Landlord wants credit check? Client says "No way!"

By
Real Estate Agent with Samsel & Associates 0790808

Stack of hundredsWe're working with a young couple who are looking to rent a house. 

He's a seasonal worker - makes big money for 3 seasons, but winter is a bit slow - and, as a result, their credit score is low. They probably wouldn't qualify for a mortgage, but they've saved enough money to pre-pay a year's rent in cash. 

There are plenty of rentals in Union County to choose from, and we found them the perfect home. The landlord loved them, they agreed to the deal, and our clients pre-paid one full year's rent in cash. 

Then, two days before our clients were to move in to their new home, the landlord's agent called us. The landlord wants a credit report on the tenants. Normally, this is pretty standard, of course. But, when we explained the extenuating circumstances, the landlord insisted. 

Our clients refused. 

And the deal falls through. The landlord had a year's rent in cash and turned it down for a technicality. 

What do you think?

 

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~ Wayne & Jean 

Union County, NJ - a great place to live and work!

If you're looking to buy or sell a property in Union County, call us at 908-917-4189 or email TeamZuhl@gmail.com.

 

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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Wallace S. Gibson, CPM 07/01/2013 08:59 PM
  2. David Popoff 07/02/2013 05:14 AM
  3. Bob Crane 07/07/2013 12:11 PM
  4. Winston Heverly 08/17/2013 09:38 AM
Topic:
Home Buying
Tags:
credit score
credit report
rental

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Rainmaker
361,889
Jeanne Dufort
Coldwell Banker Lake Country - Madison, GA
Madison and Lake Oconee GA

Transparency matters - when someone with bad credit wants the use of a high-value asset, they had better be willing to back up what they tell with a report that matches.

Jul 02, 2013 12:38 AM #72
Rainer
286,848
Thomas McCombs
Century 21 HomeStar - Akron, OH

Drug dealers and Meth lab operators often have a lot of cash.

Is this what a property manager wants in his rental? A credit check might help uncover a history.

Jul 02, 2013 01:10 AM #73
Rainer
140,265
Keith Whited
RE/MAX Gateway - Alexandria, VA

I'm assuming that since this occurred at the last minute - two days before the tenants were to mon=ve in - that a lease had already been signed. If that is the case I think it was WAY TOO LATE for the landlord to attempt to require what he/she should have required in the first place.

Jul 02, 2013 01:13 AM #74
Rainer
146,223
Theresa Akin
CORPUS CHRISTI REALTY GROUP - Corpus Christi, TX

Cash is all fine and dandy, dandy and fine. but still need a background check which includes the credit history and any criminal history.  Let's not forget the rental history. There are those with bad credit histories and good rental histories. Income is there and rent always paid on time never into the grace period (due then payable dates). Many landlords want nothing to do with one who has a credit score less than 650 or even 700. All depends.

Jul 02, 2013 01:27 AM #75
Rainmaker
370,463
Travis "the SOLD man" Parker; Associate Broker
iXL Real Estate-Wiregrasss\ - Enterprise, AL
email: Travis@theSOLDman.me / cell: 334-494-7846

Possibly offer another year or 6 months rent to be paid halfway thru the lease (or to coincide with the money making season for the tenant). This way, the owner has a little safety cushion. Also, possibly offer a larger damage deposit (not legal in some areas, so wording has to be right).

Jul 02, 2013 01:34 AM #76
Rainmaker
461,710
Bruce Hicks
Best Homes Hawaii - Honolulu, HI
Your Lifetime Friend/Helper!

Typically, if there is a discrepancy with a credit inquiry, I offer the applicant an opportunity to give a thorough written explanation of their credit history.

Jul 02, 2013 02:15 AM #77
Rainmaker
843,657
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi Wayne & Jean, we would probably waive the credit check, but would still require a background check.  We want to know if they have criminal behavior on their record.

Jul 02, 2013 02:16 AM #78
Rainmaker
1,543,566
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

The situation and the comments here are interesting. It's obvious that you had a good feeling about this couple, but many here are suspicious about possible criminal behavior. 

Did the tenants refuse because it was a last-minute request? Or because they didn't want their payment history revealed? 

I agree - the credit check should have come before the lease if it was to be required. 

Jul 02, 2013 02:41 AM #79
Rainer
103,107
Rosie Moore
Serving Sugar Land, Richmond, Rosenberg, Missouri City - Sugar Land, TX
Credit checks should never be waived, especially if the tenants pre-pay one year's worth of rent. Paying in advance would be a red flag for me. Plus, you don't want to get in trouble for violating fair housing laws. All applicants should undergo the same qualification procedures - which should always include a credit check.
Jul 02, 2013 02:46 AM #80
Rainer
479,464
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

When cash is involved, your suspicious mind should be activated, shouldn't it? The agent should have issued the terms and conditions and insisted on a credit report regardless of the circumstances before approving the application. The agent has a fiduciary responsibility to his client, the landlord foremost, instead of simply closing a transaction.

