Free Rent Trick
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Previous Training Events
- Worcester 2017-03-08
Slides, Past Video and Training Material
Avoiding the Free Rent Trick
[Start 0:00:00]
Doug: Our last topic tonight is, How Not to get scammed by the Free Rent Trick. It will be 8 minutes and then you will have lots of time to talk to folks and network.
What is the free rent trick? It’s real. It’s a real thing. This is a sign from Worcester, Mass 1995. A MassLandlords member took a picture of this. We scanned it. “Live rent free 1 year; Landlord will pay you $1,000 to leave!!! I did it…Find out how. Send postcard to: Rent Runners in Newton. I will meet you for consultation. Ongoing process how to help or write you, or we can talk on the phones” – spelled with an F – “or meet one-on-one. Very legal. Effortless. Small donation accepted.”
We learned about how to buy the right property. We learned about how to fix up the property, and now we’re learning about operations. This is really important. Massachusetts real estate has a lot of traps for the unwary. The free rent trick is absolutely one of the worst traps but the people in this room are proof that you can be successful in real estate, so we’re going to end this with very concrete advice for how you can avoid this.
Just a quick tour what this is. I’m going to describe it to you as if you are tenants so that you can understand the process and I’m going to describe it to you because you’re landlords about how to protect yourself.
You’re a tenant.
1. Find a way to get public assistance. That’s a long list of possibilities. It could be Section 8. It could be Massachusetts Rental Voucher Program. It could be something as common as social security or veteran’s benefits. Any form of public assistance whatsoever, food stamps, anything.
2. Find a trusting landlord, someone that doesn’t have a conditions statement for their apartment. An older building is best because – we’ll see later on – that’s going to work well. If you can find the landlord that’s relatively poor or perhaps elderly and used to working without lots of paper, or uneducated like they really don't know what they’re doing, in Massachusetts, that’s going to be your best mark. Look for that kind of landlord.
3. When no one is looking, make holes in the window screens, so you let insects in. Loosen the drain, not under the kitchen sink so you get dripping leading to mold. Loosen the toilet wing nuts on the pedestal base. You’ll get leaking water and unsanitary conditions. Knock a hole in a painted surface so it looks like a dump. Remove and discard a ceiling tile if you have dropped ceilings, and do anything else that you can stomach. Make that place look awful. Just don’t let anyone see you do it.
4. Wait for the eviction notice. Stop paying rent. Stop paying rent. Wait for the eviction notice.
5. When you get it, call the board of health and say, “Oh, my gosh! It was like this when I moved in. I couldn’t get the landlord’s attention until I stopped paying rent. Now I’m being evicted. Help me!” The board of health will write down there.
Now note: if the landlord has a conditions statement, it’s going to be harder. You have to call the board of health your landlord before you get the eviction notice. But don’t let the landlord in to make repairs. If you do, wait for that eviction notice. Don’t let them in. Get the eviction notice.
6. Be brave. You’re going to have to go to court. When you get there, say, “I want an attorney, but I can’t afford one.” The state will appoint an attorney. Let them do their job. Give them the pictures of the horrible slum you’re living in and you’ll have to let the landlord in to make repairs at this point, so do that. Eventually, you’re going to lose your case. You’re going to get evicted. You didn’t pay the rent.
Suppose the landlord was kind hearted because you picked a good mark and they waited 3 months of nonpayment before they gave you the notice to quit. Then you attorney appointed by the state did a good job, too, and they gave you little more than the minimum, which is 3 months, the judge might say you owe 7 months’ rent. Don’t pay it. Do not pay it. The judge can’t make you because of step 1, which you took care of. You received public assistance. You are judgement-proof. All you have to do is find another landlord, move out, find another landlord, and repeat.
Landlords, don’t let this happen to you. Here’s a couple of steps.
