How To Find Out What Liens Are On a Property

Property liens can be problematic for a wide variety of reasons.

They tend to be discovered during the sales process and must be cleared before the sale will be allowed to proceed.

Some jurisdictions will automatically notify property owners when a lien is filed, but this isn’t always the case.

If you think your property might have a lien on it, then here’s how you can find out.

1. Check Your County Recorder or County Clerk’s Records.

Many of these records are online so they can be instantly searched.

You’ll need to find the specific county website that applies to you.

If you cannot locate the website, then you’ll need to stop by the office in person and ask for the records that pertain to your property.

Online options are usually free, but in-person options tend to have an associated fee.

2. Look At Your Parcel.

Whether you’re looking at the paper file or an online listing, you’ll need to go through the Parcel ID to look at the history of the property.

There will likely be a heading called “Liens” to locate.

It may be under the “Book” heading or could be listed under property taxes.

Select the tabs or open the file up to see if there are any liens that are listed.

3. No Liens Listed Doesn’t Mean They Don’t Exist.

Liens can sometimes exist on a property even if they aren’t in their proper place because of a misfiled document.

Go through the entire “Book” section of the file and look for specific language about a lien that may be present to see what turns up.

Look for anything that may be associated with a creditor, even if it doesn’t actually include the term “Lien.”

4. Use A Search Service.

Many online real estate agencies today offer a free property report for prospective buyers to determine if there is a lien present.

Just pull up the property in question and you’ll get the information that you need.

Knowing how to find out what liens are on a property will help to save you a headache later on during the sales or ownership process if one exists.

Use these tips to avoid surprises and you’ll be able to find and/or clear a lien effectively.

Cancellation of Debt on Rental Property

There are a lot of unique tax circumstances that can hit an investor at any given time. One of the most common issues that landlords face is a cancellation of debt on a rental property. The removal of a debt is a good thing and it brings a sense of relief, but that’s not the end of the story. A debt cancellation is viewed by taxing authorities as earned income. In many circumstances, this must be reported at the end of the year and it can increase tax liabilities.

Mortgage Forgiveness Does Not Apply To a Rental

Many homeowners have been able to get out of large amounts of debt through the foreclosure process, deed-in-lieu, or through short sales thanks to the Mortgage Debt Relief Act. The only problem is that many landlords believe they can take advantage of this law, but they cannot. This income forgiveness does not apply to a rental property.

Here’s an example of the income liability that you’d be facing at tax season. Your rental property has a mortgage for $200,000 and a value of $250,000. You can’t get a tenant and so you can’t make the mortgage payments. The home goes into foreclosure and you lose the rights to the property because the bank takes it back. They sell the property for $165,000 on the open market and then forgive the rest of your mortgage.

Your total income that must be reported: $35,000. This is because having a lien holder taking possession of a property does not automatically remove a loan. Some landlords have also found this out the hard way as well. Instead of having the debt forgiven, they’re finding collection notices in the mail.

There Is One Exception To This Rule

The only time a rental property does not need to report a canceled debt as income is when that debt is $600 or less. In this circumstance, not enough income has been generated to warrant the filing. The same is true for income that is earned through traditional means as well. As long as the initial amount threshold is never met, then the money does not need to be reported.

When would a landlord have $600 or less in a canceled debt on a rental property? A forgiven utility bill is the most common place this is seen. Discounts or debt forgiveness from repair personnel would also potentially qualify for this action.

The only time a landlord would be able to have their mortgage debt canceled and the income forgiven is if they are living in the home as their primary residence. In this specific circumstance, a portion of the income or even all of it may qualify for debt forgiveness without the phantom income charge on taxes.

The cancellation of debt on a rental property can relieve a landlord of their primary responsibility, but that only lasts until tax season rolls around. Know how much income you’ll need to report and plan your tax payments accordingly so that you aren’t surprised by the final bill that becomes due.

Safety Options for Single-Family Units

Your rental property is an investment.

And there are a few subtle ways to protect this investment, such as getting homeowner’s insurance.

However, it’s also important to think about more direct ways in which you can physically protect your rental properties from burglars and vandals.

Here are three options for protecting your properties and your tenants:

Alarm Systems
Alarm systems use sensors and codes to protect your buildings.

