As a property manager, you took an ex-tenant to court for non-payment and were awarded a victory and now you want payment. This also may be a requirement due to the contract agreement with the owner of the property. But, despite your faithful attempts at collections of this judgment you have been unable to do so and now your only recourse is to forgive the debt which is passed on to the owner.
Here is a thought to help collect and soothe the owner at the same time. The Internal Revenue Service treats these uncollected funds as debt forgiveness and you can send a 1099-MISC IRS form to the renter for the amount of the uncollected rent. Property Management Companies are required to mail a copy of the amount of funds past due to the last known address (which may be your rental address) prior to January 31st, then send a notice to the IRS and let them take action. It doesn't matter if the notice is received as long as one is mailed. Mail this certified mail and retain the receipt of mailing for your records. On April 15th, the IRS will match up the 1099-MISC tax form to the renter’s taxes and ask for more tax money. They technically received a month's free rent and will be required to pay the IRS taxes on the unreported money. This money is regarded as income to them.
The negative (sort of) aspect of this scenario is that after sending the notice to the IRS you no longer have any legal recourse to collect the rent and neither does the owner. In many instances people may not want the IRS to know about the unpaid judgment especially if they are collecting public assistance making your chance of collecting much higher.
Notify the tenant you will be mailing a 1099-MISC to the IRS within ten days if payment is not received. Consider adding this as a company policy to the lease agreement. This inspires many renters to make their payments to avoid such notice.
For additional information on this and other renting articles, please visit our web site at http://www.mrpmrentals.com/
Mountain Ridge Property Management
Your Property Management Source
Monday, November 23, 2009
Saturday, November 14, 2009
How to Screen a Prospective Tenant
When accepting a rental applications take some simple steps in tenant screening to save time, money and agony. Be sure the following information is collected on your rental application.
1. References: Require your rental application to ask for references both personal and rental references for at a minimum of the past three years. Checking this information can easily provide information into the type of person you are dealing with.
2. Income and Employment: The tenant’s monthly income should be three times the monthly rent Meaning: If the rent is $500 per month, their income should be $1500 per month take home. Verify their income is a permanent source and not part-time or temporary. If there is a roommate situation property management agents require each tenant to qualify financially with their own income. Management companies have varying policies for income qualifications and should be clearly spelled out in your contract agreement.
3. Evictions: Each tenant should have a clean record. If there is an unacceptable record refuse to rent to them. Period. Make a firm policy and apply it to all tenants without question.
4. Criminal Records: Always check a tenant's criminal record. If there is an unacceptable record refuse to rent to the. Period. Make a firm policy and apply it to all tenants without question.
5. Identification: Have each tenant produce a photo ID such as a valid driver’s license and a valid credit card or preferably their social security card. Obtain a clear photocopy of each piece of ID for your records. Why? As the property manager there is a genuine need to obtain a photo of the person(s)occupying your property. Without a photo ID you may not recognize the person(s) who initially applied to rent your property and if there comes a time for say an eviction, you will need to know what each tenant looks like to have them both legally and easily served or to locate them in a courtroom setting.
6. Collections: Check credit reports for bad payment history, tax liens, collections, derogatory or disparaging remarks, or type and number of late payments. Ideally, the credit report should be clean with no late payments and no collections. Medical issues are also listed but may or may not have any real influence on their true credit history.
7. Verification: Verify that each person moving into your rental is the same person you received an application, credit report and were screened for occupancy. Refer to the identification material for additional verification.
8. Sex Offender: Each applicant should be checked out on the states list as a sex offender or predator.
Each adult that will occupy the property must sign the lease agreement. This should be done together and before anyone is given permission to occupy the property.
For additional information on this and other renting articles, please visit our web site at http://www.mrpmrentals.com/
Mountain Ridge Property Management
Your Property Management Source
1. References: Require your rental application to ask for references both personal and rental references for at a minimum of the past three years. Checking this information can easily provide information into the type of person you are dealing with.
2. Income and Employment: The tenant’s monthly income should be three times the monthly rent Meaning: If the rent is $500 per month, their income should be $1500 per month take home. Verify their income is a permanent source and not part-time or temporary. If there is a roommate situation property management agents require each tenant to qualify financially with their own income. Management companies have varying policies for income qualifications and should be clearly spelled out in your contract agreement.
3. Evictions: Each tenant should have a clean record. If there is an unacceptable record refuse to rent to them. Period. Make a firm policy and apply it to all tenants without question.
4. Criminal Records: Always check a tenant's criminal record. If there is an unacceptable record refuse to rent to the. Period. Make a firm policy and apply it to all tenants without question.
5. Identification: Have each tenant produce a photo ID such as a valid driver’s license and a valid credit card or preferably their social security card. Obtain a clear photocopy of each piece of ID for your records. Why? As the property manager there is a genuine need to obtain a photo of the person(s)occupying your property. Without a photo ID you may not recognize the person(s) who initially applied to rent your property and if there comes a time for say an eviction, you will need to know what each tenant looks like to have them both legally and easily served or to locate them in a courtroom setting.
