As Billy Currington so aptly noted a few years ago, "God is great, beer is good, and people are crazy". Few groups of people know this last item to be true better than landlords. For those of you who follow my Facebook page (Kentucky Landlord Law, found here) or subscribe to my e-mail list, you are familiar with an article I posted a few weeks ago about the criminal ingenuity of an evicted tenant in Spokane, Washington. For the rest of you, here’s the direct link to the article.
The news wasn’t that a tenant was being evicted. That happens every day all around the country. The news also wasn’t that an evicted tenant became vindictive and tried to extract a “pound of flesh” from the landlord on his way out the door. Landlords know that guy all too well. He harasses the staff, trashes the property, and goes on an internet rampage about how awful he was treated by the management. This tenant was different. Not better, mind you, just different. In this case, the evicted tenant decided to scam someone else and make a few dollars, presumably to put down as a deposit on his new abode.
This tenant decided that, since he was being evicted, he would advertise his unit for rent on Craigslist. When people responded to the ad, he pretended to be the property manager, even showing the property to those interested. Ultimately, he convinced two women to sign a lease for the unit and give him money for the security deposit and first month’s rent. He gave them a key and told them when they could move in. Of course, when it came time for these ladies to move in, the evicted tenant was nowhere to be found and his phone numbers had been disconnected.
While evicted tenants renting out their units is far from ordinary, scam advertisements of rental property on the internet are nothing new. There have been numerous such incidents in Kentucky, and probably many more that have not been reported. The logistics are often different. Some scammers take a picture of a property that is for rent, often with a “For Rent” sign in the yard, then list their own contact information for interested parties. Others use pictures that are posted online. Some go so far as to break into the unit to take interior pictures or unlock the doors in order to show it to potential renters. Scammers that hack the landlord’s e-mail account allow the landlord to do most of the heavy lifting (phone calls, showing the unit, etc.), then they contact the tenant directly to coordinate signing the lease and getting payment. In other cases, the scammer just wants a completed rental application in order to get the applicant’s personal information for identity theft purposes.
At this point, everyone should be familiar with the Nigerian Rental Scams. This scam is a bit less common these days, but was quite prevalent in the early 2000’s. The scammer would make contact, typically via e-mail and typically from outside of the United States (Nigeria was always the location, originally), about a property that had been listed on the internet. The scammer would almost always be desperate to rent the property and would typically offer to pay more than the listing price in order to make things move quickly. The scammer would "mistakenly" send the landlord a payment via check, cashier's check, or money order for even more than was agreed upon. The scammer would then ask that the landlord wire him a refund for the amount that was “overpaid”. After wiring the scammer the "refund", the landlord would find out that the scammer's original payment would not be honored by the bank, either because of insufficient funds or as a forgery. By this point, the scammer has disappeared with the landlord's money. There are a number of versions of this scam, but it always involves you sending money to someone that you have not personally met.
Unfortunately, the unknown scammers aren’t the only concern for landlords that has arisen from the technology boom. I recently learned of an incident at a small apartment community (not in Kentucky) where the property manager kept noticing a stranger using its amenities one weekend. After seeing him on the property for the third time, the manager confronted him, only to find out that he had “rented” an apartment unit from a regular tenant via Airbnb. The regular tenant had advertised his own unit on Airbnb, and the stranger had responded to the ad and arranged to stay in the unit for the weekend as a vacation. Needless to say, the tenant was not welcomed back with open arms by the management upon his return.
As I noted in this week’s Lessons From Eviction Court (linked here), technology is wonderful and, in many ways, makes our lives easier. However, it also creates new headaches. Craigslist, Zillow, Airbnb, and the like have created an inexpensive way to advertise properties. However, we have to remember that technology can always be used for good AND bad. Scammers will use these websites and other means to steal your money and your potential tenants. And your own tenants are using these websites to “sublease” their rental units, typically in violation of their leases.
So what’s a landlord to do? A few suggestions:
Conduct regular internet checks for your properties. Search Craigslist, Zillow, Airbnb, Couchsurfing, and similar sites on a regular basis to see if any of your properties are fraudulently listed. A regular Google search is also a good idea. The landlord in Spokane actually found the fraudulent apartment listing by the evicted tenant, and made a separate post warning people that the tenant was being evicted and that no one should give him money. Unfortunately, the warning went either unseen or unheeded by at least two people, one of whom had apparently been living in a homeless shelter to save her money for her own place to live.
Make sure you change the locks after every tenancy. While your previous tenant may have returned the keys, he may also have made a copy. Even your good tenants may have loaned a key to friend or family member at some point who made a copy for illicit purposes. Always change the locks.
Don’t “reimburse” tenants or applicants until their payment has cleared.
Watermark your photos. This makes them much more difficult to copy.
Pay careful attention to e-mails "inquiring" about your listings. Fraudulent e-mails typically have the following characteristics:
- they are not personalized (often addressed to "Hello Sir/Madam")
- they contain numerous misspellings and grammatical errors, although this is a bit more common in the "texting generation";
- they randomly, excessively, and inappropriately capitalize words;
- they have character mistakes ("I amfromAtlanta Georgia");
- they indicate that the person is out-of-town for an extended period;
- they offer to send more money than you are seeking;
- they want to move in without seeing the property;
- they have an urgent situation;
- the e-mail address has no connection to the name of the person (e.g., email@example.com)
If an e-mail has several of these characteristics, be on your guard.
Check your properties regularly for signs of unauthorized entry. Scammers will break into properties to unlock them so that they can "show" the property to potential victims of their scam.
Make sure your leases explicitly prohibit subleasing or assigning of the unit by the tenant. As I noted last week at the Crime-Free Multi-Family Housing Seminar in Lexington, any time you allow someone to live at your property without conducting a criminal background check on them, you’ve just introduced an unknown to your property. This individual could be a great person or could be wanted for terrorism. While your Resident Selection Plan and Rental Application should allow you to screen out unknown individuals as prospective tenants, a lease that allows subleasing or assignments by tenants opens that door back up again. Further, the absence of such a provision means that you cannot evict your tenant for renting out his unit, as it would not be a material lease violation.
Technology is morally neutral. It isn’t good or bad in itself, but rather functions according to the intent of the user. As a result, landlords have to be increasingly aware of the ways in which scammers, both inside and outside of their rental communities, will use technology to endanger their rental properties. A little awareness can save big money.
Do you have a scam story to tell? Share it in the comments.