The sensors will alert the authorities when a door is opened or a window is broken.

Codes entered onto keypads can change alarm settings and turn the alarm on and off as your tenants come and go.

Sensors
The sensors included in alarm systems must be installed.

This cost of installation can vary significantly depending on the type and number of sensors used.

Some sensors can only measure when a window or door has been opened, whether by a tenant or an intruder.

These less expensive sensors throughout the home won’t alert tenants to dangers such as carbon monoxide, fire, flood, or broken windows.

The more expensive sensors can detect significant risks to your tenants and property.

They can also alert your tenants when there is motion detected in the home.

For example, someone may sneak into a home while the alarm isn’t armed.

They then may hide until the tenants are asleep.

The intruder may even watch from their hiding place as someone enters the code to disarm the alarm so that they’ll be able to disarm it before they start stealing valuables.

They can them disarm the system, take valuables out of the home, and rearm the system.

This scenario is possible for a system without motion detectors.

However, with motion detectors, as soon as they intruder began to move from their hiding place, the sensors would trip, the alarms would sound, and the tenants would be alerted.

Gated Entry
Another option for tenant and property safety is gated entry.

This entails having a strong gate constructed all around the property line with just a few entry points (for instance, one in the front, one in the back, and one on the side), for tenants to use.

The tenants would need a key card or gate code to gain entry onto the property.

The Gate
The gate you choose would need to be high enough so that no one could jump or climb over it.

Yet, you’ll want to monitor the height, because costs of installing the gate increase as the height goes up.

Also, for aesthetic purposes, gates that are very high tend to make residential properties look like prisons, and this may turn off potential (or even current) tenants.

Video Surveillance
Criminals may be less likely to steal from or damage your property if there are cameras visible on the land.

If they understand there is a greater risk that they will be captured because they are being videotaped, they are less likely to take the risk of getting caught.

Playback and Monitoring
You may not need to have a specific security professional viewing the security cameras of a single-family home throughout every hour of the day.

There are ways to digitally record and store various amounts of video so that you have it on file and can play it back to see who spray-painted a garage door or stole a laptop from a home.

Since most people notice an act of vandalism or theft has taken place soon after it happens, you may opt to store video that covers a limited date range.

Based on the property you’re protecting, its neighborhood, and your budget, use this information to make a decision about the best single-family unit security options for your rental situation.

Keeping your property safe protects the longevity and the value of the land and structure that you have invested in.

Minimizing the Damage Done to Your Property

Normal wear and tear on a unit is… well, normal.

Depending on how long the tenant lives within your house or apartment unit, you’ll see wear on carpets, on walls, and on appliances.

This is all just a part of life in a person’s home, but there are certain things you can do to minimize the damage even before you choose your tenant.

This will help when it’s time to turn the property over.

The shorter the turn around period, the better your income.

There are many ways to protect your property, but protecting for beyond-normal wear and tear (even if it’s not done maliciously) begins during the advertising/screening process.

While certain groups are protected by law that does not mean that you cannot be picky over your next renters.

You can’t market your rental to ‘singles’ or ‘families without children’, of course, but you can make other choices that will help keep your property in better shape.

Smokers

Smokers are not currently a protected class. Indoor smoking can cause damage the the paint on the walls and to the carpets and make it difficult to eradicate the smell even after the tenant has moved out.

You may be required to paint over nicotine stained walls and do a deeper clean on the unit than you would have with a non smoker.

Many landlords are marketing their properties as ‘smoke free’ now.

Smoking will be prohibited inside these units, and you may choose to only accept applicants who do not smoke at all.

This will also help with renting the property again when it becomes time, as the new applicants see that your property is smoke free and they don’t have to worry about lingering smells.

Pets

Unless the applicant is requesting to keep a service animal, a pet is not a protected class.

You’ll want to put some thought into how you want to approach pets, though, because while they’re not protected many renters do own them and you may risk cutting off a significant number of potentially excellent applicants from your pool to choose from.

Though some landlords prefer to keep pets out of their property entirely, some choose instead to limit the breed, size, and number of the pets they allow in.

Meeting the pet is also an option you may choose to entertain as well. You can tell a great deal about the animal from the meeting, such as how well they behave and listen to the owner. You may also choose to charge a pet deposit and/or pet rent to cover any potential costs associated to the clean up.

