Barry is a new landlord. He just purchased his first rental property, a tri-plex that is across town from where he lives. He was very excited to own a piece of investment property (remember that feeling?) and wanted to be a good landlord. He also considered himself very lucky that he bought a property with all three units occupied. Great, no vacancies!

Shortly after closing the escrow on his triplex, Barry got some telephone calls from neighbors in the vicinity of his property. They were complaining about the single lady in Unit A. She has guests late at night almost every night. They felt sure she is a prostitute. Barry contacted the local law enforcement, but was informed that he would need further proof in order for the law enforcement to get involved.

On the first of the month, Barry got checks from the lady in Unit A, and the tenant in Unit C, but no rent from Unit B. When Barry went by to see the tenant in Unit B, and to ask why he had not paid his rent, the neighbor informed him that the police had arrested the tenant from Unit B last week for selling illegal drugs out of his rental unit. This time, Barry contacted his attorney for advice, but was disappointed to find that even though his tenant had been arrested, Barry does not automatically regain possession of the rental unit. Barry wrote his attorney a check for $500 to start the eviction process for non-payment of rent.

The next month, the tenant in Unit C complained that his unit was infested with roaches. Being aware that the implied warranty of habitability requires a landlord to keep a rental unit pest-free, Barry went to inspect the property and arrange for pest control. He found that the tenant had turned the unit into a garbage dump. The tenant had obviously not taken out his trash in weeks; there were piles of newspapers in every corner, and mildew in the bathroom. No wonder he had a roach problem! Barry called for pest control, then went back to his attorney’s office and wrote another check!

Barry has learned a valuable lesson about investing in rental property – not all landlords screen tenants properly! If you are purchasing property that is tenant-occupied, you may want to consider making delivery of the property vacant a condition of the close of escrow. That way, you can select your own tenants using your own criteria. Otherwise, you may inherit someone else’s problems!

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Landlord Liable for Dangerous Tenant

This horror story comes from an actual court case (Rosales v. Stewart) whereby a landlord was held liable for injuries caused to a neighbor by his tenant.  He was held liable because the landlord knew of the tenant’s dangerous propensities and failed to terminate the tenancy after acquiring the knowledge.

In this case, a neighbor’s child, a 10-year old boy, was killed by a gunshot fired by the tenant. The 10-year old boy lived in the house across the street. The landlord knew the tenant liked to discharge firearms periodically in his back yard.  The landlord failed to evict the tenant once he found out that he was conducting dangerous activities on the property. The court found that the landlord was under a duty to third persons to remove dangerous conditions on the property, even if that meant getting rid of the tenant.

The lesson?  A landlord must not allow a tenant who poses a danger to others to remain in residence.  This would apply to a tenant who has a dog that is known to be vicious or has a history of biting people, for example, or a tenant who is known to be a reckless driver, as well as any tenant who poses a danger to others in any way.

Don't ever put an address on keys!

I employ a number of housekeepers in my property management business. The housekeepers are all independent contractors who work for a number of other people as well as working for me. One of the housekeepers had her garage broken into recently. Along with a camera and some cleaning equipment, her box of keys to houses she cleans on a regular basis was taken.

Fortunately for me, none of my keys can be identified, because they all have codes on them as opposed to addresses. The codes match an internal system that the burglar would not be able to figure out. However, one of the other property management companies for whom she manages has complete addresses on all their keys, so they got busy re-keying about 80 houses on the day after the robbery.

The moral of the story: Don’t ever put an address on a key! There are lots of code systems that you can use to identify your keys. Pick one you like and use it!