Rental Documents Primer

Being a landlord is a full-time job, even if it’s supposed to be a part-time one. Between finding great tenants and answering those late-night calls about clogged toilets, it can sometimes feel like there’s a never-ending list of tasks to accomplish.

One of the best ways to keep your business running smoothly is to organize all rental documents in a neat, meticulous, and accessible way. Failing to produce even a single document at a crucial moment could mean losing thousands from your hard-earned money through lengthy federal or tenant lawsuits. Yes, they’re that important.  Read on to learn more about rental documents.

What Legal Rental Documents Should Every Landlord Keep on File?

Whether you’re a new landlord or an established one, these rental documents are an absolute must-have:

1. Lease/Rental Agreements

Your rental agreement is one of the main legal rental documents you need to get right. This may sound like a no-brainer, but you’d be surprised at the number of landlords that don’t get it right—or don’t even have one in the first place. 

Rental agreements may vary, but the most basic one should include the following:

  • Your rights and obligations as the property manager or landlord
  • The tenant’s contact information 
  • The tenant’s rights and obligations
  • The duration and terms of the lease
  • Payment terms, including when rent is due, accepted payment options, and whether or not your charge late fees

It’s good practice to always have multiple copies of your lease agreements on hand. For each tenant that moves in, have them sign the agreement and retain a copy (this includes the co-signer/guarantor). This way, you’ll be better placed to protect yourself should any legal disputes arise in the future.

2. Rental Applications

As a landlord, it’s standard procedure to ask potential tenants to fill out a rental application. A rental application is simply a form that requests preliminary information about a tenant. 

A typical rental application includes:

  • Basic contact information
  • Proof of income
  • Employment history
  • References
  • Current and prior resident information

If more than one person will be residing in a single unit, or your prospect has a guarantor/co-signor, be sure to ask those individuals to fill out their own application as well. Once you’ve received these documents, begin the tenant screening process right away. Doing this will significantly reduce your risk of leasing to a tenant with a less-than-spectacular rental history. 

3. Welcome Letter

Move-in is just the beginning of your landlord-tenant relationship, so you want to ensure you start off on the right foot. That’s where a welcome letter comes in.

Your welcome letter will help tenants remember and follow the property rules to a tee. Better yet, you’ll be able to answer questions before they’re even asked. You’ll also make an excellent first impression, and tenants will view you as a resourceful and professional landlord.

A good welcome letter will include:

  • Details about move-in day
  • How to set up, use, and pay utilities
  • Where to pick up keys
  • Where to throw away thrash and what day it’s collected
  • A reminder about renters insurance (if you need it)
  • How to report maintenance issues
  • Neighborhood guidance
  • Parking/towing information

4. Mortgage & Property Improvements

If there’s one rental document you should keep for your own sanity, it’s this one. Ensure all the mortgage information pertaining to your property is kept in a safe, easy-to-access place. These documents include your loan information, mortgage, repayment plans, and even the receipts/invoices reflecting improvements done to the property.

5. Emergency Contacts 

Something unfortunate might befall your tenant—they may incur a serious injury, fall ill, or fail to show up at work. As such, it’s incredibly important that you get them to provide you with one or more emergency contacts. You need these contacts so you know who to call if something bad happens.

This information can also come in handy in the event of an unauthorized move-out. If the tenant skipped town while owing you money, the collection agency has a much better chance of tracking them down.

If you’re a conscientious landlord, you’ll call and make sure these people actually exist. Once that’s done, compile the contacts into an accessible file or address book. 

6. Move-In Checklist

Beyond just helping keep track of your property’s condition, a move-in checklist holds your tenants accountable for any damage that occurs during their stay. Without this document, it’ll be your word against theirs after move-out.

For tenants, a move-in checklist provides some much-needed peace of mind, assuring them that you won’t charge for damages they weren’t responsible for.

Make a point of reviewing the checklist when the tenant moves in, and then again during move-out, to find out if there’s any damage beyond the normal wear and tear.

7. A Checklist for Moving Out

If you decide to craft a move-in checklist, then it’s only prudent that you have a move-out checklist in place as well. Alongside the move-in checklist, the move-out checklist paints a complete “before and after” picture of the rental unit.

Unfortunately, some tenants might disagree with or deny any damages you uncovered prior to their move-out day. These types of disputes can land both of you in court. A move-out checklist serves as a crucial piece of evidence in case a legal dispute arises over withheld security deposit funds.

8. Addendum

Do you need to make one or two adjustments to the original lease agreement? Put them in writing using an addendum form, then have it signed by all your tenant to make it legally binding. 

As a best practice, photocopy the addendum for your renters and file away the original one alongside the lease agreement.