6. Collections: Check credit reports for bad payment history, tax liens, collections, derogatory or disparaging remarks, or type and number of late payments. Ideally, the credit report should be clean with no late payments and no collections. Medical issues are also listed but may or may not have any real influence on their true credit history.
7. Verification: Verify that each person moving into your rental is the same person you received an application, credit report and were screened for occupancy. Refer to the identification material for additional verification.
8. Sex Offender: Each applicant should be checked out on the states list as a sex offender or predator.
Each adult that will occupy the property must sign the lease agreement. This should be done together and before anyone is given permission to occupy the property.
For additional information on this and other renting articles, please visit our web site at http://www.mrpmrentals.com/
Mountain Ridge Property Management
Your Property Management Source
Tuesday, November 10, 2009
Tenant Writes Bad Check
As a property manager or owner you receive rent checks every month and for the most part have had no problems. Until now, this month you receive a bounced check. You find yourself squirming with fear and agitation at the thought of a bounced rent check then having to turn to the renter in an attempt to recoup the funds.
Your first step should be in completing adequate tenant screening to ensure this is not a habit, but one of an error of kinds. Mistakes do happen. Secondly, add to your lease agreement a NSF fee for any returned bad checks and for all rents and fees from that time on must be paid with guaranteed funds cash or money order. We recommend around $25.00 NSF fee in addition, to late fees or other bank fees. The bank will then charge their NSF in addition to the cost of the check.
Okay, you have your bases covered now what?
First, contact the bank asking for the check to be run through again. Most banks run non-sufficient fund checks twice but it doesn’t hurt to ask for clarification. Then, contact the renter as this could be a simple error and payment is a phone call away. Also, collect this rent in cash and demand the NSF fee stated in your lease be included. Don’t back down, enforce your lease.
If the funds are still not in the account and your tenant isn’t cooperating, take the check to the bank of the renter. Present the check to the cashier asking how much they can cash the check for. Suppose the renter wrote the check for $600 but the account has only $400. You can request the $400 for payment of the check. Banks aren’t wild about doing this, but will if you insist on payment. There is a risk in doing this, as the renter may add more funds to the account and you will miss collecting them and receiving payment in this manner is perceived as payment in full for the check.
Another way to collect funds is called “Submitting a Collection Item”. Tellers may not be aware of this process so you will need to speak to the bank manager. There is a fee for this service usually around $15.00. The process is done like this. When you hold a check for collection, much like the process the banks do, you are given top priority for any funds that may be added to the account.
Suppose, just enough funds are added to the account to cover a check for a smaller amount, the bank will not pay that check but will hold all the funds in the account until the full amount of your check is collected and you are paid. Any remaining funds will then be applied to subsequent checks. Many banks notify the account holder their account is being held for collection, but most frequently, renters don’t know until after the fact, and after subsequent checks have bounced.
For additional information on this and other renting articles please visit our web site at http://www.mrpmrentals.com/
Mountain Ridge Property Management
Your Property Management Source
Your first step should be in completing adequate tenant screening to ensure this is not a habit, but one of an error of kinds. Mistakes do happen. Secondly, add to your lease agreement a NSF fee for any returned bad checks and for all rents and fees from that time on must be paid with guaranteed funds cash or money order. We recommend around $25.00 NSF fee in addition, to late fees or other bank fees. The bank will then charge their NSF in addition to the cost of the check.
Okay, you have your bases covered now what?
First, contact the bank asking for the check to be run through again. Most banks run non-sufficient fund checks twice but it doesn’t hurt to ask for clarification. Then, contact the renter as this could be a simple error and payment is a phone call away. Also, collect this rent in cash and demand the NSF fee stated in your lease be included. Don’t back down, enforce your lease.
If the funds are still not in the account and your tenant isn’t cooperating, take the check to the bank of the renter. Present the check to the cashier asking how much they can cash the check for. Suppose the renter wrote the check for $600 but the account has only $400. You can request the $400 for payment of the check. Banks aren’t wild about doing this, but will if you insist on payment. There is a risk in doing this, as the renter may add more funds to the account and you will miss collecting them and receiving payment in this manner is perceived as payment in full for the check.
Another way to collect funds is called “Submitting a Collection Item”. Tellers may not be aware of this process so you will need to speak to the bank manager. There is a fee for this service usually around $15.00. The process is done like this. When you hold a check for collection, much like the process the banks do, you are given top priority for any funds that may be added to the account.
Suppose, just enough funds are added to the account to cover a check for a smaller amount, the bank will not pay that check but will hold all the funds in the account until the full amount of your check is collected and you are paid. Any remaining funds will then be applied to subsequent checks. Many banks notify the account holder their account is being held for collection, but most frequently, renters don’t know until after the fact, and after subsequent checks have bounced.
For additional information on this and other renting articles please visit our web site at http://www.mrpmrentals.com/
Mountain Ridge Property Management
Your Property Management Source
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