Tenant want to pay 1 year rent in advance

[fhabib]

Hi all

Seeking your advice..

I am renting my house and a potential tenant is currenly filling the lease application, he informed me that his credit history is not good. He doesn`t want to give it to me and he is offering to pay one year in advance (he is selling his house). He will pay from the proceeds of the sale.

He said he went through divorce and he currenly has a job which i will verify.

your thoughts ..

Reagrds,
fadi

 

[TodorYordanov]

Make sure that he fully understands that you make house inspections ( i.e. furnace, air-conditioning, fire-alarms) every 6-8 weeks. Also tell him that your next door neighbour is a cop and he makes the street very quite and safe for everyone.

 

[gwasser]

QUOTE (fhabib @ Apr 20 2010, 12:18 PM) Hi all

Seeking your advice..

I am renting my house and a potential tenant is currenly filling the lease application, he informed me that his credit history is not good. He doesn`t want to give it to me and he is offering to pay one year in advance (he is selling his house). He will pay from the proceeds of the sale.

He said he went through divorce and he currenly has a job which i will verify.

your thoughts ..

Reagrds,
fadi

Be careful of a scam. Sometimes when things sound too good to be true they usually aren`t.

 

[fhabib]

i know it is weird .. i know grow up will be one of the concerns and i have already told him that i will be inspecting once every month ...

if this is a real tenent, how smart it is not to pull the credit check just because he will pay in advance..

 

[mrshort]

QUOTE (fhabib @ Apr 20 2010, 02:06 PM) i know it is weird .. i know grow up will be one of the concerns and i have already told him that i will be inspecting once every month ...

if this is a real tenent, how smart it is not to pull the credit check just because he will pay in advance..

Tell him you grade on honesty and you don`t expect perfection. Pull the bureau and get him in as long as you have certified funds for the one year and yes do the actual inspections for the entire year, not just the first month. He may pay in advance because he is going to run a grow-op as well. Be careful but make the deal if he is legit, verify that he actually owns the house he is selling by pulling title etc.

 

[invst4profit]

Don`t be a sap.

Do you have business standards regarding how you screen tenants and minimum standards for acceptance. I do and in my book this guy does not qualify.

Are you so desperate to fill your unit that you will compromise your standards and accept anyone.
Or are you operating a social agency to house losers and misfits.

It is foolish to not do a complete search on this guy just because he is flashing cash.
What you find out from his credit search will likely disgust you but even if it does not he is still a proven credit risk or is lying about his credit to distract you from his true faults.
He is likely dishonest, a liar and a very high risk.
Bad credit means he is a risk. A one year bribe sends up red flags on my radar that would simply have me rejecting this candidate outright. I would never give him a second thought.

Why would any LL take a risk with such a applicant. Think what you are considering doing. Taking in a tenant that has a credit score so bad he knows he would normally be rejected by any LL and believes a bribe will entice a LL into lowering there standards.

That bright light you see shining through the fist full of cash is the misery train and you are standing on the tracks for the next year.

 

[DaveRhydderch]

QUOTE (invst4profit @ Apr 20 2010, 04:09 PM) Don`t be a sap.

Do you have business standards regarding how you screen tenants and minimum standards for acceptance. I do and in my book this guy does not qualify.

Are you so desperate to fill your unit that you will compromise your standards and accept anyone.
Or are you operating a social agency to house losers and misfits.

It is foolish to not do a complete search on this guy just because he is flashing cash.
What you find out from his credit search will likely disgust you but even if it does not he is still a proven credit risk or is lying about his credit to distract you from his true faults.
He is likely dishonest, a liar and a very high risk.
Bad credit means he is a risk. A one year bribe sends up red flags on my radar that would simply have me rejecting this candidate outright. I would never give him a second thought.

Why would any LL take a risk with such a applicant. Think what you are considering doing. Taking in a tenant that has a credit score so bad he knows he would normally be rejected by any LL and believes a bribe will entice a LL into lowering there standards.

That bright light you see shining through the fist full of cash is the misery train and you are standing on the tracks for the next year.

I disagree here. The guy could be aware that he won`t get a place unless he does something like this. I`ve heard of people doing this because of bad credit.