1. Check masscourts.org. It’s so important. I have taken a picture or two. Masscourts.org, just type it into your browser and scroll down to there’s a thing called a captcha. It has these impossible letters and if you’re wearing glasses or you can’t see that well, just click, new challenge image. Your goal is to figure out what the four letters and numbers are, AHYX. You type those in, you say click here to search public records. That lets you into a page where you can select your court department – housing court, Worcester Housing Court, Worcester Housing Court.
You can see, type in a name, I’ve put in Tina Tenant. You can’t read it there. Search for as little of the name as possible. Search for T-I-N, that’s the first name for Tina, and T-E-N as the last name for Tenant. That will help you avoid spelling issues like if somebody entered it into the database with a double N. Search for nicknames. If she goes by something else, you put that in, too.
[0:05:02]
You want to make sure to check both housing courts and district courts. I said that in the previous slide, so housing court – Worcester housing court, Worcester housing court. Search for district court - Worcester district court, Worcester district court. I don't know why I have to pick it twice, but that’s the website we have.
If they lived in Springfield, search Western Housing Court and Springfield District Court. If they lived in Boston, search those courts out there, right? Right everywhere they’ve lived. Make sure they don’t appear here.
Our 2015 study of 2014 evictions show that 40 tenants in each court system had two or more cases that year. Forty people in Worcester are doing this. They’re in court multiple times. Seven people in Worcester were in court four times with four different landlords in a single year. This is real.
You see someone in the court records, don’t immediately dismiss them. Say, “Well, tell me what happened with your eviction.” Ask the tenant for their story. Get the contact information with the previous landlord and ask for them, determine the truth. You’re all experienced people. You know what makes sense and what doesn’t. find out what the truth was. If that landlord was bad, if that tenant was good, you’ll be able to figure that out. If they had a legitimate difference of opinion and they can explain that, well, “A landlord initially said I can have a dog and they changed their mind, that’s why I was asked to leave. I didn’t owe any money.” That’s not a reason to turn someone down.
But if you see them in the court records and there’s no good convincing explanation, that’s not good. That’s step 1.
2. Step 2 to protect yourself against free rent trick is use a conditions statement. Does anyone not know what a conditions statement is? Okay, good. Sign it when you sign the lease. You have 15 or 30 days. Rich, how many days do you have?
Rich Merlino: Fifteen.
Doug: Fifteen days, don’t wait 15 days. Go through the apartment with them at least in signing and sign it right then and there, and if you’re paranoid, get an update every time they pay the rent. Have them sign a list that says, “These are all the things that are broken in the apartment.” Sandra, do you have a question or comment?
Sandra: I know [unintelligible 0:07:00] code department [unintelligible 0:07:03] for the certificate [unintelligible 0:07:06].
Doug: Perfect.
Sandra: Works beautifully. When you go in court and they say, “This is how I got the apartment,” pull out the certificate of fitness and you say to the judge, “This is my code department [unintelligible 0:07:18].”
Doug: Yeah.
Sandra: [unintelligible 0:07:21] this is how [unintelligible 0:07:24].
Doug: I will modify this to say certificate of fitness. That’s what Sandra is saying. You can get a third party, an impartial third party to go in and inspect the apartment and say, “This place is fit for human habitation.” Remember if you have this update here, if you have the conditions statement, if you have an update on some kind of regular basis, they can’t claim massive damage. If it was good when they moved in or good last time they paid the rent and suddenly it’s all destroyed, it’s going to be pretty obvious who destroyed it, right? They can’t claim that it was like this.
Rich, do you have a comment or a question?
Rich: I had a question for Sandra. When somebody signs a statement of condition when they first move in, the law says that they have 15 days after they move in to report in writing to you any sort of defects they discovered after the fact.
Doug: Yes.
Rich: That’s what I meant with my quick answer of 15 days.
Doug: Right, okay. But I’m saying don’t let them have the form and never return it. Get at least one version of it, and if they update it, 15 days later.
Rich: Right.
