Rental fraud: What is it and how can Maryland landlords avoid it?
For those of you who have yet to experience the horror of rental fraud, we are here to explain to you exactly what it is.
Rental fraud is when someone who is not you or your Maryland rental management company claims to own your rental property and proceeds to lease it out to unknowing tenants.
Scary, isn’t it?
Rental fraud can lead to several difficult situations:
- Security deposit and first/last month rent is collected by the fraud. Then, come move in time, tenants have no way of accessing the actual property. Meanwhile, the fraudulent landlord is already on the run with money in hand.
- Your property’s locks are changed and tenants actually move into your rental home having no idea that their “landlord” is a fake.
- You are forced to remove the innocent, although illegally residing, tenants who have been scammed.
- You are left with the mess of having to prove in a court of law that the property is actually yours.
Though avoiding rental fraud may not be entirely possible, there are some proven strategies that can help reduce the chances of you ever falling victim to this type of scam.
Rental Fraud Comes in Many Forms
As mentioned above, rental fraud is when someone poses as either the landlord or property management company to illegally lease out your Maryland rental property. However, there are other types of rental fraud as well.
Landlords are also vulnerable to the types of rental fraud outlined below, and should be aware of their susceptibilities at all times.
The Eviction Scam
This type of rental fraud is when a tenant moves into your property with no intention of ever paying rent. As a result, you are forced to evict them.
Unfortunately, the eviction process can sometimes take months to pan out, as well as cost a great deal of money. This leaves the tenant plenty of time to live in your property while lining up another place to scam.
Avoid this scenario: The best way to prevent a tenant who is consistently evicted from every place they occupy is to conduct thorough screenings of each and every tenant you consider placing in your property. This should include a background check, credit check, income verification, and reference follow-up.
Another great tip is to meet each prospective tenant face-to-face, even if your rental management company typically does all the work for you.
Sometimes a first impression will leave you with a gut feeling not to go with a particular tenant, which can be helpful in avoiding scams.
The Utility Scam
Did you know that many states hold landlords responsible for the water bill despite what the outlined lease agreement states?
Sometimes a tenant will avoid paying the water utility bill because they know that after it goes unpaid for long periods of time, the water company will go after the owner of the property (you) to pay the bill.
To add to this, many tenants are aware that the water company typically does not shut off the water supply to any given residence. This means your tenant is using water on your dime.
Avoid this scenario: The best way to avoid this utility scam is to call your local water company from time to time to make sure your tenant is current on all of their bills.
In addition, it is best to have your property management company draft a detailed lease agreement outlining the responsibilities regarding utility payments. This way, should your tenant neglect their financial obligations, you have a way to prove in court who was responsible for what.
The International Scam
This highly popular scam is an unfortunate one that many landlords fall prey to. Also known as the Nigerian 419 scam, this type of fraud involves a prospective tenant from overseas looking to lease your rental property in the near future.
The fraudulent tenant will send you a check for the amount owed at move-in, plus extra “by accident.” This extra money is usually double what you asked for move-in costs.
The fraud will then ask you to wire back the excess money and before you know it, the original check that was sent to you turns out to be fraudulent while the money you have wired back to this person was your real, hard-earned cash.
Avoid this scenario: It is best to not deal with overseas tenants, unless you have a professional helping you with the background checks.
In addition, never accept a certified check from anyone overseas. These checks will usually clear and then bounce weeks later because they are fake.
If by chance you are accepting money from an overseas tenant, only accept money orders through a reputable company, such as Western Union.
Monitor Your Vacant Properties
In addition to the above-mentioned rental fraud scenarios, there are other ways to avoid getting scammed by sneaky people.
Your Maryland rental property is most vulnerable when it is vacant. The last thing you want is someone breaking into your property and taking up residence with a fake lease agreement.
Should you notice someone squatting in your vacant home, chances are high that the police will have very little authority if the “tenants” have what seems to be a legitimate lease agreement.
The heartbreaking thing is that sometimes these scammers will demand you pay a “ransom” for them to leave your property. This not only costs you money but allows the trespassers a free pass. They never have to take responsibility for their actions and actually make money off of their scam.
And, if you decide against paying the frauds off, this situation will still cost you countless hours and money as you wade through the courts attempting to prove the lease agreement is fake and the “tenants” are indeed trespassers.
Avoid this scenario: Monitor your vacant properties regularly to make sure no one has stepped in and taken up residence.
You may even consider adding an active security system to your Maryland property so that if someone does attempt to break in, the police will have authority to charge him or her appropriately.
Watermark Your Photographs
These days, advertising vacant properties online is the norm. And, if you utilize a reputable rental management company, such as Bay Management Group, your rental home is promoted across several platforms to expose your vacant property to the widest pool of prospective tenants.
With any professional rental property ad, images of the home are a necessity. Anyone looking to lease a home wants to have a clear idea what the property looks like before inquiring about it.
The problem is, if someone if posing as you or your rental management company and posting a vacancy online, innocent tenants interested in your property may get scammed or end up living in your home without permission from the true owner (you).
Avoid this scenario: Add a watermark to all images of your property as an extra layer of protection. A watermark makes it more difficult for a fraudulent landlord to steal photos of your property and will likely cause them give up on attempting to scam you.
In the end, rental fraud can be a scary situation no matter the type you are involved in. That is why being proactive about your Maryland income properties is absolutely critical to keeping your money out of the hands of scammers and keeping unwanted tenants our of your properties.
If you are looking to safeguard your Maryland rental properties to the fullest extent, contact Bay Management Group.
With knowledgeable staff working solely in property management, Bay Management Group can protect you, your rental property, and your tenants from all types of rental fraud.
Peace of mind is priceless when it comes to your rental property business.
Use Bay Management Group to conduct thorough background checks, draft airtight lease agreements, and inspect your home regularly to make sure everything is in its right place.