Rental Real Estate Due Diligence and Property Eviction Records

Massachusetts Rental Real Estate Due Diligence: Eviction Records

To complete due diligence for a Massachusetts rental property, you should find out whether there are any active evictions at the property. You should also know whether the property has a history of evictions under the current management or owner. The court records do not make this easy. There is no way to search the public records for properties by address. But MassLandlords now offers a Massachusetts Rental Real Estate Due Diligence search that lets prospective owners or managers search the eviction records by address. Now we can know what we are getting into before we offer to buy.

Disclaimer One: The rental real estate due diligence search is in beta. We have data from a couple months in 2019. We have data from October 2020 through two weeks ago rolling. We are working to close the gap while also staying current.

Disclaimer Two: We read new cases within two weeks of their having been filed. In some courts, almost all cases have addresses listed when we read them. In other courts, there are clerical delays resulting in approximately half of their cases having no addresses listed when we read the case. Our search will indicate what percent of cases have addresses. We re-read cases to look for addresses and update our database as we find them.

Disclaimer Three: This eviction records search is only one piece of an appropriately thorough rental real estate due diligence process. Before making any investment, consult with an attorney about considerations specific to rental real estate, including but not limited to tenant estoppels, transfer of security deposits, transfer of rental agreements, deleading certificates, certificates of fitness, and registration if applicable. Also consult with an attorney about basic real estate due diligence requirements including title search, inspection, permits for completed renovations, and zoning.

Search Eviction Records By Address

Why Should Rental Real Estate Due Diligence Cover Eviction Records

At time of writing, the global pandemic had created unprecedented COVID-related changes in rental real estate laws and regulations. Combined with unprecedented shutdowns of sectors of the economy, this has resulted in widespread nonpayment and different tools to address it. Mom and pop landlords that are undercapitalized seem to be selling out. Larger, better capitalized landlords seem to be buying. There are five major reasons why you need to enter any deal with your eyes open.

Sample results from the rental real estate due diligence search for “Main Street, Malden.” CC BY-SA 4.0 MassLandlords

Reason One: Income May Be Lower than Advertised

Sellers should be disclosing the contract value of rental agreements. But it’s up to you, your attorney, or your agent to find out if that rent is actually being paid. This can happen via the “tenant estoppel” process after a purchase and sale (P&S) agreement. But it’s better to check earlier in the process, before you even make an offer. If a property is not generating income as expected, your offer should reflect actual rather than theoretical income (or else do not make an offer).

Reason Two: Expenses May be Higher than Advertised

Sellers may not disclose the operating cost or the deferred maintenance schedule. It’s up to you to ask for it. And even if they say, “Everything is fine” or “it passes inspection,” what does that really mean? Renters have strong counterclaims against owners who fail to meet all aspects of the state sanitary code, which may be more detailed than a home inspector will find. By searching the court records for not just current litigation but also past litigation, you can see if this property has a history of nonpayment, withholding due to conditions, or other red flags. This might mean either the previous owner did not have the money to make repairs, or that the renters damaged the premises attempting the “free rent trick.” Either way, there may be higher than expected maintenance costs for you.

Reason Three: Capital Required May be Higher than Forecast

If there’s an indication that rents are not coming in, or that maintenance has been deferred for a long period of time, then your estimates of how much capital is required to own the property may be too low. A single kitchen gut renovation can cost $10,000 to $50,000 depending on the market. If there are structural or plumbing issues along the entire stack, then you may need to multiply the per-kitchen price by the number of units affected. If an eviction moratorium or other court delay means you need to float the cost of unproductive units for months, a year, or longer, you need to know that in advance, too. It is much better to wish you had bought something than to wish you hadn’t. Before you offer, it’s still possible to get a partner or other investor to help you take over the building with the right amount of investment.

Reason Four: If you are Unprepared, Everyone Loses

If you end up purchasing a place for which you are undercapitalized, you, your partners, and your tenants will all lose. The tenants will end up with another landlord who can’t make needed repairs or resolve existing conflict. This will drive the best tenants in your market to other properties, leaving behind the ones who need the most support or who can pay the least. This in turn generates more court action, all while you are running out of money. It makes sense to get eviction information up-front.

Reason Five: Know Your Business Plan

Some of us are turnaround specialists. We want to find the properties with massive and long-term eviction problems because we’re masters at tough-love tenant relations, subsidy applications, and thin-margin renovations. On the other hand, some of us need “turn key.” We’re willing to pay a premium to know that the building is solid, the renters are stable, and this property will be an investment more than a job. Whatever business we have, we can use the rental real estate due diligence search of eviction records to identify opportunities that fit our plan.

How to Use the Rental Real Estate Due Diligence Search

Step one: Select a time frame

The rental real estate due diligence search will let you look in the recent history or further back. The MassLandlords team manually read cases and load them into this system weekly, as part of our eviction data study. See above disclaimer for time periods available.

Step two: Enter an address

The rental real estate due diligence search works like the registry of deeds, in that you can enter a street number, a street name, and a city name.

Step three: Take the results to the court records

The rental real estate due diligence search cannot give up-to-date docket histories about individual cases. For this, we need to view the cases on the official MassCourts site. Our search is a much better place to start than the MassCourts site, because the MassCourts site does not let you search by address. But all the details are at MassCourts.

The results will appear as “filing date, court division, and docket number.” This allows you to verify that the cases are in the date range requested. It also allows you to visit MassCourts for the matching division. At MassCourts, use the Search by “Case Number” option to read each individual case. Enter the case number exactly as it appears in the rental real estate due diligence search results. The case will come up unless it is sealed.

