Utilities/Maintenance

Should the landlord or the tenant be responsible for paying utilities in their rental property? Utilities make a rental property habitable. Tenants need running water, heat, electricity, and trash collection. Landlords are required by law to provide tenants access to utilities. This decision will impact the rent price and how many bills are being paid.

Here is a list of rental property utilities/maintenance to consider: 

  • Electricity 
  • Natural Gas 
  • Trash Removal 
  • Water/Sewer 
  • Internet/Cable 
  • Lawn Care/Snow Removal 

No matter who is delegated to pay the utilities, it’s important that it’s clearly defined in the lease.

Smoking Policy

Property owners have the right to ban certain behaviors on their property to preserve its value and to protect tenants. The U.S Department of Housing and Urban Development, and the Minnesota Attorney General’s Office have upheld the right of landlords to include “no use of tobacco” clauses in their leases. 

Health concerns about secondhand smoke aside, landlords often prohibit smoking in an effort to limit fire hazards on the property, reduce fire insurance premiums, and avoid stains and odors.

Pet Policy/Service Animals

The federal Fair Housing Act prohibits discrimination in housing accommodations against those who use service animals. A landlord must allow service animals regardless of size or breed.

Landlords must allow tenants and their guests to take service animals to any place that tenants and guests are normally allowed to go. 

A landlord may not charge a pet deposit for a service animal or emotional support animal that has been permitted by reasonable accommodation, but may require a person to pay for damage caused by the animal, provided that all tenants are required to pay for damages they cause.

Unlawful Detainers/Evictions

An eviction action (formerly known as Unlawful Detainer) is a court action in which a landlord asks to recover possession of the apartment or rental home from a tenant. A landlord must follow the proper legal process, and may not forcibly remove the tenant, exclude the tenant from entering the building or rental unit, change the locks, or shut off the utilities. 

3 most common reasons for filing an eviction: 

  1. Nonpayment of rent 
  2. Lease violations 
  3. Tenant remains in the apartment or rental home after getting a notice to vacate (holding over)

Security Deposit

Landlords are entitled to collect security deposits from tenants before they move in, to protect against any unpaid rent or property damage that’s left behind after move-out. It’s important to remember that the security deposit, while being held by the landlord, is still the tenant’s money and cannot be spent during the course of the lease. 

Security deposit details and descriptions:

Limit – No Limit 

Storing the deposit – Must Be Placed in Interest Bearing Account 

Collecting the deposit – Must Notify Tenant of Health or Safety Violations or Pending Foreclosure

Written Notice – Must Provide Receipt if Tenant Pays Cash 

Keeping the deposit – Unpaid Rent, Damages, Breaches to Lease 

Returning the deposit – Within Three Weeks of Tenant Move-Out with earned interest

Sale of the property – Must Return Deposits to Tenants or Transfer to New Owner

Occupancy Limit

The federal Fair Housing Act (FHA) prohibits discrimination by direct providers of housing based on six key characteristics, one of which is familial status, meaning the presence of a child under the age of 18. The law is designed to protect families with children, as well as anyone who has legal custody or written permission to have a minor child living with him or her. 

Fair housing law permits communities to set reasonable occupancy standards, but it’s unlawful for occupancy standards to exclude families with children or to unreasonably limit the ability of families with children to obtain housing.

Criminal History

A background check can turn up any history of criminal activity. Landlords can deny tenants who have been convicted of a crime that could endanger the safety of other tenants including no felonies or violence or drug related convictions within the last 10 years. 

What to consider?

Felony: a crime for which a sentence of imprisonment for more than one year may be imposed. Gross Misdemeanors: carry a maximum sentence of one year’s jail time and a $3,000 fine Misdemeanors: carry a maximum sentence of 90 days’ jail time and a $1,000 fine, and Petty Misdemeanors: are fine-only offenses with a maximum $300 fine. 

Credit Score

What is a credit score? 

A credit score is a number that is generated by the 3 credit bureaus based on payment history and other information found in your credit report. The credit score will fall in a range from 300 (lowest) up to 850 (highest) and is meant to be a single number that summarizes an individual’s credit history. 

 

How credit scores are created? 

  • Payment history 
  • Credit usage 
  • Credit history 
  • Credit distribution

 

What is a “good” credit score for tenants? 

Anyone with a credit score over 670 or higher is already at or above the national average for Americans. So, if a renter has a score of 670 or higher, that’s a very good credit score for most rentals. Most landlords are looking for a score somewhere between 600 – 650 since renters don’t have the credit history of making mortgage payments to boost their credit score. 

 

Insufficient credit on a report? 

More often than not, a designation of Insufficient Credit means a tenant does not have enough tradelines or credit-impacting accounts. This is often seen with students or younger people, older people with no credit activity in years (family is taking care of them), and a spouse who has nothing in their name. In these situations, it will be up to the landlord to determine whether or not they can prove the tenant’s financial risk through other means. 

 

Credit score break down:

Poor: 300 – 579 – Decline prospective tenant/ keep looking for tenants 

Fair: 580 – 669 – Discuss specific issues with tenant on why certain things happened/ possibly require a cosigner 

Good: 670 – 739 – Verify income and employment/ call tenants previous landlords 

Very Good: 740 – 799 – Verify income and employment/ call tenants previous landlords Exceptional: 800 – 850 – verify Verify income and employment/ call tenants previous landlords

Employment Verification

To verify the employment and work stability of a prospective tenant, the following is considered: 

  1. Works where they claim to work
  2. Makes the amount they claim to make 
  3. That they are employed for the foreseeable future

Landlords can send a written notice to the tenant’s place of employment requesting this information.

Income Verification

A tenant must have a verifiable source of income to meet their monthly rent payments. This is verified by providing W-2’s, copies of pay stubs or copies of bank statements. 

Sufficient Income Level 

A Rent-to-Income ratio determines the monthly or annual gross income a tenant must earn to be able to afford rent each month. The standard multiplier is 3. That means that the applicant should make at least three times his or her gross monthly income to cover rental expenses. The math would look like this: Monthly Rent X 3 = Minimum monthly rental income