5 Phases of Tenancy: The Entire Process of Renting Property
The process of renting property has 5 major steps or phases of tenancy, if you will. A landlord should understand what each phase entails. From knowing what they are to knowing how to go from one phase of tenancy to the other, to knowing tips and tricks to help you navigate each step and to understanding what issues may arise and how to handle them.
These stages of renting property can help minimize issues that may come up while hunting for your ideal tenant.
Application and Screening Phase
The first phase of the tenancy process is the application and screening phase. This is the most important phase of tenancy as if you take shortcuts here, you won’t really know who you’re renting to. I wouldn’t risk handing my keys over to someone I have no clue who they are and risk having to evict them in a couple of months.
When receiving phone calls about your rental property listing, you should answer as a “property management” company. This way, if the aspiring tenant’s plan was to lie or talk their way to renting from you without properly being screened, they would be deterred since property management companies usually thoroughly screen all applicants. This is just a good way to quickly weed out potentially bad tenants from the tenancy process.
When doing the screening, verify current and past employer information on Google. If you just call the numbers they provide, who’s to say they won’t ask a friend to pose as their boss and tell you exactly what the tenant wants you to hear? If you ask for previous landlord references, the tenant can have you call exactly who they want you to call. Use Google to double check and verify.
If the tenant doesn’t have the full deposit and first month’s rent, do not rent to them no matter what their story is. It’s important you stay firm on this. Accepting part of either one of these before they move in is a set up for certain failure in the future. These situations usually wind up in eviction court!
Be cautious when the tenant wants to pay for a few months’ rent up front. You may not get another dime from them, use your best judgment.
If the tenant for some reason can’t sign the lease at the moment but is willing to pay you a holding deposit, make them sign an agreement stating you could withhold daily rent amount for when the unit was taken off the market if they decide to back out.
No matter what the story is, make sure you thoroughly screen every adult planning to live in your rental property. Every adult should submit an application and should be verified and screened.
Running credit reports and background checks usually cost money. It’s ok to charge each applicant an application and processing fee. Landlords can pass on the fees for the reports plus your time to check out references, employer info and past tenancies.
The current maximum rental application fee that can be charged in California for 2021 is $53.33 per applicant.
Rental Application and Screening Mistakes to Avoid
- There are many discriminatory protections landlords must keep in mind. Stay away from using phrases like “No Section 8” or “Singles only”. Those two phrases in your advertising can be considered discriminatory.
- Don’t charge application fees if you don’t plan on running a credit report. Applicants in California must receive an itemized receipt. If you can’t provide one, the fee in its entirety must be returned to the applicant.
- There must be a vacant rental available to collect an application fee.
- You can’t discriminate against single applicants vs married applicants. In other words, don’t charge a married couple a different rate than an individual (or single) person. This could be considered discrimination agains single persons.
- If you have collected application fees from various prospects but suddenly select the right one and have unprocessed applications, you must return the fee to each applicant in its entirety.
- If an applicant requests a copy of any of the reports you processed, one must be provided.
Rental Agreement and Move in Process Phase
Once you have hand picked a thoroughly screened applicant and are ready to offer your rental to them, it’s time to move on to phase 2 of the stages of renting property. Every stage in the process of renting property is equally important and has pivotal tips to keep in mind.
Make sure you both sit down and meet in person to go over every clause in your lease. If you are an experienced landlord, you should know what clauses cause more issues than others. Go over them twice or even three times if needed.
Before signing anything, take a tour of the vacant apartment/home. A pre-tenancy walkthrough should happen and bring along your move-in checklist. Take lots of photographs of common areas such as bathrooms, kitchen and high traffic hallways. Always have the tenant sign the checklist and hand them a copy.
When signing, use blue ink to sign all of your documents (that’s if you’re not using digital rental agreements.) This way, you can quickly find your original.
Never allow the tenant to sign a new rental agreement without having secured the first month’s rent and deposit.
