Every downturn creates desperation among those hardest hit, and people in trouble are targets for fraud. The foreclosure crisis has converted many homeowners to tenants, causing higher demand and rising rents. But don’t let the tight market stop you from thwarting scammers. If a rental seems dramatically underpriced, if a landlord is willing to lease without an application or credit check, or if the landlord or managing agent can’t meet you in person, be on your guard, says Andrew Schrage, co-owner of Money Crashers Personal Finance. Here are five of the worst rental scams to watch out for:
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1. The “vacant home” rental. Especially in areas hit hard by the housing crisis, con artists, in one case a former real estate agent, have been breaking into vacant houses, changing the locks, and showing and renting the homes to unsuspecting tenants. They promptly leave town once they’ve collected the deposits and the first month’s rent.
When dealing with a landlord you haven’t yet met, the Federal Trade Commission advises consumers to watch out for ripoff red flags: landlords who want you to wire money (which is the same as sending cash, which is not recoverable), who want a security deposit or rent before you’ve met or signed the lease, or who claim to be out of the country and unable to meet in person. Before visiting a rental, Schaffer advises checking the deed registry to get the owner’s name and asking the person who’s showing you the house for identification. If an agent is showing the property, request evidence that he or she is showing it for the owner. And even if it all checks out, before signing a lease, do a background check on your prospective landlord. A history of bankruptcies, other properties in default, or civil and criminal judgments are bad signs, says Schaffer.
2. The just-about-to-foreclose home. For any rental, it pays to find out about the person taking your money. Michael Schaffer of CheckYourLandlord.com says his company has seen a surge in properties being rented that are in pre-foreclosure--owners collecting deposits and up-front rent just before the property is auctioned. In most cases, that’s bad news for the renter, he says. Federal law does give tenants the right to stay in their homes after foreclosure for a minimum of 90 days, but you’ll lose the money and time you put into moving. And good luck getting your security deposit back, he says--you’ll have to either track down the foreclosed owner or negotiate with the new owner (often a bank) to get it back. He recommends checking the local deed registry to find out whether the property you’re looking at is in foreclosure or ever received a foreclosure notice. (CheckYourLandlord.com does free foreclosure checks too, says Schaffer.)
3. The eviction prevention hoax. In this scam, a fake legal service sends letters to tenants living in rentals that have been foreclosed on and promises to keep them from being evicted--in exchange for fees of $800 to $3000, reports MSN Real Estate. As noted above, tenants the right to stay in their homes after foreclosure for at least 90 days, and some states or cities may grant additional time. The “service” that the fake company is offering usually consists of nothing more than filling out a form on the tenant’s behalf claiming their right to stay in the property for the time allotted under the law—a task the tenant could have done themselves for free.
4. The stolen deposit. Watch out for landlords who keep part of your deposit without cause. If landlords do retain your money, they have to give you an itemized list of the repairs and how much each cost. Preventing a swindle starts at move-in time, when you should take photos and itemize preexisting damage. Then sign and date the list of existing problems and send it to the landlord. California tenant lawyer Ken Carlson writes about several games that crooked landlords play to keep more of your deposit. They might claim, for example, that you didn’t move out when you said you would simply because you mailed the keys to them, and they claim you continued to occupy the property while the keys were in transit. Carlson recommends making a copy of the keys to keep and sending the originals by certified mail a few days before you move out.
5. The approved upgrade take-back. Some landlords verbally approve the tenant to make repairs or upgrades and then backtrack later, leaving the renter stuck with the bill. Danielle from Santa Monica, California (who didn’t want to give her last name for fear of retaliation) says that her landlord verbally agreed to let her to install expensive wood flooring and promised to refund the cost. Not only didn’t she get her money back, but he threatened to evict her for making changes to the apartment. So if the owner gives you permission for changes like painting or ripping out an old ugly carpet, get it in writing.