I`d ask him about his credit and then run your normal due dilligence. Get a gut feeling for him, and then do what you feel you must. Don`t feel bad for the guy, just examine objectively.

 

[Andrew Benedict]

I`m not 100% sure, but I think In Ontario it is illegal to collect more then one months rent in advance(deposit). Up to 10,000$ fine... Even if the tenant agrees to it.

 

[fhabib]

Thank you all for your replies, appreciate your feedback..

Fadi

 

[TheVancouverMarket]

QUOTE (fhabib @ Apr 21 2010, 12:36 PM) Thank you all for your replies, appreciate your feedback..

Fadi


Careful...sounds dicey. I wouldn`t go near it.

 

[JimWhitelaw]

"That bright light you see shining through the fist full of cash is the misery train and you are standing on the tracks for the next year."

I have nothing to add, I just thought this was an awesome quote. All Abooooard!

 

[fhabib]

Nice quote Jim..

Is it true that it is illegal to collect 1 year. i never heard of the max collection allowed is 10k, how true is that? The tenant is the one who offered, i am not demanding anything ..

If it is truly illegal that would make it clear ..

Fadi

 

[Andrew Benedict]

Hey, you are only allowed to collect a max of one month rent deposit. Even if the tenant offers more.

I wasn`t sure about the 10k fine, some property manager told me that once.

 

[JohnS]

QUOTE (AndrewB12 @ Apr 20 2010, 08:14 PM) I`m not 100% sure, but I think In Ontario it is illegal to collect more then one months rent in advance(deposit). Up to 10,000$ fine... Even if the tenant agrees to it.


I`m not falling one side or the other, here, as to what you should do, but I don`t think this whole "legal" argument is quite true. I just glanced through the Ontario Residential Tenancies Act (http://www.ltb.gov.on.ca/en/Key_Informatio...L02_111677.html) and I couldn`t find anything that said that, depending on how you go about doing it. To my mind, it comes down to how long each rental period is...meaning, not the overall stay, but the amount of time between each rent payment. I couldn`t find anywhere that says that it has to be set in monthly increments. Rather, they talked about rent being paid daily, weekly, monthly, and I think I even saw every 2 months in there. So, as part of your initial agreement, I`d think that legally you should be able to state, at the start, how long each rent cheque was for. This way, it wouldn`t be a deposit...it would just be rent. And if you two agree that it`s for one year, then from my quick glancing, that should be legal.

I guess to get the real legal version, though, it`d be easiest just to call them up and ask if there`s any maximum time set on long a rent check has to cover.

Have a good one!

JohnS

 

[invst4profit]

It is illegal in Ontario to accept more than first and last and unscrupulous tenants know it. Once accepted they turn around and take LLs to the board to get there money back (and fined). They tell the board the LL demanded cash up front before they would accept them as a tenant. Once they get there money back they stop paying rent and live free for 3-6 months while the LL tries to evict.

This is how unqualified tenants get accepted and then eventually get evicted for non payment. They always come across as genuinely nice people with money issues that are in the process of selling a home. Then you quickly discover why they have bad credit when you become there next creditor.
You may be dealing with a con artist or professional tenant and the fact that he says he is selling a house is possibly a cover up so you do not search his previous LLs.

Bad credit means they are a risk and you do not need to take risks. Reject.

 

[DavidLi]

QUOTE (invst4profit @ Apr 22 2010, 07:59 AM) It is illegal in Ontario to accept more than first and last and unscrupulous tenants know it. Once accepted they turn around and take LLs to the board to get there money back (and fined). They tell the board the LL demanded cash up front before they would accept them as a tenant. Once they get there money back they stop paying rent and live free for 3-6 months while the LL tries to evict.

This is how unqualified tenants get accepted and then eventually get evicted for non payment. They always come across as genuinely nice people with money issues that are in the process of selling a home. Then you quickly discover why they have bad credit when you become there next creditor.
You may be dealing with a con artist or professional tenant and the fact that he says he is selling a house is possibly a cover up so you do not search his previous LLs.

Bad credit means they are a risk and you do not need to take risks. Reject.