Irresponsible Tenants

This one is going to be a bit harder to detect, and you won’t always be able to pinpoint it.

There’s a difference in people who live with a bit of disorganization and those that simply do not take care of the property.

When a tenant signs a lease with you they are agreeing to take care of the property as their own.

They are meant to keep it clean and maintained.

There are a couple things you can do to try to catch tenants that might cause real damage to the property before you ever sign the lease with them.

The first is to meet them in person.

Sit down with them, talk, and discuss what they’re looking for.

This won’t always give you a clear view of their habits, but it might.

You may also wish to follow up with their prior landlords.

Check and see how they left the last two or three properties that they lived at.

Were they left in the same condition as received, save the wear and tear? If so, then there’s a better chance they’ll take care of your property as well.

Regular Property Inspections

Granted, this won’t help you catch the problem before you sign the lease, but may help save you money before a small problem grows into a big one.

Make sure to abide by your local laws and give your tenant the appropriate amount of warning before dropping by so that you don’t encroach on their personal space.

You should be able to see any signs if they’re not living up to their end of the lease or if there’s a small maintenance issue that could do real damage if left unattended.

In the end these inspections help both you and your tenant so that the home is safe and secure.

How To Get Rid of Squatters

Your tenant has abandoned the rental property and you haven’t realized this as the property owner.

You’ve been sending out the notices to pay or quit because you haven’t been getting the rent, but the tenant has literally moved out and left the property vacant.

During your inspection of the property to see what is going on, you notice that there are people living in the home that shouldn’t be there.

Those folks are squatters.

Squatting is a fairly common practice. If they haven’t established a tenancy, then knowing how to get rid of squatters is as simple as calling local law enforcement officials to take care of the situation.

If the squatters have established tenancy, however, then you’ll need to officially evict them from your property.

What Happens If a Previous Tenant Left the Power On?

A home is considered to be occupied if it is supplied with power and water.

Squatters don’t have to be actively paying the utility bills of a rental home in order for them to be legally defined as a tenant.

As long as there is no hiding the fact that they are living in the home and the utilities are available to be consumed, most law enforcement officials will look at you if you’ve called them and apologize because they can’t do anything about it.

This means your first step with squatters who are considered tenants is to evict them.

You’ll need to follow the same process that you would with any other tenant, but with one exception: instead of sending a notice to pay or quit, you can send them a notice to terminate tenancy instead.

Landlord/tenant law will dictate how much time you must give the squatters to leave.

Some jurisdictions allow as little as 72 hours. A few go up to 60 days.

If you cut off the utilities to the home of a squatter who has established tenancy, you could be fined, the squatters could sue you, and you might wind up starting the eviction process all over.

Just legally evict them, even if the utilities are in your name, because it’s the cheapest overall cost you’ll face.

Most Squatters Aren’t Going to Go to Court

As long as you have followed the proper procedures according to your landlord/tenant law for eviction, you’ll be able to file for a court motion to proceed with the eviction if the squatters don’t leave the property.

Many will just move out when they receive the first notice, but a few will stick around to be legally evicted.

Once your notice to terminate the tenancy has expired, file a court motion and receive a court order for the eviction.

The squatter will have a chance to respond or defend themselves, but most don’t appear in court and you’ll receive a default judgment.

This judgment will allow the local sheriff’s office to conduct the eviction.

They will remove the people from the premises with a 72 hour notice.

You will then be able to take physical possession of the rental property once again and begin to make repairs as necessary.

You must act immediately whenever squatters are discovered because many jurisdictions will view a 30 day delay as acceptance of the living arrangements.

This would qualify the squatters to be on a month-to-month lease instead, which makes the eviction process even more difficult.

Follow these tips and your local landlord/tenant laws and you know how to get rid of squatters.

How to Set a Late Fee for Rent

If you’ve just picked up a rental property and are creating a lease, then after you decide how much rent you want to charge, you’ll want to decide on late fees. Some landlords don’t charge a late fee for their rent. Others have a flat charge that is assessed if a rental payment is overdue. Sometimes a percentage of the rent is charged as an additional fee. Which is right for you? Many of these choices are already set for you. Landlord/Tenant laws typically dictate a maximum amount that can be charged in late fees. It is generally up to 10% of the rent that is paid each month or a flat fee maximum.