Doug: That’s valid, right.
Rich: In our lease [unintelligible 0:08:25] Property Management, we actually give them a 15-day conditions statement so they fill it out. Anytime in the 15 days they find a defect, there’s a form they can fill out and it’s already made for them, and I have them sign a copy that they’ve received that.
Doug: Right.
Rich: If we never get that back, then that matter is closed.
Doug: Good. Yeah, all right, step 3 to protect yourself.
3. Use temporary restraining orders. You remember the advice to tenants was don’t let the landlord in to make repairs because that buys you extra time. Here’s how you get a temporary restraining order. This slide, thanks to Sandra. Again, Sandra is the expert at using this to get past troublesome tenants. Go to court and say you need a temporary restraining order. You can ask Sandra tonight for more details. You can ask the court for help. You get that. Request for a TRO hearing. You give it to a constable. The constable delivers it to the tenant and it pulls the tenant into court for a hearing usually in under a week, and the court will look at the situation and order the tenant grant access specially for plumbing issues which lead to mold and other unsanitary conditions or property damage, especially for electrical issues, which can lead to fire.
Do not accept no for an answer if a tenant prohibits you from entering their unit to make repairs. That’s advice number 3.
4. Screen your tenants. There are lot of ways to screen tenants, but I’ll tell you income is the most important thing. We all hopefully make adequate income to pay for our needs. We don't need to pull the free rent trick on anyone. This gets into someone’s head when they realize they’re short and they can’t afford the rent anymore. Stable tenants don’t need that, so make sure the household that’s applying for the apartment has enough money.
[0:10:01]
Like I said, screening whatever you do – credit or references or whatever, don’t forget masscourts.org.
5. Finally we’re working on eliminating this. Many states, I think there’s about 30 of them, have what’s mandatory rent escrow law. Even though we know it’s 40 people in Worcester and 40 people in Boston, that casts a long shadow. Even though it’s pretty rare, it casts a long shadow. A lot of people are afraid of this, so we’re proposing one bill. There are other groups proposing other bills. We’re not quite mature enough to herd all the cats into a single bill. But basically, the idea is if a tenant has a legitimate beef with their landlord and they can’t get the landlord’s attention to repair the place until they stop paying rent that’s the only thing that gets landlord attention, well the tenant should pay that rent into escrow, so the end of court proceedings however long they last, the money is still there. It’s not like it’s spent. It’s not like if they receive public assistance, you have to go after the judgment.
If you don't believe me that this is real, I want you to read the law for yourself, Google Mass General Law Chapter 239 Section 8A, 239 8A. Look at the section that starts, “Whenever any counter claim or claim of defense under this section is based on any allegation concerning the condition of the premises.” Remember I talked about destroying the pipes and stuff? That’s where that gets triggered. in the meantime, remember the law helps those who help themselves, so here’s your summary.
Check masscourts.org always. Find out the truth of past evictions. Use a conditions statement, and if you want a certificate of occupancy for $110, well worth it. Get a temporary restraining order if the tenant won’t let you in to fix the place. Screen for income among other things with income specially. When we ask you please support our effort to reform the law and get mandatory rent escrow.
Okay, that’s the end.
Rich: Mandatory rent escrow will eliminate the free rent trick because nobody is going to withhold the rent fraudulently if they have to pay it into an account anyway, isn’t that true.
Doug: That is true and the hope is that we can work with the tenant advocates and say, “Normal mandatory escrow eliminate a legitimate tool people have to compel repairs. If the landlord is not responsive, they can stop paying the rent. They just pay it into escrow.”
Rich: Sure.
Doug: Yeah. Questions are coming. Could you go around, Rich?
Rich: Yes, yes. I have a question for Sandra because she mentioned a certificate of fitness. What is your opinion of having a Section 8 inspector come instead of that because they’ll come for $60 and I’m cheap, so I want to get your take on it?
