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Should landlords prove credit?

By ReneePorsia · Bankrate.com
Thursday, April 7, 2011
Posted: 8 am ET

Normally it's the renter who needs to prove their creditworthiness to the landlord. But with the current state of the housing market, it may be time for the landlord to prove to the renter that their credit is not in the toilet. With so many homeowners going into foreclosure each and every month at outstanding numbers, why shouldn't they have to prove it? According to RealtyTrac, 225,101 homeowners filed for foreclosure last month alone.

Many renters are finding themselves out on the street even after being a stellar tenant. What's going on is many landlords are finding themselves not being able to pay the mortgages on their rental properties, so they find a dependable, unsuspecting tenant to rent the place out to for about a year. But instead of paying the mortgage with the tenant's money every month, they pocket it, leaving the mortgage to go unpaid. Then one day the renter gets a notice in the mail or a knock on the door ... and it's not the Avon lady. It's the bank, and they want their property back.Renters don't always think to question the landlord about whether or not they are current on their mortgage. But I feel that landlords should be required to prove to the perspective renter that they are paying their mortgage each and every month. And if they can't, well, then they shouldn't be able to rent out their property.Having landlords who aren't paying their mortgages certainly is not anything new, but it is something that's becoming more and more common given the current economic situation that so many homeowners are facing. Renters have rights, but when trying to rent a place, the last thing any renter wants to do is upset the landlord. But in this market, if they don't want to find themselves homeless, they might need to confront their potential landlord. After all, it's their own well-being they are protecting.As a renter, make sure to demand landlords to prove their financial situation before renting their property.

Renee Porsia is an expert real estate broker, author, real estate instructor with RE/MAX Action and blogger at www.reneeporsia.wordpress.com.

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6 Comments
Andy
April 11, 2011 at 11:43 am

@Amy. Some tenants may have credit problems, but many people also rent because it does offer more freedom than purchasing a home. With the place that I work I may only live in one place for 2 to 3 years and then something opens up and I end up moving. Unless you're going to stay one place for 10 or more years it's not really practical to buy a home.

Davida
April 10, 2011 at 7:26 pm

This was brought up when we were looking to rent. It's a scary thought when you are paying a lot of money to move your possessions, children and pets only to find that you may receive a knock at your door, the place you call home, with an eviction notice. If we, as renters have to prove our credit worthiness, landlords should have to provide the same.

Julie
April 09, 2011 at 12:22 pm

Great article with excellent points. This would be especially helpful information for people new to renting. Well written.

Amy
April 08, 2011 at 10:28 pm

Most tentants have bad credit that is why they rent

Julie
April 08, 2011 at 8:47 pm

This is a great article. Very important information especially during this current economic climate. This information would be especially helpful to those just starting out with their first place. Many go into rental agreements without knowing of potential pitfalls. Very good points!

Jessica
April 08, 2011 at 9:48 am

Excellent point made! I have a close friend who is now going through this for the second time. Tenants need to protect themselves just as much as the landlords. It works bioth ways!