3 Reasons Why You Can’t Afford to Skip a Tenant Check

When it comes to renting your property, it is important to know who will be residing in your unit. A comprehensive tenant check can provide you with the information you need to make an informed decision about who will occupy your property.

Without a proper tenant screening, it can be easy to run into trouble. Tenants may not pay their rent on time or could refuse to pay for damage they cause in your unit. Unruly tenants can also create disturbances in the neighborhood and become a nuisance to other tenants. In order to avoid such conflicts, it is important to ensure that you evaluate potential tenants.

1. More Efficient Operations

One of the most common reasons that many landlords give for not conducting a tenant check is simply not having the time or resources to do so. Operating a property rental business can be time-consuming. When you need to rent a unit quickly, it is completely natural to want to skip over some steps and simply go with your gut instinct. While this might work out well some of the time, it is a risk and it is a risk that can cost you even more time and money in the long run. Conducting a professional tenant check can assist you in screening your tenants while saving effort and time.

2. Creditworthiness

As a landlord, you have a responsibility to run a tenant check on potential tenants prior to signing a lease agreement. Doing so will eliminate any doubt regarding the tenant’s ability to pay the rent. Additionally, a tenant check will provide some insight into the type of tenant the applicant may be and whether the applicant is suitable for your unit. With a professional tenant check, you do not have to worry about taking time out of your schedule to perform a background check. The tenant screening service will conduct a thorough background check on the applicants for you and then provide any relevant information you might need to know.

3. Criminal Background Checks

If you have encountered a situation where an applicant is referred to you by a friend, family member, or even another tenant, you may feel awkward about running a background check to obtain necessary information regarding the tenant’s background. Failure to run the proper background check can lead to even more problems later on. In order to avoid such problems, it is advisable to have a tenant screening service do the job for you. This will help to remove the burden from your shoulders while still helping you to make an informed decision. As a landlord, you need to know if a tenant may use your property in an illegal manner or even if he or she has ever been convicted for any unlawful activity in the past.

Managing a property rental business comes with numerous responsibilities. Among those responsibilities is ensuring that you rent to reliable, creditworthy tenants. A tenant check using VerticalRent is the best way to do that.

Ten Tips for Tenants

1. Bring your paperwork.
The best way to win over a prospective landlord is to be prepared. To get a competitive edge over other applicants, bring the following when you meet the landlord: a completed rental application; written references from landlords, employers, and colleagues; and a current copy of your credit report.


2. Review the lease.
Carefully review all of the conditions of the tenancy before you sign on the dotted line. Your lease or rental agreement may contain a provision that you find unacceptable — for example, restrictions on guests, pets, design alterations, or running a home business. For help reviewing your lease or rental agreement, see Signing a Lease or Rental Agreement FAQ.

3. Get everything in writing.
To avoid disputes or misunderstandings with your landlord, get everything in writing. Keep copies of any correspondence and follow up an oral agreement with a letter, setting out your understandings. For example, if you ask your landlord to make repairs, put your request in writing and keep a copy for yourself. If the landlord agrees orally, send a letter confirming this.

4. Protect your privacy rights.
Next to disputes over rent or security deposits, one of the most common and emotion-filled misunderstandings arises over the tension between a landlord’s right to enter a rental unit and a tenant’s right to be left alone. If you understand your privacy rights (for example, the amount of notice your landlord must provide before entering), it will be easier to protect them. For more information, see Tenants’ Rights to Privacy and Repairs FAQ.

5. Demand repairs.
Know your rights to live in a habitable rental unit — and don’t give them up. The vast majority of landlords are required to offer their tenants livable premises, including adequate weatherproofing; heat, water, and electricity; and clean, sanitary, and structurally safe premises. If your rental unit is not kept in good repair, you have a number of options, ranging from withholding a portion of the rent, to paying for repairs and deducting the cost from your rent, to calling the building inspector (who may order the landlord to make repairs), to moving out without liability for your future rent. For more information, see the article Renters’ Rights to Minor Repairs.

6. Talk to your landlord.
Keep communication open with your landlord. If there’s a problem — for example, if the landlord is slow to make repairs — talk it over to see if the issue can be resolved short of a nasty legal battle. Resolving Landlord-Tenant Disputes FAQ provides some advice.

7. Purchase renters’ insurance.
Your landlord’s insurance policy will not cover your losses due to theft or damage. Renters’ insurance also covers you if you’re sued by someone who claims to have been injured in your rental due to your carelessness. Renters’ insurance typically costs $350 a year for a $50,000 policy that covers loss due to theft or damage caused by other people or natural disasters; if you don’t need that much coverage, there are cheaper policies. For more information about renters’ insurance, see the article Renters: Protect Yourself From Crime.

