Is the Landlord a Scam Artist?

VOLUME 2R

By Melanie Green

Tenants want landlords who diligently provide safe, clean and compliant rentals for a reasonable price. Despite this, it’s not unheard of to have a landlord who is a scammer.

These are common landlord scams:

Security deposit disputes
Adverse possession
Renting out a property from a non-owner
Fraudulent online listings

By knowing what kinds of landlord scams are common and how to recognize them, it’s possible to avoid this group before it’s too late.

Security Deposit Disputes

According to Shawn Yesner of Yesner Law, security deposit disputes are the most common type of landlord scam that tenants face. This happens when the tenant moves out and pays to clean out the place, only for the landlord to try to keep the security deposit and claim that the tenant left the rental with damage.

In Florida, landlords have 15 days to return the security deposit and 30 days to make a claim on it. In Texas, landlords must receive a written statement of the tenant’s forwarding address and have 30 days to refund the deposit.

“In this case, landlords may claim that the repairs and cleaning required after the tenant moved out exceed the deposit,” said Yesner. “They may say that they’ll waive the extra money owed to the landlord if the tenant drops the claim. Landlords know that it’s more expensive for tenants to seek legal counsel than to lose the security deposit.”

Yesner adds that this can happen when the landlord simply doesn’t have the money because they didn’t keep it in a separate account. Perhaps these landlords didn’t intend to scam the tenant; they just anticipated property damage. Regardless of why the landlord decided to try to keep the security deposit, this is a type of scam that tenants may face.

Fortunately, there are some things that tenants can do to protect themselves. On the day that renters move in, they should take time- and date-stamped photos of the entire rental, documenting its condition. Tenants can confirm each repair they made or that the landlord failed to make. When tenants move out, they can take more time- and date-stamped photos of the unit to show that the condition is the same or better.

The tenant can make a copy of the receipts for repairs or professional cleaning to give to the landlord. When tenants turn in the keys, they can also give the landlord a copy of all of the evidence they have of the rental’s condition. This can dissuade a landlord from trying to fraudulently keep a security deposit.

If this doesn’t work, it is possible for tenants to pursue legal action against a wrongfully withheld security deposit. In Texas, the tenant can recover three times the amount of the wrongfully withheld deposit plus legal fees. Depending on the dollar amount of what’s owed, tenants might find that it is worth the effort to pursue legal action through the local Justice of the Peace office or to get a real estate attorney involved if they could get three times the sum of the wrongfully deducted deposit.

Rules of Adverse Possession

Adverse possession is a legal concept that entitles someone who possesses land they don’t own to have a valid title to the land, as long as they meet each state and jurisdiction’s common law requirements. Generally, the person living on the property must:

Possess the property continuously for a set amount of time outlined by each state’s statute
Infringe on the rights of the property’s legal owner by possessing it
Openly and notoriously possess the property in a way that other people can notice it
Not share the property with other people

People who own property through adverse possession cannot legally rent out these properties to tenants. Tenants should not sign an enforceable lease with someone attempting to gain ownership of a property through adverse possession. This can cause the lease to be void in the middle of a lease term, and the tenants will have to move.

In Texas, there is a three-, five- and 10-year statute for record owners to defend their property against adverse possession based on the level of documentation or title the possessor has. For instance, if the possessor has a title, the true property owner only has three years to make their claim to get the property back.

In Florida, occupants can claim possession after living on the property for seven years and paying taxes or having a color of title (where the “owner” has a document claiming the title was transferred to him or her, but there may be initial defects somewhere). The possessor must also cultivate, improve or protect the property in question from a substantial enclosure. Simply bringing outdated property taxes up to date financially could trigger this process.

Tenants should generally avoid renting out properties involved with adverse possession. For single-family homes, it’s easy to check county records to see who owns a property and whether property taxes are up to date. In the majority of states and counties, this search can be conducted online from a personal computer. It is better to avoid living in a rental that isn’t up to date with its property taxes, as this can have many ramifications later.

Renting Out Property That Landlords Don’t Own

There are other ways that people may try to rent out a property they don’t actually own. They might try to rent out a property they stole, use an out-of-town neighbor’s home or rent a place from someone they know owns it. This can cause challenges when it comes to the true and lawful property owner finding out.

This may also become an issue for travelers who are unaware that property is being used as an Airbnb, especially if condo bylaws or landlords never allowed property owners or tenants to do so. However, Airbnb hosts do not have to be property owners, which can further complicate temporary rentals.

Tenants should avoid paying rent to someone that never or no longer owns the unit, or does not have the legal right to lease it out. One way to do this is to ask for ownership information upfront and by conducting research into who owns a property before signing a lease.

Falling Victim to Fraudulent Online Rental Listings

In an ongoing (and unfortunately popular) scheme, criminals will copy rental listings from legitimate websites like Zillow, or duplicate the content on Craigslist and other easy-to-post rental sites. In the fake listing, the scammers might offer a lower application fee, rental rate or deposit requirement to entice potential renters to apply through the fraudulent version of the ad.

Scammers, who pose as owners, claim that they’re out of town. If the online user wants the property while it’s still available, then a monetary request is sent for a “security deposit and first month’s rent” to an account number the scammer provides. Those who hastily accept the terms and send the money to avoid paying higher rental rates on other sites soon find out that their money is gone for good.