Sandra: I never hired a Section 8 inspector because usually it comes along with a Section 8 tenant. I happen to love the guys down at the code department. I just think that they understand, they really truly understand the problems that we face. I get calls from them all the time, saying, “I don’t want to go to that place anymore. Don’t call me. I don’t care.”
I’ve had one inspector saying, “I will not go to that building again if those people are still in the building.”
I said, “Okay, well I’m trying to get them out.”
I just think that certificate of fitness is so true to me. In fact, it’s much more effective than a Section 8 inspection because the housing court will absolutely go along with you on the certificate of fitness not necessarily so on the Section 8 inspector because you can’t use that when you’re doing your – they put less credence on that than they do the certificate of fitness.
Doug: The advice -
Rich: Interesting.
Doug: Given up here is also take pictures. It complements the certificates so you can say, ‘Look, really. This isn’t a corrupt inspector either. This is for real.”
Rich: Yeah, and you don't have to worry about the cost of film so you can take like 150 pictures. You open up every cabinet, take inside out fridge -
Doug: Yeah.
Rich: Freeze all that stuff.
Doug: There are lots of questions.
Female Audience 1: I’ve been getting a lot of calls from people moving here from out of state. Do you know if any other states have something from the housing court like masscourts.org?
Male Audience 1: [unintelligible 0:14:11].
Female Audience 1: Massachusetts [unintelligible 0:14:13].
Doug: Okay.
Male Audience 1: It’s National NTN Online.
Rich: Ntnonline.com, National Tenant Network, ntnonline.com. Who’s next? Come on. There were like eight of you. Okay, thank you.
Doug: Just one comment on the screening providers. The fine print on many of them excludes four states which have strict laws. Massachusetts is among them but if someone is moving from one of those four states, make sure you understand that NTN is covering the state where your tenant came from. It’s very likely they will but just make sure you understand that. Bill?
Bill: I just wanted to make a statement an experience I had and it was the first time ever, I was doing some work in a tenant’s apartment and so she decided to stop paying rent –
Rich: Put the [unintelligible 0:15:04]
[0:15:04]
Doug: You were doing some work in a tenant’s apartment and she decided to stop paying rent. And you hold the mike closer to your mouth.
Bill: Okay. Can you hear me now [laughter]?
Audience: Yeah.
Bill: I sent them an eviction notice and they called of course the board of health. The board of health came in, wrote me up on a few things, so I took care of the repairs and got my TRO and all that stuff, good stuff, and made an agreement in the housing court. About 8 months later, she decided she wasn’t going to pay her rent again. I sent her an eviction notice. She called the board of health. When they came out, a number of things that she was reporting in the apartment, they wrote up for.
Audience: Yes [laughter].
Doug: That’s great. Well done.
Bill: Yeah, because they have just been out there a few months before and it was the same thing when they came in for inspections. These things were repaired.
Doug: Wow! That’s great. thank you for sharing.
Rich: That was a good story.
Female Audience 2: Hi! Just a clarification on the tenant, the certificate of fitness, that’s only an option, Sandra, if the apartment is vacant, correct? You can’t do that if it’s occupied?
Sandra: You know what, I think there are probably situations where it [unintelligible 0:16:33] a lot better when the apartment is vacant.
Rich: Sandra says it’s easier when it’s vacant but you have had the inspection done while the apartment is occupied?
Sandra: It was after those for that particular tenant, and a year later on, I got a phone call just a little month or so ago from [unintelligible 0:16:53] the code department just took the fitness and said the certificate of fitness is about to run out. What do you want to do?
I said, “She’s gone out of here [unintelligible 0:17:03].”
Rich: Okay. We have a couple of more questions?
Male Audience 2: This is for Sandra. Are you talking about the one-tenant inspection or is it a different inspection that you’re talking about?
Sandra: The one [unintelligible 0:17:18].