9. Tax and Financial Records

This one is an absolute must. None-negotiable, if you may. Generally speaking, all landlords should hold on to the following financial documentation:

  • Record of rental expenses
  • Record of rental income
  • Documentation to support that income and expenses (including receipts, invoices, and other forms of proof as mandated by the IRS).

The last point is often the one that carries the most weight. If you are expensing out things like entertainment and travel for your taxes, you will need to have indisputable proof showing that they were indeed business-related expenses. Why? Because these are the things that the IRS evaluates most closely.

10. Communication with Tenants

Our final ‘legal document every landlord should keep on file’ is actually not one document—but all of them. Well, all the communications you’ve had with a tenant from the day they sent in their application to their move-out day.

Keep all emails and text messages, even the ones that seem inconsequential. We all love the concept of ‘I am a man of my word,’ but that won’t help when you’re having to pay a mortgage due to a tenant defaulting their rent. So, take detailed and dated notes of every communication you have with tenants, including in-person meetings and telephone calls. 

What Documents Should Landlords Receive Fresh Copies Of Every Year?

We see you asking, “But I already have all the aforementioned rental documents and even kept them on file.” That’s great.

However, a smart landlord will know that some of these documents must be updated yearly. After all, no one wants to open a file on the day of a lawsuit only to find that some of the information within is outdated and pretty much irrelevant.

With that in mind, here are some documents and individual pieces of information you should receive afresh every 12 months:

  • Emergency contacts
  • References
  • A signed leased agreement
  • Employment and income details
  • Screening results
  • The renter’s contact information

What Is the Best Way to Research Updates Made to Local and Federal Laws That Could Potentially Impact What Documents to Use?

Looking to find out whether there are any changes made to the federal or your state’s landlord-tenant laws, so you don’t end up using the wrong documents? A quick and incisive search on Google might just do the trick.

For local laws, any new updates are often published in the “pocket parts” of a specific landlord-tenant law book. Every state has several such books, each tackling a specific issue as it pertains to the typical landlord-tenant relationship. For example, if you are a landlord in Texas, the state’s law library recommends that you check out these landlord-tenant books every so often. Nolo has a full state-by-state rundown of landlord-tenant statutes, just in case you need it.

You’ll find the “pocket parts” at the back of each book. Even if the law you’re looking for is in the regular book, you should always check the pocket part to see if any changes to the law have been made. The pocket parts are updated every year.

For changes made to federal laws, your best bet is to keep checking established sites like Investopedia and Cornell Law School. These sites update their content every year, so you can rest assured that you’ll be getting nothing but spot-on, timely, and well-researched information.

Digital vs. Physical Copies: Pros & Cons

Digital Copy Pros

Some of the advantages you’ll enjoy once you start filing your rental documents electronically include:

  • Saves money, effort, and time
  • Better organization
  • Competitive advantage
  • Better than a filing cabinet

Digital Copy Cons

Security is arguably the main (and possibly the only) drawback associated with digital file keeping. This is especially the case if you employ a third party to do the filing for you. Besides, there are way too many hackers out there, and it takes just one wrong click for your most sensitive rental files to disappear into thin air.

Physical Copy Pros

Understandably, there are very few advantages associated with this form of record keeping. After all, no one wants to lose a critical rental file simply because they have frequent memory lapses. 

That said, some of the pros you could possibly enjoy by storing your documents in physical files include:

  • It provides a natural and dependable backup for digital files
  • Always accessible (if the files are kept well, of course)

Physical Copy Cons

Before deciding on which filing option to choose, you’ll want to peruse these physical copy disadvantages first:

  • Takes up a lot of space
  • Prone to damage and being misplaced
  • Hard to make changes
  • Security concerns (definitely less secure than its digital counterpart)
  • Higher initial and maintenance costs

Precautions to Take to Ensure Your Rental Documents are Kept Secure

You already know that you’ll always have a plethora of sensitive tenant and applicant information in your possession. That’s given. Factor in your own files, including those delicate rental income records, and you can see why it’s important to ensure everything is kept safe and secure.

While there’s no single foolproof way to safeguard data, some measures are significantly better than others. These include:

  • Zip it: While it may go without saying, tenant or applicant information is something you shouldn’t be sharing. So, please, don’t release anything unless you have consent.
  • The obvious but overlooked: Making sure your computer is secure is a must to protect sensitive rental documents. To that end, run security checks every now and then to ensure your device is running smoothing and securely. It’s also prudent to set strong passwords for your computer and limit access to it by anyone you don’t want viewing the sensitive information within. 
  • Destroy information, legally: There comes a time that you’ll need to do away with some of the rental documents you’re currently keeping. It’s inevitable. When disposing of confidential documents, it’s important that you do it both properly and legally. The best and most simple way to destroy paper documents is to use a paper shredder. As for digital copies, simply hit the delete button, and you’ll have discarded them for good.