Should You Even Be Charging a Late Fee?

The issue with a late fee being included on a rental agreement is that it allows someone extra time to stay in a rental without actually paying for that privilege. An eviction procedure cannot even begin until the grace period for the late fee has expired. Let’s take two examples for consideration. 1. Landlord A has a flat that he rents for $700 per month. The lease clearly states that rent is due by 5pm on the 1st of the month. He does not have a grace period or a late fee. This means he can file a Notice to Quit or Pay on the 2nd of the month right away in the morning. If the tenant doesn’t pay, with a 3 week average time for eviction, he can have a paying tenant ready to go for his flat by the next month. 2. Landlord B has an apartment that he also rents for $700 per month. The lease states that rent is due on the 1st of the month, but that there is also a grace period until the 5th of the month where no late fees will be charged. After the 5th, the lease states that $70 late fees will be assessed and rent will be due by the 8th. This means that Landlord B cannot start the actual eviction procedures until the 9th of the month. 3. The benefit of setting late fees is that you’ll be able to offset some of your costs that come with the collection of overdue rent. The detriment is that if you have a tenant who is in a rental and isn’t paying what is due, it can be 10-14 extra days of not receiving any income from the rental property.

Late Fees Can Sometimes Be Charged as a First Expense

Depending on your landlord/tenant laws, it may be possible to charge a late fee as a first expense. This means that you could take any rental payments that are received from a tenant and apply them to the late fees first. In the example above, let’s say Landlord B gets paid rent on the 7th of the month for $700. This landlord could then apply the $70 late fee first, meaning that the tenant is still out of compliance on the lease because the full amount has not been paid. An eviction proceeding can still begin. Late fees can be a delicate balancing act. Some landlords may choose to ignore late fees and just start the eviction process immediately. Others may choose to include late fees as a possible way to earn extra profit. Know what your legal limits are before you begin, be consistent with your policies, and you’ll have an overall positive experience.

Are Multi-Family Properties More Profitable?

When investing in real estate, there are always a few questions that must be answered before you start.

One of the most basic is: What types of property make the best investments?

Mixed-use properties have a different set of benefits and challenges than strictly residential.

Multi-family properties can produce more income, but they also come with larger expenses. Single-family homes may be easy to start, but they have hidden costs down the road.

Many investors swear by multi-family properties as the best investment, and they’re not wrong.

Pros of Multi-Family Properties
The benefits of multi-family properties can be summed up in three simple phrases:

  1. Lower taxes
  2. Lower vacancy rates
  3. More convenience

Pay Less in Taxes
Paying property taxes on a single building is typically much less burdensome than paying on separate properties.

This is usually due to one major factor: lot size. Larger lots come with higher tax assessments.

With multi-family dwellings, landlords only pay for one outdoor space (otherwise known as space that doesn’t earn) versus several.
Keep Properties Occupied
Another benefit to multi-family properties is the simple fact that apartments never stay rented 100 percent of the time.

There will be turnover.

In a single-family home, that means the entire property fails to earn when a tenant moves on.

In a multi-family property, staggered rental agreements help ensure that the landlord is never holding a property with no positive cash flow.

Convenient Management
Managing properties can be challenging, particularly when first getting started in the business.

Juggling insurance payments, rental applications, tenant notifications and legal proceedings like evictions is difficult for inexperienced managers.

Add on the challenge of property checks and maintenance scheduling, and it is easy to wind up spending more time on the road than at a rental property.

When all the units are in one place, it is much easier to schedule one day to visit every unit.

This cuts down on travel time, and it can also help minimize major system expenses. For example, landlords only face one roof repair per building, not per residence.

Cons of Multi-Family Properties
With all the obvious benefits, it may be difficult to see the downside, but there is one, and it is big — expenses.

Multi-family properties are more expensive to buy and more expensive to up maintain.

Yes, there is only one roof and one foundation, but there are several kitchens and bathrooms.

There might be a shared laundry room or individual washers and dryers in each unit.

Regardless, what that boils down to is lots of appliances that the landlord has to pay for.

Of course, the same would be true for a landlord who owned several individual properties, but there are some extra cautions that go with multi-family dwellings.