Male Audience 2: The one-tenant inspection -
Rich: Sandra, I’m going to give you the microphone. I’m going to let you go around the room and take everybody’s questions [laughter].
Sandra: Each apartment has to have its own certificate of fitness; it doesn’t go to a building.
Male Audience 2: Okay, so what kind of inspection did you do?
Sandra: If I’m over there at 49 King Street I got four units there and I want to have certificate of fitness, they won’t do the entire building, they will but if each individual unit gets a certificate of fitness, it’s 110 × 4. It’s worth it because it’s the code department that’s doing it. I love it.
Rich: All right. He’s the other free rent trick. When somebody gives you a check on moving date and it bounces.
Sandra: No, no, no! No personal checks on moving date.
Male Audience 3: Sandra, would you like the mike?
Sandra: No personal checks on moving date. Money orders and bank checks.
Male Audience 4: I just want to add I think another defense when you’re dealing with tenants who are not paying the rent, not allowing you access, etc., is to document. I don't think anybody doesn’t realize that but it goes without saying that keep you email them, or keep a log if you tried two or three times to get access, they’re not giving you access, etc., so that when you’re in court, the more documentation you have, the more credibility you have when you’re in front of specialist or a judge.
Doug: Yeah, exactly even if it’s not particularly helpful documentation. If you look organized, you’re credible.
Rich: That is a really good tip and the other tip that Sandra brought up was no personal checks on moving day. I will take personal checks more than a week before moving day; anything after that has to be a bank check or a money order, preferably a bank check. Do you have more questions - Sandra has more to add [laughter]. Back to you, Sandra.
Sandra: Sorry. Initial tenancies until they’ve established a tenancy with me, no personal checks ever, and I’ve stopped taking cash because it’s very dangerous. I’m actually very concerned about my staff. I just tell specially if I don’t know the people, I want money orders because that’s like cash or I’ll take a bank check, but until you’ve established residency, tenancy with me, no personal checks specially two days before moving. Not happening.
Doug: I just like to say Sandra has always impressed me as the landlord of last resort, and she has a reputation in the community for being if you got a tenant that’s hard to house, Sandra will work with them and get them housed, so Sandra has these policies as a tough cookie to make sure that she can keep these housing units available for people who are problematic –
[0:20:08]
Rich: I am -
Doug: Bouncing checks and considering the free rent trick and all that. Sandra is extremely knowledgeable at this end of the rental market.
Rich: And I’m not giving you the microphone to repeat what you just said, Sandra [laughter]. Do we have any more questions in the back?
Dave: All right, I just want to add on with the documenting everything, I told my tenants to text me for any kind of repair requests or whatever. I purposely don’t answer the phone if they’re calling just so I get the text messages so that everything is documented.
Then also when you’re looking at the people on the courthouse, masscourts.org, make sure you check all the six housing courts, and then when you do your credit check, it will show you where they lived. Check all those district courts. Some areas don’t even have housing courts, and if people are suing them, they will come up on district courts also, so you don’t want somebody who’s been sued 10 times that’s living in your place.
Doug: Absolutely.
Rich: If their address is on the credit report that they didn’t tell me about, I kind of want to know why that is. Who else has a question? For Sandra?
Doug: Just one comment about text. Dave’s comment about text is good. Texts are good record but your service provider might auto delete them from your device after 60 or 90 days, so if you exchange a series of significant texts, screenshot that. Every phone should be able to usually push volume or power or something like that and takes a picture, screenshot important texts.
Male Audience 5: [unintelligible 0:21:36]
Doug: All right, Rich has the mike.
Rich: Yeah, and then you can save the file for later.
Doug: Yeah, exactly.
Female Audience 1: I discovered that if someone is using a city hall for their address that legally they’re allowed to do that if they’re a victim of domestic violence or have been in some other trouble, so that was surprising to me. But it is allowable from the city that they’re in to do that.
Doug: How are you supposed to check their eviction record?
Female Audience 1: Right, right.
