Why cash for Keys by landlords is bad for the industry.
Why cash for Keys by landlords is bad for the industry.
One of the most common complaints we hear from landlords is, I wish there was a bad tenant list. My response is, there is one, landlords just don’t use it.
Where is the bad tenant list, it is the credit report and I don’t mean rent should be reported on their credit reports. The complaint is based on the tenants who failed to pay the rent then damaged the property on the way out the door. This is a common complaint about bad tenants.
As a landlord what can you do? In some of these cases landlords have been given an order of possession from the RTB which includes a monetary order against the tenant. If you have been given a monetary order and the tenant refuses to pay, a landlord should send this to collections. I hear many people say this won’t do anything as you can’t get blood from a stone. Well in fact sometimes you can get what you need even from a stone.
What landlords miss in this approach is that when you send it to collections, that is then reported on their credit report, and stays on their report for many years. Therefore if this person goes to rent another property, or borrow money for another reason this will appear on their credit report. That provides the next landlord the information to make an informed decisions and say we can’t rent from you as you owe a previous landlord money. If the landlord before you had sent the tenants order to collections you would have made a different choice.
If you don’t have an order of possession what can you do. During the application process you should collect data on the individual allowing you to perform a credit check to verify their information. There are sources who can assist landlords to find people in these situations. Often the credit report provides other details including address information on the party. If a person owes you money you have the information you need to locate the individual after they have left your property. After you have found them then you can serve the documents for the hearing at the RTB. Finding the tenant and taking them to RTB is important as it gives the landlord the opportunity to obtain the monetary order.
When landlords provide cash for keys all they are doing is pushing the problem to the next landlord to deal with the same issue you have dealt with.
Does the stone bleed? Sometimes yes. Often people’s lives change for the better. They may leave your property and a few years later are in a better financial position, trying to lease a car or rent another property when they are denied due to your application on their credit report. At this time they may choose to pay off the debt, and you may receive some funds from this transaction. More importantly the individual learns the importance of paying the rent and treating properties they rent respectfully moving forward.
We have rented to people who have had a debt on their report that shows they went and paid it off. This shows responsibility. We have also turned down people who have a debt on their report which has not been paid as this shows a lack of responsibility.
We have sent monetary orders to collection agencies which have reported it on a past tenants credit repair and years later they settle as it is the only way to have it removed from impeding their life moving forward.
Offering cash for keys is not solving any problems, it is passing the buck.
This is why I don’t like to hear landlords saying they offered the tenant cash for keys to vacate. If more landlords took their monetay order to collections these people would need to adjust their behaviour. Without enforcement they will never change.
Being a landlord is a long term endevour and it may take time to recover the funds you are seeking. Help the community out by following the law to help everyone.
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