"Accidental Landlord" - an accident waiting to happen?

It has become more commonplace for a private homeowner to unexpectedly find himself (gender neutral for this writer's purpose) playing the role of landlord as a result of the difficult selling environment in real estate. This happens because the property owner needs to move on to a new job, or some such compelling reason. When the home sits empty, unable to find a buyer, the "Plan B" is dusted off and presented to the owner: RENT IT! Get some revenue stream started with the property!

And so this home that perhaps was on the market for SALE, now becomes a home on the market for RENT. There are two sides to a lease arrangement: the landlord's side, and the tenant's side. Each has its own set of challenges, thrills, and every other emotion in between. Most Realtors will tell you that they are handling many more home rental listings over the past 3-5 years than they ever imagined they would. I include myself in that statement. I have represented both landlords and tenants.

I want to keep my posts brief, so this one will put forward one caveat for would-be tenants who are searching for an appropriate rental property. Do whatever you can to feel confident that your landlord is not having mortgage difficulties on the property that you intend to lease. Or at least be prepared to move with perhaps only 30 days notice once you do move into the property. Unwittingly, tenants can sign a year lease, move in, and unceremoniously be forced to vacate in the first month because the owner is in pre-foreclosure and the bank has earned the right to take the property back. This is exactly what happened to tenants in a downtown Evanston condo last year, folks who were referred to me to rescue them and find an immediate replacement rental in a matter of days. Yes, I helped them find a wonderful new rental home. The agent who rented the condo to them had some unpleasant consequences, I was told. My office sales manager has repeatedly warned us agents to be diligent when working with rental clients (or landlords); "Check the status of that property!" We Realtors are charged with taking every precaution to protect our clients' interests, and that includes not getting kicked out of a rental property before the term of the lease ends.

When looking for a rental home, you must do your homework on the owner of property, regarding the mortgage status. There are websites online that promise to report on a landlord's mortgage status, for a subscription fee. On the other hand, you can determine that information for yourself, free of charge, if you are looking in a community that has public website access to county records, such as the Recorder of Deeds and the local Circuit Court. Foreclosure is a legal process, and foreclosure lawsuits can be tracked online here in Cook County.  Or, you can put that task in the hands of your favorite Realtor, who will take care to show you only properties that are not tainted by the threat of foreclosure.

This is just one more outcome of the whole housing/mortgage crisis in America, but at least you can manage it by taking precautions to protect yourself.

Tenants, Do Your Homework!

I just inherited a client who is living a nightmare, through no fault of his own. His employer has relocated him to my community of coverage from out of state. The client leased a nice condo unit in a popular building. That was three weeks ago. This client is now being forced to move out. Want to guess why?

Yep, the condo owner is in foreclosure, and the unit is scheduled to be auctioned at sheriff's sale very soon.

Yes, I will be showing this client a rental condo or two, in addition to some rental apartments, but it was a moment of agent-client bonding when I sat at the computer with this client and checked the online recorder of deeds file for those condos we plan to visit.

Rental clients are a much larger percentage of our business in my broker's company of late, and the newest "wrinkle" in helping a tenant on the hunt for a new home is verifying the clear title of the condo for rent. And not just a search for foreclosure problems is needed; a condo owner can be putting his tenant at risk if the owner has not been paying the condo assessments as well. In this state (Illinois), the condo association has the ability to seize the condo unit for nonpayment of assessments, and arrange for its own tenant.

Just thought I should pass this along as a "heads up" to my colleagues out there across the country, as well as folks who are searching for a home to rent. Bad things CAN happen to good people (the tenant), but we can minimize the risk by taking a moment to verify a fact or two.