A leak in an upstairs bathroom can ruin several apartments, not just one.

A problem with a water heater might flood a downstairs neighbor.

A fire from a malfunctioning oven can cause smoke damage throughout a property.

This is on top of the higher price tag attached to any obviously commercial venture and the added cost of obtaining property licenses and insurance.

Multi-Family Is Still the Better Bet
The bottom line is that any investment holds an element of risk, but multi-family properties help offset many of the risks associated with real estate.

As long as the price is right, the location is good, and the numbers make sense, a multi-family property stands to make more money now and in the long term.

Why You Should Follow Up With Tenant References

Renting your property to tenants can be a great way to make a living or earn extra money on the side, but without proper diligence, it can also be a source of tension, stress, and financial burden.

The biggest way to prevent headaches and stress when dealing managing tenants is to screen them properly before they sign the lease and take control of your rental space.

In this blog, we’ll touch on the main steps of the tenant-screening process.

These steps, plus a background check, can weed out potentially problematic tenants before they sign a lease for your property.

What is a personal reference?
Personal references, usually asked for on rental applications, are people handpicked by the tenant for landlords to contact.

In an ideal world, these people will vouch for a tenant’s good character telling a landlord what a great person and renter a prospective tenant is.

Personal references usually fit in these categories:

•    Family members and close friends (this is the dominant category)
•    Former roommates and cohabitants of the prospective tenant
•    Work associates (either co-workers or supervisors)
These people can give invaluable insight into a tenant’s behavior and help you figure out whether a tenant will be a positive member of your rental community.

Why check up on them?
So why would you call people who are the trusted confidants of a prospective tenant?

Aren’t they just going to brag on the tenant and give you a positively biased account?

Honestly, the answer to that is probably going to be yes, but without doing the due diligence and asking questions, you might squander a huge opportunity to screen out a potential problem tenant.

A tenant’s personal references are supposed to compliment the tenant’s character, work ethic and respect for their surroundings and others; therefore, positive answers from these references really don’t mean much in comparison to the checks you’ve already made.

One of these handpicked references might say something intentionally or unwittingly that casts doubt on a tenant’s character or viability.

Negative references from a trusted source of a prospective tenant, intentional or said in the throes of conversation, can be a bombshell that could disqualify a tenant from consideration.

Think about it. If the tenant’s mother tells you about times when she or her husband paid the tenant’s bills, wouldn’t that make you think twice about that tenant’s ability to pay his or her rent on time?

If the tenant’s friend mentions the tenant’s penchant for playing loud music and partying, wouldn’t that make you question the tenant’s ability to be a respectful member of your rental community?

If the tenant’s roommate mentions a pet that the tenant “conveniently” left off the rental application, would this cast doubt on the tenant’s honesty and integrity?

Those are things you wouldn’t discover without diligently checking personal references.

Tone of questions
Personal references aren’t going to give you dirt on a tenant unsolicited; therefore, you have to know how to ask the pertinent questions.

Before asking questions, be sure to review The Fair Housing Act and use it as a reference to avoid questions that could get you in civil or legal trouble.

Be sure to ask questions that require more than just a yes or no answer.

Questions such as “How many times was [name of tenant] late on bill payments?” are harder for a reference to avoid than “Was [name of tenant] ever late on a payment?”

Conclusion
Checking up on personal references might seem superfluous, but it’s absolutely necessary in the tenant-screening process.

While you’ll receive glowing reviews most of the time, that occasional negative review of a tenant from a personal reference could save you from disaster.

Organization in Your Life as a Property Manager

When it comes to property management, organization can help keep you moving steadily and smoothly forward.

Whether you’re in the middle of tax season or simply keeping up with files on tenants, it’s best to have a steady protocol that you follow throughout the process.

Start with your screening process.

Once you’ve placed your add for your rental you’ll start to receive calls and emails that show interest in the property. While there is certain information that you cannot choose your next tenant based on, there are plenty of details you can look into that will help you choose.

Have each applicant fill out the same application for you so that you are not asking different groups of people different questions.

Once you receive these applications you can begin your pre-screening process to weed out the applicants that will obviously not fit with your property.

Is your rental non-smoking? You can deny any applicant that says that they smoke on their application.