Final Thoughts

While you may have plenty on your plate as a landlord, you can make things easier for yourself by keeping all your rental documents in an easy-to-access manner. It’s also a safety precaution that not only keeps the IRS at bay, but also protects you from any lawsuit that might be thrown your way in the future. Plus, it’s a great way to stay organized and neat.

At LandlordStation, we make rental documentation easy for you. We offer different types of legal rental documents so you can find the ones that best fit your requirements and budget. Who knew legal rental documentation would be this fast, fuss-free, and painless? Contact us today to learn more.

Rent Payment Trends: 5 Key Reasons Why You Need to Switch Online Rent Payments

Research shows that late rent payments is a number one concern for landlords and property managers. The more time you spend following up – calls, emails, texts… sometimes all of the above – is time that you can’t devote to the rest of your business. In the worst case scenarios, you lose even more time filing for an eviction just to get the tenant out.

There are a variety of ways to protect yourself from late or non payments. Screening is always your first line of defense, but a solid rent collection strategy will help encourage your tenants to pay rent on time. It will also boosts your capacity to compete and grow your rental business.

In this interest, we have made a brief rundown of the available options for collecting rent payments (including our #1 recommendation):

Rent Collection Methods

Every landlord and property manager will have slightly different business needs, so we have compiled a list of collection methods.

By Mail

It’s possible to get rent from your tenants through money orders or mail-in checks, but this also means that payments are likely to delay. Worse still, checks may get lost along the way.

Collecting in Person

This method ensures you have a check in your hands on the designated day. However, it may leave you with more record-keeping and miles to travel, thus increasing your operational costs.

Drop-Off Location

If you have an office, tenants can drop off rent payments there. You can use a dedicated drop-off box placed strategically in your rental property. Disputes may arise if a payment goes missing and a particular drop-off location may not be convenient for all your tenants.

Collect Rent Online

This is our #1 recommendation. One-third of Americans have paid a bill late due to forgetfulness, and accepting online rent payments helps simplify and automate that process for both landlords and tenants. When you use an online rent payment system, you and your tenants can take advantage of tools such as automatic reminders and recurring payments to ensure that you receive your payment on time.

Reasons to Switch to Online Rent Payments

Have a look at the following reasons why you should consider switching to online rent payments.

1. Save Time

Collecting rent can be a lengthy process, especially if done by check or money order. You’ll have to:

  • Collect the payments or checks
  • Prepare deposit slips
  • Deposit money order or checks to the bank
  • Post receipts
  • Check follow-ups to ensure checks don’t bounce
  • Adjust your booking keeping

This can take a lot of time, but when you set up an online portal to collect rent payments, you can reduce the time spent on the manual processes associated with paper-based payments by up to 65%. Imagine what you can achieve with more than half of your day back and a hassle-free rent week!

2. Convenience

Paying rent online is fast, easy, and convenient for your tenants as opposed to having them drive to your office or make sure that they get the check in the mail on time. There are a variety of things that can delay a check, but with the ability to pay rent online, tenants can make payments promptly, regardless of location. That means more on-time payments and fewer followups to track down rent.

3. Security

Security is of the utmost importance when dealing rent payments.

Criminology Professor David Maimon from Georgia State University estimates that $11-30 million is being lost across the country due to drop box thefts. He also notes that the information your tenants share via checks and money orders contains sensitive data that—in the wrong hands—can make you and your tenants victims of identity theft.

On the other hand, online rent payments are end-to-end encrypted to mitigate the risk of identity theft and fraud. Your financial data is secure, and your tenant’s financial information is safe.

4. Boost Your Cash Flow

Timely collection of rent is, arguably, the most fundamental aspect of your business. Online rent payment increases the percentage of on-time rent payments, thus creating a domino effect of profitability and efficiency. 

AutoPay and automatic rent reminders streamline the reconciliation of account receivables. As such, you will likely receive full-balance, on-time payments every month, which ultimately boosts your cash flow.

The online ability for your tenants to split rent through an online portal will also allow them to conveniently submit their half of the payment on the day it is due rather than trying to coordinate with each other each month. Once set up, a system such as LandlordStation’s Tenant Portal can charge each tenant the amount owed and deliver it to your bank account in a timely manner.

5. Enhance Tenant Experience and Retention

Offering your tenants pay-on-go flexibility through an online rent payment option will boost your resident’s satisfaction and overall experience at your property. Envelopes, stamps, and checks may seem outdated (and possibly inconvenient) to your tenants, especially the more tech-savvy ones.