 8. Protect your security deposit.
To protect yourself and avoid any misunderstandings, make sure your lease or rental agreement is clear on the use and refund of security deposits, including allowable deductions. When you move in, do a walk-through with the landlord to record existing damage to the premises on a move-in statement or checklist. For more information, see the article Protect Your Security Deposit When You Move In.

9. Protect your safety.
Learn whether your building and neighborhood are safe, and what you can expect your landlord to do about it if they aren’t. Get copies of any state or local laws that require safety devices such as deadbolts and window locks, check out the property’s vulnerability to intrusion by a criminal, and learn whether criminal incidents have already occurred on the property or nearby. If a crime is highly likely, your landlord may be obligated to take some steps to protect you. For more information on this subject, see the article Renters: Protect Yourself From Crime.

10. Deal with an eviction properly.

Know when to fight an eviction notice — and when to move. If you feel the landlord is clearly is the wrong (for example, you haven’t received proper notice, the premises are uninhabitable), you may want to fight the eviction. But unless you have the law and provable facts on your side, fighting an eviction notice can be short-sighted. If you lose an eviction lawsuit, you may end up hundreds (even thousands) of dollars in debt, which will damage your credit rating and your ability to easily rent from future landlords. For more information on eviction, see the Renters’ & Tenants’ Rights area of Nolo’s website.

Ethics Code for HOA Board Members

The Nature of Ethical Dilemmas

Ethical issues occur in everyday administration, management and governance of any homeowners association. In order to navigate these complex ethical dilemmas, HOA board members first need to be able to identify problems of ethics before they will be able to implement an ethical value system.

Many ethical dilemmas faced by board members on a daily basis are not clear-cut, often having no right or wrong answers readily defined. How your homeowners association deals with these ethical dilemmas says a lot about the character and integrity of the board.

Navigating the Grey Area

Ethical dilemmas often do not black or white answer, falling instead into a grey area that can be argued for or against in multiple ways.

According to Kenneth Blanchard and Norman Peale’s The Power of Ethical Management, HOA board members should ask themselves three questions when faced with an ethical dilemma:

  1. Is it legal? Study the California Civil Code and your HOA’s governing documents to determine if any will be violated by engaging in the action.
  2. Is it balanced? Consider the effects of the action on all parties involved, both in the short and long-term outcome to determine if the action is biased for those directly and indirectly involved.
  3. Is it right? Use your own moral guidelines to judge if an action is ethical. If you feel guilty, ashamed, or are generally unsure about an action, it’s best to refrain from committing it.

Most of the time, when dealing with grey area decisions, answering just one of these questions is not enough. Take the time to reflect on all three questions, and the most ethical course of action will become clear.

Fiduciary Duty and Board Member Liability

To maintain protection from liability as volunteer directors, HOA board members have to fulfill their fiduciary duty. According to Corporations Code Section 7231, this means board members must act in good faith, in the best interests of the association, and using such care, including reasonable inquiry, as an ordinarily prudent person would under similar circumstances.

To properly protect the actions of each member, the board, and the homeowners association, all board members should research and understand their fiduciary duties to ensure that they are acting ethically (especially a new board member with no prior director experience).

The Practice of Ethics

Practicing ethics involves integrity and personal responsibility. For a HOA board member, this involves knowing, understanding, and doing: knowing the rules of governance for the HOA, understanding the difference between right and wrong behavior or conduct, and always doing what is right.

Ethics of Board Duty and Responsibility

The HOA board should be focused on the main purposes of the association:

  • Protecting and preserving the HOA’s common areas and other real, personal, and intangible assets.
  • Managing the HOA’s finances, which includes statutory budgeting and disclosure requirements, reserve funds, and assessment collections.
  • Promoting the homeowners’ unimpeded and safe use and enjoyment of the HOA’s common areas, exclusive use common areas and separate interests.
  • Enforcing the association’s governing documents

Purposefully choosing to not commit an action for the best interests of the association can be both ethical and beneficial for a homeowners association. However, sometimes the act of not doing something can breach of a board member’s ethical duties. When inaction negatively affects the well-being of the HOA, board members cannot turn a blind-eye. No decision is a decision.

Board of Director Code of Ethics

Ethics are the moral compass that guides the performance of a director’s duties and governance of a homeowners association. Creating a functioning compass means establishing a standard for your HOA to follow when conducting its business. These standards are established, in part, in the California Corporations and Civil Codes. Boards should adopt a code of ethics or at a minimum a code of conduct, to establish a standard for how the board conducts itself and the business decisions of the association.

