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Tenant Scams: Everything Landlords Need to Know

Tenant Scams: Everything Landlords Need to Know
March 14, 2023

Tenant scams are fraudulent activities perpetrated by individuals or groups who pose as tenants in order to deceive landlords, property managers, or real estate agents. These scams can take various forms, but they all involve some type of dishonesty aimed at obtaining housing or money from property owners under false pretenses. To avoid falling victim to tenant scams, landlords and property managers should take steps to verify tenants' identities, income, and rental history. Here we will discuss everything landlords need to know about common tenant scams, and how to best avoid such situations.


Most common tenant scams in the United States


Fake rental listings

 

Scammers create fake rental listings for properties that are not actually available for rent. They may use photos and descriptions of real properties to lure in potential renters and collect application fees or security deposits before disappearing.


Rent skimming

 

Rent skimming occurs when a tenant collects rent from subtenants but fails to pay the landlord. This can result in financial losses for the landlord and legal issues for the subtenants.


Non-payment of rent

 

Some tenants may move into a property with no intention of paying rent. This can be difficult for landlords to address, as eviction proceedings can be time-consuming and costly.


Identity theft

 

Scammers may use stolen personal information to apply for rental properties or open utility accounts in someone else's name. This can leave the victim with unpaid bills and a damaged credit score.

 

RENTAL SCAM text written on a chalk board


Fake rental references

Scammers may provide fake rental references to make themselves appear as reliable tenants. Landlords can protect themselves by verifying rental references with previous landlords or property managers.


False maintenance requests

 

Scammers may make false maintenance requests in order to gain access to a property and steal valuables or sensitive information. Landlords should verify maintenance requests with tenants before sending anyone to the property.


Security deposit scams

 

Some scammers may ask for a large security deposit before renting a property, then disappear with the money. Landlords should require a reasonable security deposit and should always provide a receipt.


Rent overpayment

 

Scammers may send a fraudulent check or money order for more than the amount of rent owed, then ask the landlord to return the difference. The original payment will bounce, leaving the landlord out of pocket. Landlords should verify payments before returning any money to tenants.

 

Stressed young couple sitting at table, looking at laptop screen


How to avoid tenant scams


1. Verify tenant identity: It's important to verify the identity of prospective tenants to ensure they are who they say they are. Ask for a government-issued photo ID and verify that the name matches the one on the rental application. This can help protect you from identity theft scams.


2. Conduct background and credit checks: Running a background check and credit check on prospective tenants can help you assess their creditworthiness, rental history, and behavior. This can help you identify any red flags that might indicate a scam or potential problem tenant.


3. Check references: Contacting previous landlords or property managers can help you verify a prospective tenant's rental history, behavior, and reliability. Make sure to ask for references and follow up on them to ensure you're getting an accurate picture of the tenant.


4. Beware of upfront payments: Be cautious of tenants who offer to pay rent upfront with a check or money order, especially if it's for an amount that's significantly higher than the monthly rent. Verify the funds before handing over the keys to the property to avoid falling victim to rent overpayment scams.


5. Keep a record of all communication: Keeping a record of all communication with tenants can help protect you in case of any disputes or scams. Make sure to save emails, texts, and phone calls, and keep a detailed record of any agreements or conversations you have with tenants.


6. Be cautious of unsolicited inquiries: Be wary of unsolicited inquiries from prospective tenants who seem too eager to rent without asking any questions or providing sufficient documentation. This can be a sign of a scam or a potential problem tenant.


7. Educate yourself: Learning about the common types of tenant scams can help you stay vigilant and protect yourself from potential scams. Keep up to date with the latest trends in tenant scams and stay informed on how to protect yourself and your property.


8. Work with a reputable property management company: Working with a reputable property management company can help you screen tenants, manage rental payments, and handle any disputes that may arise. A good property management company can help you avoid tenant scams and protect your property investment.

 

Real estate fraud. Gavel and keys


Background check for tenants: a must for every landlord


Background checks are an essential part of the tenant screening process. They help landlords and property managers evaluate a prospective tenant's rental history, employment history, creditworthiness, criminal record, and other important factors that can impact their ability to pay rent and be a responsible tenant. Here are some common elements of background checks for tenants:


1. Credit check: A credit check can provide insight into a prospective tenant's creditworthiness, including their credit score, payment history, outstanding debts, and financial obligations. This can help landlords and property managers assess the tenant's ability to pay rent and manage their finances responsibly.


2. Criminal background check: A criminal background check can reveal any criminal history or convictions of a prospective tenant. This can help landlords and property managers identify any potential safety risks or concerns.


3. Rental history check: A rental history check involves contacting the previous landlords or property managers of a prospective tenant to verify their rental history, behavior, and reliability. This can help landlords and property managers identify any red flags or potential issues with the tenant.


4. Employment verification: An employment verification involves contacting a prospective tenant's employer to verify their employment status and income. This can help landlords and property managers assess the tenant's ability to pay rent and manage their finances responsibly.


5. Identity verification: Identity verification involves confirming a prospective tenant's identity by checking their government-issued ID or other official documents. This can help landlords and property managers prevent identity theft scams and protect their property.


It's important to note that background checks for tenants must comply with federal and state laws, including the Fair Credit Reporting Act (FCRA) and state-specific tenant screening laws. Landlords and property managers should also have a written screening policy in place and apply the screening criteria consistently to avoid any potential discrimination claims.

 

LANDLORD-TENANT LAW book's title


What to do if you got scammed by tenants


If you have fallen victim to a tenant scam in America, there are a few steps you can take:


1. Contact the authorities: It's important to report the scam to the local police or sheriff's department as soon as possible. They may be able to help you recover any money or property lost in the scam, and can also investigate the situation to prevent others from falling victim to the same scam.


2. Notify the landlord or property management company: If the scam involved someone pretending to be a landlord or property manager, it's important to let the real landlord or property management company know what has happened. They may be able to provide you with assistance or advice, and can also take steps to protect other tenants from the same scam.


3. Check your credit report: If you provided the scammer with personal information such as your Social Security number or date of birth, they may be able to use this information to open unauthorized accounts or make unauthorized charges. Check your credit report regularly to ensure that there are no unfamiliar accounts or charges.


4. Contact your bank or credit card company: If you provided the scammer with any financial information, such as your bank account or credit card number, contact your bank or credit card company immediately. They can help you freeze your accounts or issue new credit cards to prevent further fraud.


5. Seek legal advice: If you have lost money or property in the scam, or if you are facing legal action as a result of the scam, it may be helpful to consult with a lawyer who specializes in landlord-tenant law. They can help you understand your legal rights and options, and may be able to assist you in recovering your losses.


Remember to be cautious when dealing with landlords or property managers, and always verify their identity and legitimacy before providing any personal or financial information. Scammers often use tactics such as pressure or urgency to try to get you to act quickly, so take the time to research and verify before making any payments or signing any contracts.

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