for you. But I prefer to do it myself, especially when phoning the two previous landlords. The current landlord might be trying to get rid of a bad tenant so don’t rely on that reference alone. However, ask both landlords, “Would you rent to this tenant again?”

The landlord’s answer will usually be very honest, especially from the second previous landlord. That answer, coupled with the tenant applicant’s credit report, is usually sufficient to help you decide whether to rent to that applicant.

Screening on the basis of prior rental history and credit information is perfectly legal. It is not illegal discrimination if you treat all applicants equally. For more details, please consult a local real estate attorney.

IS LANDLORD LIABLE FOR TENANT’S DOG BITE?

DEAR BOB: I own a two-family duplex rental. One unit is on the first floor. The other unit is on the second floor. The first-floor tenant has a dog, which is kept in the fenced backyard. Somehow, the dog got out of the backyard and slightly bit the upstairs tenant’s child who was playing on his tricycle in the driveway. The injury required three stitches in his leg. Now the upstairs tenant is threatening to sue me (the downstairs tenant has no assets and isn’t worth suing). Do I have any liability? – Erin T.

DEAR ERIN: Only a judge or jury can answer your question for sure. The downstairs tenant is obviously liable. However, the upstairs tenant’s lawyer probably knows, as I often tell my college real estate law students, it doesn’t pay to sue poor people.

If you knew the dog was dangerous and vicious, you might be found liable for allowing the downstairs tenant to keep a dangerous dog. You should notify your insurance company and let the insurer handle the matter. For more details, please consult a local real estate attorney.

WHEN YOU BUY YOUR HOME, PLAN HOW YOU WILL SELL IT

DEAR BOB: About four years ago, we bought our first home. It is a modest two-bedroom house. Now we want to sell it due to a job transfer to a city about 70 miles away. But we can’t afford to buy a home there until we sell our current home. We’ve had it listed with two different Realtors, but neither has been able to find a buyer. They tell us the problems are (1) most buyers want three-bedroom homes, (2) the neighborhood isn’t the best, (3) the house backs up to a noisy freeway (although there is a sound wall), and (4) the floor plan is “odd” because the front master bedroom requires a long way down the hallway to the bathroom. How can we get our home sold so we can move on? – Alfred G.

DEAR ALFRED: Your home is known by appraisers as being functionally obsolete. That means it has significant problems that hurt its market value.

The reason a home doesn’t sell is usually because it is overpriced.

If I were in your situation, I would take the house off the market for a week or two. Then re-list it for sale with your area’s best real estate agent at its realistic market value. A substantial price reduction will probably be necessary due to the home’s problems.

The new Robert Bruss special report, “Living Trust Pros and Cons for Avoiding Probate Costs and Delays for Your Heirs,” is now available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet download at www.bobbruss.com. Questions for this column are welcome at either address.