We do not give links directly to the individual cases because MassCourts.org does not support individual case links. (If you are aware that this article is out of date, email us at hello@masslandlords.net).

The Rental Real Estate Due Diligence Search is not a Tenant Screening Tool

Our rental property due diligence search cannot easily be used to search for tenant backgrounds. We do not accept a unit number in the search fields, although a unit number will display in the results. We do not allow searching by name. The courts control which renter records may be viewed on a by-name basis. Some cases are sealed now (e.g., minors) or may be sealed in the future. You should conduct any tenant screening search at MassCourts primarily.

Rental Real Estate Due Diligence for Massachusetts Conclusion

We are fortunate to live in a state with a robust safety net, decently transparent courts, and a great trade association like MassLandlords to pull all of this information together for you. Search your property eviction records before you buy!

Rental Real Estate Due Diligence Frequently Asked Questions

Won’t my agent or attorney let me know if there are active evictions?

Yes, they should, but only after the purchase and sale. In a listing or term sheet, sellers will disclose only the contract value of rental agreements. After you sign a purchase and sale agreement, you, your agent, or attorney may conduct what are called “estoppels.” These documents can help you determine whether there is active litigation against any renter. It’s better to have information about current litigation earlier in the process. Waiting until after the P&S creates several inefficiencies:

First, you may not know to ask for estoppels at all, closing a deal you don’t want. If you are an inexperienced buyer, make sure your team includes an agent and an attorney who are familiar with tenant estoppels. Some attorneys don’t like estoppels; they obtain the same information informally. In either case, this tool gives you an early indication of what the post P&S process should uncover.

Second, if you learn about litigation only after the P&S, you may back out of the deal. This wastes everyone’s time, including yours, your agent’s, the seller’s, and the seller’s agent’s. Who wants to tour the property, crunch the numbers, have a flurry of calls back and forth to set up a P&S, and take the property off the market only to find out two weeks later that the eviction is a deal-breaker. Better for everyone to learn early!

Third, the original offer is the best time to explain the reasons why you do or do not want a property. This is an added tool to beat out other bidders.

If you want the property because you know how long an eviction takes, because this particular eviction is almost finished, and/or because you are well enough capitalized to see it through, then your offer should indicate this additional strength. You might even be able to offer over asking with this detailed case knowledge. Do the math!

On the other hand, if you don’t want a property at asking because the litigation looks too long or expensive, then you can try adjusting your offer down to reflect the true costs to you after closing. Even in a less-than-asking scenario, which typically looks weaker, a buyer can still indicate strength by demonstrating detailed knowledge and willingness to close even given the litigation.

Sellers gain by picking the buyer who is best informed and least likely to back out of any deal.

What if the property has evictions?

A result here does not indicate whether the case is ongoing or closed. It does not indicate whether the landlord, the renter, or both were failing in their obligations. You must take each matching docket and view each case history at MassCourts to know.

Furthermore, each business is different. If you want to get a good deal on a property, then the more court activity, the better! You can act as the clean-up specialist to do what the current owner cannot or will not: repair the property, enact tougher screening criteria, apply for and wait for subsidies, or whatever may be needed.

If you are an inexperienced landlord, caution: we recommend you obtain lots of training at MassLandlords, and build a very good team including an attorney, before acquiring any asset with ongoing litigation. Or else you should consider passing on the deal.

How many times can I search?

As a member, you can search for your own business or clients as often as you like. You may not search for non-client friends or family. Dues are priced to be affordable, especially for new or prospective landlords. Please have them sign up as a member.

How does matching work?

The text you enter must appear in the records exactly as entered, or there will be no result.

Street number is difficult because of variations. For instance, was “122R Inman” written as “122 R” (with a space)? Was “One Broadway” written was “1 Broadway”? When in doubt, leave the street number blank.

Street address type is also difficult, and is not recommended. For “Henshaw Place,” do not enter “Pl” or “Place.” Enter only “Henshaw” and then visually screen the results to find “Place” as opposed to “Lane,” “Corner” etc.

Why doesn’t MassLandlords show tenant names?

Two reasons:

First, you can already search by tenant name at MassCourts.org.

Second, this search feature is intended to be used by buyers of real estate. The search is focused on all units at an address rather than any given unit or renter.

Can I use this search for tenant screening?

This search is not a tenant screening tool. We do not list tenant names. We only list unit numbers if the courts listed them.

There is one advantage of starting a tenant screening search here. We return results from all court divisions all at once. So you can enter a street address and you may see which courts have had jurisdiction. You can then search those courts at MassCourts.

If you search for an address intending to learn about a particular renter, you will have to verify the time period, the unit number, and the name all match your applicant. This will require looking up at MassCourts.org each docket number returned here. It may be that the applicant you are considering was not listed on a case brought at that address or unit. Furthermore, the courts may seal certain cases (e.g., minors), rendering them unable to be used in tenant screening. MassCourts.org remains the official source of information on litigants.

Why doesn’t MassLandlords link to the individual MassCourts cases?

At time of writing, MassCourts did not allow case-specific inbound links. If you notice this has changed, email hello@masslandlords.net and we can update our software.

Can I use automated tools or software to search?

No, our site is not fast enough to handle front-end requests from automated systems. You will bog down the site for everyone. Utilization is monitored.

We have developers on staff who may be able to open an API for you. Email hello@masslandlords.net to inquire. Costs above and beyond membership dues may apply.