Question: I am a renter and enjoy your column because I learn a lot about how landlords operate. I am concerned that so many landlords use the credit report to select their tenants. Sure, a bad credit report may be a red flag. But that doesn’t mean that the tenant has not or will not pay the rent in a timely manner. My credit became bad after I moved into this apartment six years ago, but I have always paid my rent on time. The management company has not had any problems with me. If I were given a notice to vacate I might even become homeless because I don’t have any savings. My credit report would shut the doors for many potential landlords. Are there some landlords that will trust tenants with poor credit or not even run a credit check?
Property manager Griswold replies:
Thank you for your comments. You raise many valid points. Yes, there are some landlords that do not rely on credit reports when screening their tenants. You may have to broaden your search for these landlords or property managers, but they do exist. However, your analysis is correct that the vast majority of landlords and property managers do require credit information because it has been shown to be a good indicator of qualified tenants. My experience in managing more than 40,000 rental units in the last 25-plus years is that a credit report that shows previous evictions or an inability to pay rent is definitely a red flag that the prudent landlord should not ignore. Of course, if you were a landlord you would be interested in knowing whether your proposed tenant had the ability to pay the rent each month.
Despite the image that landlords are all wealthy, most landlords do not have the luxury of being able to meet their monthly debt service and operating costs of their rental property without the prompt payment of the full rent from all tenants. Many landlords will rent to tenants with credit problems if the tenant will get a co-signer or will pay a larger security deposit. This is no different than other credit businesses, such as car dealers. Ironically, your bad credit has worked to the benefit of your current landlord since you will make sure that your rent gets paid before anything else. You also have an excellent track record of paying your rent every month for the last six years and should be able to get a reference from your current landlord if you had to relocate. You might want to ask for a reference letter so that you would have it handy in the event that you need to move in the future.
Question: Is there some standard form of legal document that can be signed between prospective roommates that would be a binding lease just like the kind of the contract that is signed between the tenants and landlord?
Tenants’ attorney Kellman replies:
Roommate situations can be difficult since you are sharing common facilities and depending on each other to pay the full rent. These situations invariably will require some kind of understanding or agreement as between each roommate as to their respective rights and obligations during the tenancy. While most landlords will require all roommates to sign one lease (as co-tenants) it would be wise to have another agreement as between the roommates to cover issues as between themselves. There are many lease forms generally available for landlord-tenant contracts but roommate agreement forms are a bit rarer, especially since these situations are usually more unique and therefore more difficult to put in a standard form. If such an agreement form is not available, roommates can simply draw up their own agreement to cover areas of concern including paying rent, sharing of common areas, guest rules, handling of the deposit and what happens when one roommate wants to move out. The landlord does not have to agree to or be a party to this roommate contract but be sure that all the roommates who sign on are authorized occupants of the rental unit.
This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of “Property Management for Dummies” and co-author of “Real Estate Investing for Dummies,” and San Diego attorneys Steven R. Kellman, director of the Tenant’s Legal Center, and Ted Smith, principal in a firm representing landlords.
E-mail your questions to Rental Q&A at rgriswold.inman@retodayradio.com.
Questions should be brief and cannot be answered individually.