If the lease doesn’t start on the 1st of the month, prorate rent. You should always collect the first month’s rent in full regardless of the date and prorate the second month.
We have an amazing pro rate calculator you can try! You can prorate move in and move out amounts.
During the Tenancy Phase
Your tenant is all moved in and is ready to move on the next step of the process of renting property. Phase 3: during the tenancy.
It is crucial that you begin documenting everything that happens with your new tenant. With all tenants, really. If you don’t already, start now. It’s easier now than ever to create a folder with a word document to note any and all incidents.
Your tenant will be late on rent and it’s ok from time to time. Write down every time they are late and the reason. If all of a sudden you notice their mother has passed away twice in a one year period, it’s a sign that things could go south quickly if you’re not careful. Incidents you should be keeping track of:
- Maintenance request dates, details and completion dates. Scan any and all receipts or documentation regarding all incidents and store them in that same folder.
- Inspections and your findings.
- Any and all notices you serve to your tenant. (late rent, notices to cure or quit, rent raises, etc)
- Any police activity your tenant is involved in.
- Issues with other tenants.
It’s a lot easier to raise your rents at small increments per year, say $50 bucks, than to do one for $200 after 3 or 4 years. Make sure your rent increases follow all applicable laws and ordinances such as AB 1482, LARSO, State of Emergency orders, etc.
Ending Tenancy Phase
The process of renting property must come to an end no matter how good or bad your tenant was. Sometimes the tenancy will end amicably, as in the lease has ended and both parties decided to move on to different options. Other times you’ll realize you have rented to a tenant from hell. There are several ways you can put an end to the stages of renting property.
All tenancies end with a notice. You must know which notice is the right notice to use. A 30 day notice, for example, may be used to terminate a month to month lease or even a fixed term lease if and when the tenancy is less than 12 months old. A 60 day notice should be used for 12 months or more.
A 3 day notice to cure or quit for breach of contract. A 3 day notice to pay or quit for failure to pay rent.
These are just examples and shouldn’t be considered legal advice. There are many regulations in place such as local regulations and AB 1482 which protects tenants from unjustified causes to terminate a lease across California.
Ending tenancy anytime after March 1st, 2020 should be done with caution and an eviction lawyer should be consulted.
If a tenant wishes to end tenancy, then a 30 day or 60 day notice should be provided to the landlord. The landlord should then notify the tenant of an initial inspection and schedule with the tenant.
The idea behind this initial inspection is to go over the move in checklist with your tenant and compare it to a move out inspection list and allow your tenant to fix any issues that may warrant deductions from their security deposit.
If your tenant is terminating tenancy via eviction, the move out inspection isn’t required.
You should always try and get a forwarding address and update contact information. Next, the last step in the process of renting property.
Post Tenant Phase
The final stage of renting property comes once a tenant has fully vacated, either via eviction or voluntarily. The first step should be to make a final walkthrough inspection while taking plenty of photographs of damages, in case you need to defend yourself in court. Next, create a game plan!
Change locks! Immediately. If your tenant says they will turn in the keys on Saturday, meet them there along with a locksmith! You don’t want to risk that tenant or someone else with a set of keys to come in and squat.
If your tenant has left behind personal property:
- If the items are valued at less than $700, the items can be disposed of.
- If the items are valued at more than $700, follow this guide.
The landlord must return an itemized list of the disposition of the security deposit along with copies of receipts and any amount remaining within 21 days of moving out.
Make sure your rental is move-in ready before you start advertising. You most likely won’t get the desired results if you try and “view” the rental before it’s ready.
Learn from any and all mistakes! Write them down. The more you document situations that went wrong, the easier it is to learn from it and avoid making the same mistake again.
The process of renting property can be a long and expensive learning curve. It doesn’t have to be though. If you follow our guide to the 5 phases of tenancy, you can learn about what they are and tips on how to go from one to another with minor hiccups.
Video: The 5 Phases of Tenancy
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Filed under: Tenant Screening