The Expert Podcast

So, let's say that you are going to rent a property, whether it's a commercial property, an apartment, a house, or any type of rental where you're going to be a tenant and you have a landlord. Do you need to perform any advanced investigation? Do you need to do any due diligence on that potential landlord or property owner before you enter into the lease? Remember, that landlord is going to be performing due diligence on you. They're going to do a credit check, you're going to have an application, they may check your employment and your background to make sure that you haven't had a lot of rental evictions. But do you need to do the same thing?

Think about it. It's a relatively equal playing field for renting an apartment. You are going to pay, let's say, it's $2,000 a month rent, times 12 months—that's $24,000. You're promising to pay $24,000, and you're expecting them to give you back $24,000 in value in the form of use of that property. What if they go into foreclosure? What if they don't have the money to maintain the property? What if they don't pay the utilities? There's a lot of things that can go wrong, just as much can go wrong with the landlord as with the tenant. So, how do you protect yourself as a tenant from falling victim to a deficient, defective, or scammer landlord? Well, you can perform some due diligence. You can do some basic things like, first of all, making sure they're the actual owner of the property. You can do a title search on the property, you can do a deed search on the property, you can also run a lien search to make sure the property doesn't have a lot of liens against it.

Because if the property you're going to rent is loaded up with liens, that means the owner—the landlord—doesn't have enough money to pay creditors. How are they going to have enough money to maintain the appearance, the upkeep, the functionality of utilities, or mechanical systems? The other thing you want to do is look at their litigation history, their civil court history. Do they do a lot of evictions? Do they sue people? Are people suing them? If there's a lot of prior tenants that are suing them or that have filed cases in court, that might be an issue. Are there any complaints with the housing board? Have they been put on notice that they're doing something wrong in violating lease terms?

Then, you want to look at the history of the person themselves. Do they have a criminal record? We came across a case where we were doing some due diligence for a client, and we found that the landlord, the property owner, had a long history of sexual assault convictions. Well, this was a building that was a multi-unit building, and the landlord lived in the building. So, would you want to be living in a building with a person that had that kind of criminal background? Or even any kind of criminal background? What if they're a burglar or an assault person? Those are the kinds of things you might want to know about.

Then, what you want to do is look at the history of that building to see if there are any zoning violations or permit violations. If the person is maybe doing electrical work without permits, you may not want to live in a building that has faulty electrical or plumbing or any of the other critical systems.

And last but not least, you want to do more of a general background on that landlord and maybe some of the other tenants to see what their social media looks like, what kind of activities they get involved in, what are the police calls on that property. Are there a lot of complaints about noise? Are there people getting arrested in the building and in the area? Are there bad neighbors? Is the next-door neighbor playing loud music? Is the next-door neighbor a drug dealer? Those are the kinds of things you can perform. Again, you're committing to one, sometimes two, years of your life living in that property, and if you find that there are things that would make living there not convenient either financially or lifestyle, you may want to know that in advance.

Same thing with commercial properties. If you are a business renting a storefront, some office space, or warehouse space, you want to know if there are a lot of complaints. Is there crime in the area? Is the landlord financially sound? Can they afford to pay the taxes? Can they afford to pay the insurance and the upkeep? It's all a matter of understanding that when you're signing a lease, you're not just signing to rent a property. You're committing a certain amount of money over the course of a year or two to pay to that person. So, on a commercial lease, let's say $4,000 a month for a year—that's $50,000. If it's a two-year lease, you're promising to pay $100,000, six figures, to that landlord. You may want to know who you're doing business with before you sign on the dotted line.

For more information about landlord-tenant due diligence or backgrounds, you can click the link below to activeintel.com. We also have live consultation available with a licensed private investigator. You can schedule that right on the website. We'd be glad to talk to you more. Thank you for watching. Remember, you can access live one-on-one personal consultations with a licensed private investigator, a licensed commercial insurance broker, a licensed certified real estate title examiner, and also a certified civil court mediator. So, if you have a need to talk to an expert in any of these fields, or even a licensed building general contractor, you can click the link below to actualhuman.com and arrange a live one-on-one, undivided attention with a licensed expert, where you can ask any questions, get information about your situation, and we'd be glad to help.