Doug: Interesting.
Rich: I’m really glad that you brought that up because if somebody put a city hall address on there, I would make fun of them would be my first reaction, so I’m glad you brought that up. We have time for one more question.
George: When we started doing in all our agreements is we put in a 3-day notice to quit for nonpayment. Under Chapter 186 Section 11A it says, “If it is not noted on time spent for the notice to quit, you will give a 14-day.” We put in a 3-day notice, they don’t pay, and what that does it gets them into court faster, 11 days faster, pluss it makes
this guy fooling around. Three-day notice to quit where everybody is giving a 14-day, but if you get a chance, Google Mass General Law 186 Section 11A and you will get the language. I think it’s in the second paragraph -
Doug:
In particular to rooming houses because I didn’t think you could do anything shorter than 7?
George: All of our agreements, 7-day if they pay weekly.
Doug: If they pay weekly.
George: If they pay weekly
Doug: I think that’s the key and your mike died, but George is saying his tenants pay weekly and so he’s got a particular - for most folks with monthly rentals, I think 3 days is not going to be recognized by a judge.
George: They’ll recognize it [unintelligible 0:23:45].
Doug: Okay. Let’s Google it.
Rich: We will. In addition to that, I just have to say -
Doug: Yeah.
Rich: Aside from short rental periods like 7 days, we had a number of attorneys tell us that is absolutely illegal, so I’m not an attorney.
Doug: On a monthly rental?
Rich: Right, on a monthly rental that there is no possible way that anybody should ever attempt something like that. They will get themselves in trouble. That’s what we were told multiple times.
Doug: Okay, so we’re repeating that for the room and George is saying this particular case is a weekly rental, okay.
Rich: And it’s 8:30, so it’s up to you.
Doug: Yeah. Should we -
Male Audience 6: You’re not [unintelligible 0:24:17].
Doug: Do you have a question, comment?
Rich: I’m not a lawyer and I’m not giving legal advice, that’s correct.
Doug: Could we do Bill one more because -
Rich: Yeah. He’s such a good story last time. It’s going to be tough to top.
Bill: This is not a question. It’s a comment. Can everybody hear me?
Audience: Yes [laughter].
Bill: I have written in my contract, “If the rent is not there on or before the day it’s due, the next day they get served an eviction notice,” and I have done that a few times now and it works well.
Doug: That’s right. There is no grace period that’s required. You can give an eviction notice the day the rent is late.
[0:25:00]
Rich: That is actually advice Judge Horan had given us specifically on more than one occasion.
Doug: Because she recognizes that the law makes long delays in eviction process, so why give a grace period? Your notice period is the grace period.
Male Audience 7: On the 1st of the month or the 2nd of the month?
Rich: On the 2nd of the month.
Male Audience 8: [unintelligible 0:25:18].
Bill: At 12 o'clock on the 1st day of the month.
Rich: It’s 12:01 AM [laughter]. Bill is over at your house [laughter].
Doug: Yeah. All right, so we’re going to wrap it up. If you liked the meeting, if you didn’t like the meeting, if you liked or didn’t like particular speakers, the food, segments, the venue, whatever, please fill out a yellow feedback card. What’s that?
Male Audience 9: Clean the table.
Doug: Help us by cleaning the table. One last thing: we’re giving away $50 free. We have $400 Home Depot gift card that we’re selling --that’s more than $400. We’re selling it at 10 percent off at the registration desk, and we’re still selling Good Landlord books and we have lots of literature including on title assurance at the leave stuff/take stuff tables. Please take those and we’ll see you next month.
Rich: Next month, yeah.
Doug: For Mike and Mike.
Rich: The Mike and Mike Show continued.
Doug: And -
Rich: And money matters.
Doug: Money matters.
Rich: Business experts. I’m going to get off the table because I don’t want anybody to take me.
Doug: Yeah. All right, thank you.
[End 0:26:30]