After you run a tenant screening report on them, did you find that their credit score is below what you’re willing to accept?

Make sure to have a list of requirements already written down so that no one can claim discrimination.

Saving Time

If you own multiple properties and/or have another job on top of being a landlord/property manager, you’ll probably find yourself hoping to save time where you can.

Driving all over town to meet with a new tenant to sign paperwork can be troublesome, especially when you find that either you or the new tenant have forgotten a piece of the paperwork and you’ll have to meet again.

You may wish to invest in a service that provides access to electronic signatures so that you can simply email the lease or any other paperwork to the tenant and they may email it back.

This saves time and money in gas and printing costs.

Saving Space

You’ll want to keep detailed files on each tenant that passes through your property.

While they’re there, you’ll be building the file.

Hopefully they’ll come in, live peacefully, and leave without any need to use it in any sort of legal action against them, but should you need to file an eviction you’ll want to be ready.

Choosing to store files securely online is becoming increasingly more popular the obvious reasons in that it saves space and it makes those files easier to search.

You may have the name, but shifting through draws of papers for your tenant may become tiresome.

If you have it files online you may simply click the search tool to find what you’re looking for quickly and easily.

As you continue on in your career you’ll learn your own tricks and pick up on those of other landlords and property managers.

Use these to your advantage to make sure you are not wasting your time needlessly.

Can Landlords Dispose of Abandoned Property?

If your tenant moves out and leaves items behind, state and local laws govern what you can do with the abandoned property.

So, before you sell your prior tenant’s television, it’s important to learn about your legal obligations.

 

Lost vs. Abandoned Property

Before making any plans, make sure that your tenant has abandoned — not lost — a piece of property.

If you find a ring in a medicine cabinet, for example, it’s possible that the item was misplaced and not abandoned.

In this case, you have an obligation to attempt to contact the previous tenants so the ring can be returned.

If the tenants cannot be found, but it is likely that the item was lost, the landlord may have to relinquish the item to the local police or sheriff.

However, if it’s likely that the property was abandoned, the owner will be able to keep, sell, or dispose of any items according to state law.

Notification Requirements

Most states require that you notify the tenant that he or she has abandoned items on your property.

Unless state statutes specify otherwise, a certified letter is often the best way to complete this step.

The letter should list the items that were abandoned, as well as tell the former tenant how to claim them and the time period in which he has to do so.

Waiting Periods and Storage Requirements

States with notification requirements will also specify how long you must wait before disposing of any items.

These time periods can vary widely.

Delaware state statutes require a seven-day waiting period to allow tenants to claim abandoned property after an eviction, while Vermont requires that a landlord wait 60 days.

Most states will also allow you to charge a reasonable storage fee that the tenant must pay before his or her items are returned.

Some states will also allow you to charge a removal fee.

If you intend to charge these fees, you should specify the amount in the notification letter you send.

Abandoned Property Disposal

Even after the waiting period has passed, state laws will specify what you can do with abandoned property.

Some states will allow you to sell, destroy, or keep any items.

Other states require that landlords hold a public sale for any items that exceed a certain monetary value.

Some states — including California, Florida, Connecticut, and Wisconsin — specify that any profits from abandoned property sales must be remitted to the state or town government.

State law may also allow the tenant to claim any proceeds from the sale of his or her property, as long as the claim is made within a certain time frame.

Other states require a public sale, but will allow you to keep the proceeds after a waiting period.

If your prior tenant still owes you money, the state statute may allow you to deduct the amount owed from the proceeds of any property sales.

Hawaii, Kansas, and Maine all allow landlords to deduct back rent from an abandoned property auction’s profits.

Researching State and Local Laws

Before removing any possessions from a rental, you must research your state and local laws thoroughly.

Most state websites have the applicable statutes published online.

If you don’t follow your state’s laws, your tenant could sue you for damages.

When researching laws, be sure to follow the correct guidelines.

Statutes may distinguish between property abandoned during an eviction versus property that was left after a tenant voluntarily moved out.

Residential and commercial rental property may also be governed by different laws.

Some cities have local laws that supersede state law.

To avoid any problems, landlords should document their actions carefully and keep any pertinent records.

This documentation should include a copy of the notification letter and receipts for any costs associated with selling and/or storing the abandoned property.