According to a study, millennials pay up to 61% of their bills online, while the older generation pays 42% of bills online. If you want to hold on to such tenants, the ability to pay rent online offers them yet another incentive.

When the tenants perceive that you have their convenience, ease, and best interest in mind, they feel connected to the property and to you as the landlord. Happy tenants are more likely to renew their leases, refer friends, and respect the community. 

How We Can Help

In the course of managing your rental property, it’s easy to get overwhelmed by all the nuances and lose focus on what’s important. At LandlordStation, we offer you a full range of products and services guaranteed to make tenant and property management easy and seamless.

Our online rent payment solution is a super brand designed with unparalleled expertise to ensure you receive rent payments quickly and securely. Stop chasing down rent payments and focus on what’s important—growing your business.

For more information on Online Rent Payments or inquiries on how we can help, feel free to Contact Us today, and we will be more than willing to assist.

How to Perform Tenant Screening and Respect Data Privacy

Investing in rental property also means investing in your tenants. Quality tenants keep your property clean, submit timely requests for any repairs, and leave less wear-and-tear on the house. They also pay on-time rent every month. But how do you know which applicants will become your best tenants? That is what the tenant screening process is for, and the laws associated.

Fair housing laws determine the questions you can ask. Local data privacy laws determine what you can do with an applicant’s personal information. Even their name and current address can be the seeds of identity theft, which is why data privacy has become such an important issue. So how does a responsible landlord handle tenant screening, wisely choosing the right tenants while protecting their data in the necessary ways?

As landlord pros, we have a few pointers.

The Fair Housing Act and Tenant Screening

The Fair Housing Act prohibits landlords from asking questions that may lead to discrimination. Unfortunately, this can include questions you might otherwise ask about family, background, and personal plans. You cannot ask questions or make decisions on housing regarding a tenant’s:

  • Race
  • Color
  • Religion
  • National origin
  • Sex
  • Disability
  • Familial status

You can ask about the number of household members, but not about spouses or children. You can ask about the number of vehicles, but not if one is a handicap van. It is even tricky to ask where your tenants are moving from, in case this reveals their national origin.

Data Privacy Laws for Landlords

Data privacy laws vary by state and can vary by city. California has the strictest personal data laws, but many other states include laws regarding how customer data (tenants, in your case) is handled and must be deleted on request. You will want to look up your state’s data privacy laws.

Best practices, however, suggest avoiding possessing any private data. If you can’t avoid, the second best option is to delete any private data you acquire as soon as its use is completed.

Do You Need Sensitive Information to Screen Tenants?

Yes. Part of tenant screening includes a credit, criminal, and eviction check. You will also want to verify each applicant’s employment and income. All of this requires very personal information, like an applicant’s social security number, current address, date of birth, and more. Knowing some of this information can even lead to a conflict of interest between fair housing and landlord decision-making.

Fortunately, you don’t need to personally have this kind of private information on your future tenants. Only your background check and credit check team do. LandlordStation allows landlords to run tenant screenings with just the tenant’s name and email address. The tenant can then – privately – enter sensitive information that goes straight to the credit bureau for the report – but is never seen or stored by the landlord. This is the best way to fulfill all your goals; getting a  detailed tenant screening report, respecting fair housing laws, and protecting tenant data privacy.

How Should Sensitive Tenant Data be Kept?

If you find yourself in possession of private tenant data, perhaps in the form of applications, keep this data under lock and key or delete it to protect the tenant’s data security.

If you store tenant data, keep papers in a locked filing cabinet. Keep digital files in encrypted storage or a data vault with a brand that you trust. In most states with data security laws, you are required to make a reasonable business-class effort to protect your customer/tenant’s data.

What to Do If You Have a Data Breach

What happens if a server or service where you are storing tenant data is breached by a hacking incident or exposed by accident? You will need to follow the data protection laws of your region but, most likely, your requirements include alerting tenants that their risk of identity theft has risen and possibly providing an identity protection monitoring subscription-like Norton LifeLock or Experian IdentityWorks.

LandlordStation Protects Tenants and Landlords from Data Privacy Concerns

Being a landlord is standing halfway between a host and a business owner. On one hand, you need to carefully screen tenants to find reliable and responsible people. On the other hand, you need to handle and hold as little sensitive information about your tenants as possible, especially during the critical decision-making process. LandlordStation offers the perfect solution that creates the shortest, most secure path between the tenant’s information and the credit check reports you need to make a strong decision.

To begin tenant screening with LandlordStation or to explore more of our handy landlord resources, contact us today.