Hi there,

How about Alberta? Is it allowed legally to collect one year rent when the tenant signs the lease agreement? My tenants are immirgrants from Switzerland and they said rent payment practise in Switzerland follows the different one than in Canada, so they prefer giving me one year rent with money order so that they don`t need to take time to get used to it and save time to do something else. Of course I put some clauses in the lease agreement to give me some right to check my property once a month as long as I give them 24 hours notice in advance. I checked the passports and all the legal documents and employment letter and copied them. Is what i am doing good enough to protect myself? Any comments are greatly appreciated.

David

 

[bizaro86]

QUOTE (DavidLi @ Apr 22 2010, 11:22 AM) Hi there,
so they prefer giving me one year rent with money order so that they don`t need to take time to get used to it and save time to do something else.

Any time I hear about large bills getting paid with money orders from foreign countries, I get suspicious. A very common scam is to pay a large amount of money by money order, and then request a refund for some reason. Only a month or two later does it come out that the money order was fake, and you`re out not only that amount, but whatever you`ve refunded them.

I`m not saying not to do it, but be careful.

Regards,

Michael

 

[vandriani]

QUOTE (bizaro86 @ Apr 22 2010, 12:04 PM) Any time I hear about large bills getting paid with money orders from foreign countries, I get suspicious. A very common scam is to pay a large amount of money by money order, and then request a refund for some reason. Only a month or two later does it come out that the money order was fake, and you`re out not only that amount, but whatever you`ve refunded them.

I`m not saying not to do it, but be careful.

Regards,

Michael

This is what I thought immediate after reading the initial post.
Maybe you could work something out with a bank so that a bank account is created that requires 2 signatures and an automatic predefined transfer monthly.
Deposit the money order there and have the bank immediately inspect the money order.
I have never done this but may be an avenue to investigate

 

[JohnS]

QUOTE (invst4profit @ Apr 22 2010, 09:59 AM) It is illegal in Ontario to accept more than first and last and unscrupulous tenants know it.I`m not arguing with you about if the tenant is trying to pull something here or not, or about the practices of unscrupulous tenants. However, if by first and last you mean only first and last months, then you`re mistaken, I believe, although that is the commonly accepted practice and wisdom. But according to http://www.ltb.gov.on.ca/en/Key_Informatio...L02_111479.html that isn`t the case. It says, ...
Rent Deposits & Other Charges

Can a landlord charge a person a deposit or a fee to rent a unit?
Yes, a landlord can collect a rent deposit if it is requested on or before the day that the landlord and tenant enter into the tenancy agreement. The rent deposit cannot be more than one month`s rent or the rent for one rental period, whichever is less. For example, if rent payments are made weekly, the deposit cannot be more than one week`s rent; if rent payments are made monthly or bi-monthly, the deposit cannot be more than one month`s rent.

The rent deposit must be used for the rent for the last month before the tenancy ends. It cannot be used for anything else, such as to pay for damages....


So, if the person is paying weekly, you can only insist that you get the first week`s and the last week`s. But if the rental period is bi-monthly, meaning once every 2 months, then you can get the first rental period`s cheque (covering 2 months) and then a deposit for only last month`s rent. In total, then you would get 3 months` rent, and not just first and last month`s. So, if they say that you can have rental periods of a day, or a week, or a month, or bi-monthly, then why not yearly? It might be written up in there somewhere else, but in my semi-cursory scanning, I didn`t see it.

Anyway, food for thought. To my mind, in Ontario, it would be legal to get one year`s rent upfront, as the agreed-upon lease would stipulate that the rental period was for one year. In this case, they would only be paying for the rental period, and there would be no deposit. Whether it is advisable is something else entirely.

Have a good one, all!

JohnS

 

[invst4profit]

Although your logic does make some sense it will not fly with the board. There logic says no one rents by the year, resulting in a LL collecting first and last of two years rent, and will rule against any LL trying to collect a years rent in advance.

As a LL in Ontario you must be very careful basing your decisions on logic. It is not how the LTB operates and LLs often pay the price for making logical decisions. It is best not to think but rather to ask the board first, but make sure you call 3 or 4 times because it will take several calls to get the same answer twice.