Checklist for HOA Board Member Code of Ethics
The code…
Defines the value system of the HOA and how directors must behave
Clarifies ethical standards regarding loyalty, fidelity, integrity, honesty, confidentiality and competency
Establishes ethical standards that enable board members to avoid potential grey areas
Incorporates preferred business practices, appropriate legal requirements, and the expected code of conduct for board members

An ethics code or conduct code can be an invaluable tool to ensure that board members are aware of the “line in the sand” when it comes to grey areas and turn an otherwise confusing situation into a clear decision. A good practice is to distribute your board member code of ethics to the homeowners as well as the board. This will make the board’s actions accountable to each other and the homeowners, creating a transparency that’s a win-win for directors and owners.

Check out our sample Board of Director Code of Ethics

Ethical Behavior in HOA Interactions

Ethical behavior is based on observations and perceptions – board members need to “walk the walk” as well as “talk the talk.”

In the homeowners association context, ethics are involved in approximately six types of relationships and interactions:

  1. Between individual board members
  2. Between the board and the association
  3. Between the board and homeowners/residents
  4. Between the board and management
  5. Between the board and association experts and consultants (i.e. association legal counsel, financial and tax advisors, reserve study providers, etc.)
  6. Between the board and vendors

Issuing platitudes as to what is and what isn’t ethical behavior is not sufficient for an HOA to be ethical. Board members should be held accountable for their actions, and their peers should demand that they implement ethical behavior.

The Business Judgment Rule

The Business Judgment Rule(link is external) is a presumption that directors’ decisions are based on sound business judgment, which can be rebutted only by a factual showing of fraud, bad faith or gross overreaching. Acting in accordance with the Business Judgment Rule is an indication that a board member is likely acting ethically. In the California Supreme Court case, Lamden v. La Jolla Shores (link is external)Clubdominium Homeowners Association, the effects of the Business Judgment Rule can be seen:

The court held that it will defer to a board’s authority and presumed expertise in discretionary decisions regarding the maintenance and repair of a common interest development, provided the board’s decisions are: (1) Based upon reasonable investigation; (2) Made in good faith and with regard to the best interest of the association; and (3) Within the scope of authority given to the board under the relevant statutes and CC&Rs. Assuming that a board was found to have acted in accordance with these factors, then the board would seemingly have committed no wrongs in performing whatever action was being questioned.

When acting upon/after reasonable investigation and inquiry, a director should…

  • Independently investigate and evaluate facts particular to a situation before acting.
  • Consult with experts or consultants (i.e. legal counsel, financial manager, reserve study provider, etc.) when it is prudent to do so.
  • Rely on information, opinions, reports or statements prepared by experts and consultants.

When acting in good faith and in the best interests of the association, directors…

  • Cannot make decisions that benefit their own self-interests.
  • Must make decisions that do not negatively affect the association financially, legally or otherwise.
  • Cannot act in the best interests of a particular group or minority interest of an association.

Identifying Unethical HOA Members

Ethical standards imposed on and expected of a homeowners association are only as good as their adherence by members.

Unethical Board Members

Unethical board members not acting in the best interest of the association are:

  • Not enforcing the association’s governing documents (including not enforcing delinquent assessment collection policies).
  • Acting in a disparate or discriminatory manner towards certain homeowners.
  • Advancing self-serving interests to further their own agenda (which would be a conflict of interest).
  • Improper corporate governance (i.e. not following the requirements of the association’s governing documents or statutory requirements).
  • Not following the Business Judgment Rule.
  • Violating the association’s governing documents. Depending on governing document authority, this can lead to declaring the seat of a director vacant.
  • Breaking the attorney-client privilege and/or distributing confidential corporate/business records.
  • Embezzlement – “Borrowing” permanently or temporarily from the association’s funds.

How to solve the problem: Educate board members of the above symptoms on their fiduciary duties, statutorily required standard of care, and code of ethics adopted by the board. Peer pressure can be an effective tool to curb unethical behavior – other board members should confront the offending board member to address ethical issues.

Unethical Homeowners

Unethical homeowners placing the association at risk are:

  • Harassing HOA employees, independent contractors and vendors. The HOA is in an employer-employee relationship, and harassment can create a hostile workplace while exposing the association to potential legal liability.
  • Damaging to the HOA’s common area.
  • Continuously violating the HOA’s governing documents.
  • Failing to pay assessments.

How to solve the problem: Enforce the HOA’s governing documents and discipline when appropriate.

Ethics are yours to adopt – if you don’t do it for yourself and your board, no one will.

– See more at: http://www.echo-ca.org/article/ethics-code-hoa-board-members#sthash.Bnf6s7G2.dpuf