Jul 02, 2013 03:20 AM #81
Rainmaker
303,933
Michael J. O'Connor
Diamond Ridge Realty - Corona, CA
Eastvale - 951-847-4883

My community features very large homes (average house is probably near 3000 square feet) with easy access to major interstate freeways and less than 100 miles from the Mexican border.  

So far this year, police have busted 20 marijuana grow houses which were almost always rentals.  These homes were converted in very destructive ways to allow for sometimes over 1000 plants to be grown inside the residence.  I'm sure that some of these landlords were lured with large up-front rental payments and received flimsy rental applications with very little to back up who the renters are.

The temptations of looking the other way has resulted in huge renovation expenses for these owners - typically not covered by insurance, as the activities leading to the damages were illegal.

That said, I think there was a big mistake in having a meet-and-greet and allowing money to change hands without a fully written contract in place.  I might be 'assuming' that no written contract was in place, but if there was one, I'm not sure that the landlord would have the right to refuse the rental at that point.  The credit report should have been solved before any monies changed hands.

Jul 02, 2013 04:24 AM #82
Rainer
133,134
Deleted Account
Fort Myers, FL

There is really no reason to refuse a credit check unless you have something to hide.  If they refuse a credit check, I would definitely want a background check and reference check too.  If they paid in cash, it would be a red flag for me.  Normally that much money would be in a bank and a credit check would show that.  Possibly got the money illegally, I agree no deal.  You never know who they are and sounds like bad news.

Jul 02, 2013 06:43 AM #83
Rainmaker
1,166,184
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

I am so over credit reports which often do not show whether a tenant is going to be responsible or not and which can't guarantee that during the lease they won't go bankrupt.  In my mind previous landlords' references are worth their weight in gold and if a tenant admits they don't have good credit and is willing to pay several months up front it is not automatically a red flag.  

Jul 02, 2013 07:23 AM #84
Rainer
38,892
Mike Schrieber
MikeSchrieber - Laupahoehoe, HI
Local Realtor

Doesn't anyone think about year 2 and 3 anymore? If the owner follows steps 1 to 10 every time they end up with no tenant problems and this kind of situation never occurs. Good opportunity for the broker.

Jul 02, 2013 07:43 AM #85
Rainmaker
1,431,210
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Give them the credit check.  I think most landlords understand there will be problems on many of the renters, or they would not be renters.  He may be looking for red flags like out and out walking away from things.

Jul 02, 2013 09:13 AM #86
Rainmaker
380,228
Don Fabrizio-Garcia
Fab Real Estate - Danbury, CT
Owner/Broker/Trainer - Fab Real Estate

Does the landlord require credit checks for all tenant applicants? If so, then they should of course have demanded one of these tenants.  Rental policies should be standard across the board.

In Connecticut, paying the year's rent up front is not allowed - any pre-payment of rent is considered to be a security deposit, and the maximum security deposit allowed is two months' rent (one month is tenant is aged 62 or over).

Jul 02, 2013 11:52 AM #87
Ambassador
1,723,119
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

@ Thomas McComb - do you really see Drug dealers and Meth lab operators reflected in a Credit Check Report? Are you serious? I have seen quite a few reports, but has never seen anything like that there.

It is a credit report, not a background check, and I do not see why confuse one with the other. And what if you have a perfect Credit report and they started growing weed in the rental property?

Does tenants agreeing to give you a credit report mean that they will not do it, and the guy, paying cash will?

Jul 03, 2013 06:20 AM #88
Ambassador
636,952
Larry Lawfer
YourStories Realty Group powered by Castles Unlimited® - Newton, MA
"I listen for a living." It's all about you.

A credit check is standard operating procedure in every rental. Extenuating circumstances must be made clear from the get go. If leases have been signed and the agreements have been funded then I don't see how the Landlord or the agent can add new requirements at the last minute.  These are the kinds of deals that end up in court. A day without a lawyer is a good day so due diligence is vital.

Jul 03, 2013 11:10 PM #89
Rainmaker
273,520
Wayne B. Pruner
Oregon First - Tigard, OR
Tigard Oregon Homes for Sale, Realtor, GRI

I'm a Landlord and do credit checks on all my properties. Good credit is not a perfect indicator, but it helps. In my state, if the Landlord accepts any rent, he now has rented to the tenant.

Nov 26, 2013 11:36 PM #90
Rainer
198,783
Randy Shamburger
Movement Mortgage - Greenville, SC
FHA, VA, USDA and Conventional Mortgage Expert

This is good stuff, thanks!

Nov 27, 2013 01:57 AM #91
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