To avoid this scam, renters should always physically see the property in question. A quick online search for the property address should reveal a duplicate listing. If the contact information is different or if a landlord requests payment without a rental viewing, especially through an online payment system, this is almost certainly a red flag. Landlords who sign up with Realtors want to avoid the leg work involved in sifting through potential renters, but responsible ones won’t accept any random person who will pay without question.

Tenant Rights to Information Access

Landlords are not required to disclose where they live to tenants. When it comes to larger, multi-unit properties or apartment communities, it isn’t uncommon for tenants to not know who really owns the property or where they live. However, it is possible for tenants to find out information about who owns a property and their background before moving in.

Property tax records are readily available online in Florida and Texas. Anyone can use the county’s property tax record search to look at property information that is classified as public, such as who owns a property and whether they are behind on paying property taxes. If a prospective tenant finds out that a property is owned by someone besides their contact person, it warrants further discussion with the potential landlord.

In some cases, there are perfectly valid reasons why the name of the person listing a property would not be the owner. For instance, property managers and Realtors often list properties and interact with potential tenants. However, a property manager or a Realtor would not claim to own the property. They would have a written contract with the property owner to act on their behalf.

To overcome concerns of ownership, prospective tenants can ask to see proof of ownership or proof of the right to lease out a property from the owner. If a potential landlord cannot provide this information, this could be a potential red flag about renting out the unit.

Finding Out Information About the Property Owner

Once the property’s lawful owner is identified, it is possible to search county criminal and circuit court records online to see if there are past bankruptcies, criminal or civil charges, refinancing, or personal lawsuits. While some documents are protected or sealed, many court documents can be downloaded or viewed by savvy web users for free. Tenants can search for the county that the property is located in, along with any other county the prospective landlord lives, mentions or has property in. Just because there isn’t a record in one county doesn’t mean that there isn’t a red flag out there.

Some potential situations that are red flags include:

Past Bankruptcies

Bankruptcy-related court records can be accessed through county circuit court records. If a landlord filed bankruptcy recently, they likely have financial problems and could be more inclined to try to wrongfully keep a security deposit. At the very least, bankrupt landlords won’t have the money to make timely repairs if they’re needed.

Criminal or Civil Charges

People with criminal or civil charges against them may not make the best landlords. While this will depend on the type of charges, a landlord with a criminal history of violence or fraud may have no issue defrauding or threatening violence against tenants. Just like an employer conducts a background check on potential employees, it’s always a good idea for tenants to know the type of person they rent from.

Records of Refinancing

Some counties make documents related to second mortgages, refinancing and home equity line of credit (HELOC) loans available through public circuit court record searches. If a landlord recently refinanced the home or took out funds from the house, it could be a signal of financial trouble.

Personal Lawsuits

It is possible to find records or local news stories about personal lawsuits that the landlord faced. The nature of the lawsuits can give hints regarding the landlord’s past behavior. Look for evidence of a landlord (or person pretending to be the landlord) hurting other people in the past.

Recent Divorces

Divorces can be very messy. If the property a tenant plans to rent is an asset in a divorce, one spouse may not retain ownership of the property going forward and may not have the legal rights to rent it. Should tenants want to rent out a property that’s a part of an ongoing divorce, it might be worth checking in with a real estate attorney before signing a lease to make sure the lease is enforceable and legal.

When To Seek Legal Help

“There are two times when tenants reach out to real estate lawyers,” said Yesner. “Before anything happens, such as to review a lease, or after something happens and there’s a potential lawsuit.”

Technically, a real estate lawyer can review any lease before a tenant signs it. However, this may not always be cost-effective or necessary, depending on a tenant’s personal risk acceptance level. For tenants looking at an apartment in a large complex operated by a well-established company, it is probably okay to sign this standardized contract without paying for a real estate lawyer reviewing it first.

However, tenants may want to get a quick legal review of the lease before signing any complex contracts for more expensive properties with private owners. Yesner said that a lawyer should always review commercial leases.

Having a lawyer review a lease in advance is less expensive than seeking legal counsel during a lawsuit or after a scam occurred. Lawyers may have flat fees for lease reviews to help clients save money on basic, short-term and routine tasks. The exact costs associated with getting legal support after something happens varies with each lawyer and the complexity of the case. Lawsuits that end in mediation are shorter and cost less than cases that go to trial.

The best way for tenants to protect themselves from scamming landlords is to do their research on the property and the landlord in advance, working with a lawyer to review the lease before signing it and seeking legal counsel when needed. If something doesn’t feel right, it is better to find a different rental versus proceeding with a potentially bad deal.

If the property can’t be shown in advance, or the landlord misses appointments, takes too long to respond or anything else feels awry, these should be considered red flags. Once tenants find the right property, it is critical to document the condition before and after the lease term. Combined, these steps can help ensure tenants reduce their risk of being involved in landlord scams.

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Know Legal Ramifications of Recording Tenant-Landlord Disputes

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Avoid Landlord Retaliation When Reporting Building Violations

9 Reasons Renters Insurance Is a Necessity

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