Taking all the right steps to screen potential tenants is time-consuming and requires objective systems. As fine tuned as those systems might be, there is no perfect system. People’s lives change in ways that could not have been predicted in the initial screening. Sometimes, changes include new or different occupants in your rental.
What is the difference in tenants and occupants? An occupant is somebody who has started living in the property with no prior screening or approval. They are not a party to the lease. It’s somebody the original tenant has invited in. It is wrong and should be stopped.
The challenge is how to discover unauthorized occupants. Then to decide what to do about them.
Normal Screening Procedures For Applicants Won’t Stop Unapproved Occupants
About two years ago, we rented a unit to a local roofer. Everything about his application checked out clean, including his US Work Permit and the reference of his employer who was a neighbor. Our policy is that once we determine the applicant has the right to live in the United States during the term of the lease, we then turn to our other basic background checks. We use the standard criteria which includes credit, job stability, prior landlord reference, and criminal report to obtain an objective score.
This information is plugged into a system with spelled out criteria for approval. If the applicant does not get approved based on these criteria, they will at minimum need a co-signer. In this case the scoring model allowed us to rent to the applicant with no co-signer.
First Sign of A Problem
About four months into the lease we fielded a complaint from the neighbor (also our tenant). The complaint was that the people living in the next door unit stayed out late at night on the back porch making a lot of noise.
This was curious news as we had rented to just one tenant and the neighbor made it sound like this happened with such frequency that these were all residents. The neighbor confirmed these men out late at night were the same men who lived in the unit.
Our normal scheduled inspection of the unit was still a few weeks off. A drive-by of the property yielded no clue that anything was amiss. There were no extra vehicles or people loitering during daylight hours.
So, a small investigation ensued.
The Investigation
Did I mention the rent was current and paid on time every month? This led us to have no clues of a problem until the neighbors complained. We had not received any service requests from the tenant either so there had been no reason to enter the home.
Upon trying to reach our tenant we discovered their phone number was disconnected. We then went to the property in the middle of the day. It appeared like nobody was home but we could hear voices. Upon ringing the doorbell we were greeted by two people who were not our tenant. We do make a copy of our tenant’s photo ID for easy recognition. They told us that the tenant was not there. These occupants had very limited ability to communicate in English.
Next, we created a letter demanding to speak to the tenant. We wrote it in English and the tenant’s native language. I also asked our receptionist about who was bringing in the rent. She mentioned it was usually two men who did not speak English. The rent was paid in cash.
The Tenant and the Occupants
To make a long story short, it turns out the tenant was a straw man and probably never occupied the unit. Instead, the employer had occupied the unit with illegal workers. They paid the rent on time so as to not cause any notice. Paying $800 rent in cash might have been the first alarm. At that time it was not so unusual to cause concern.
We were only in the fourth month of the lease so information was piling up fast. After talking to the roofing contractor, he admitted he had no idea how many people occupied the unit. He also admitted the tenant on our lease had returned to his native country. The roofing contractor was told we needed his help as these men were not going to be able to continue to occupy this residence.
Through him, and a translator, we started an eviction that thankfully went off with no legal involvement. At one point, when delivering the eviction in two languages, I walked through the three bedroom property and found a total of ten men, some sleeping, some just hanging out.
What We Learned
This incident allowed us to review our policies to address how we will identify and handle unauthorized occupants in a rental.
- Create definitions in your lease of the difference between a guest and unauthorized occupants. State a specific time period (i.e. 10 days) where an individual(s) will be considered unauthorized if not previously approved by the landlord.
- Also in the lease include language that defines abandonment by the actual tenant.
- We stopped accepting cash for rent. With the many options available, from on-line payment to money orders, to retail payment stores, there is far to high a risk involved in accepting cash for rent. It also makes it too easy for anyone to pay the rent.
- At least one applicant must have a taxpayer identification number.
- Take neighbor complaints seriously. Investigate thoroughly when it appears to be a regular problem involving more people than the approved tenants.
- Don’t assume everything is fine because the rent is being paid.
One final note. Trying to evict one unauthorized occupant is one of the toughest cases to prove in court. If you decide to try it, be prepared to have done some private investigation work to include photos of the unauthorized occupants coming and going, and sworn statements from neighbors. The alternative, and the better solution, is to make the unauthorized occupants complete screening and add them to the lease.
Assuming, of course, they are not wanted criminals.
