Common Tenant Scams every Landlord needs to watch out for

It is an unfortunate reality that there will be tenants who try to abuse landlords to get ‘free’ accommodation with ‘free’ utilities. Fortunately, added due diligence can reduce the risk of falling victim to these common tenant scams.

No or Partial Payment of Deposit and First Month’s Rent

In this tenant scam, a tenant will pay part of the deposit and/or first month’s rent and convince the landlord to allow the tenant to have occupation of the property and make promises to pay the rest later. When the agreed payment date arrives, the tenant will usually: make a further promise to pay later; provide the landlord with a plausible reason as to why payment could not be made; or stop responding to the landlord altogether. This tenant scam is actually quite common, and usually, most eviction cases stem from tenants employing this tactic.

There are several steps that a landlord can take to try and reduce the chance of falling for this tenant scam, such as:

• Requiring FULL payment before handing over the keys to the property.
• Contacting previous landlords to find out if the tenant failed to make any payment to them. [Note: Some landlords will sometimes hide the fact that the tenant failed to pay to try and have the tenant move out to avoid the costs of evicting the tenant.]
• Examine the payment history of the tenant on a platform such as TPN.

Late Payments

Another common tenant scam used by some tenants is to pay the rent late; the tenant will usually pay later and later to try and “train” the landlord into accepting whatever the tenant wants. Usually, when the date for payment arrives, the tenant will provide somewhat convincing reasons for the late payment; however, this usually evolves into the tenant failing to pay altogether.

There are several steps that a landlord can take to try and reduce the chance of falling for this tenant scam, such as:

• Insisting on payment as agreed to in terms of the lease agreement.
• Taking quick action when the tenant fails to make payment as agreed to in the lease agreement. This conditions the tenant to make payment when they have to, or else they will receive a letter of demand or some other notice.
• Examine the payment history of the tenant on a platform such as TPN.

Prepayment of Rent

This uncommon tenant scam involves the tenant offering to prepay the rent, then prepaying the rent (Eg, for 4 months) and then making no further payments whatsoever. While this tenant scam is hard to detect, there are steps that can be taken to try and reduce the likelihood of falling victim to this tenant scam.

Steps that can be taken:

• Examine the payment history of the tenant on a platform such as TPN.
• Determining the tenant’s ability to afford rent through an affordability assessment.
• Determining where the money comes from. This is to see if the money received was a one-off payment or if it is a regular occurrence. Example: If the money is from the tenant’s monthly wage or salary, this could be seen as a reduced risk. If the money comes from a business deal that was successful, this could be seen as an increased risk.

Demanded Alterations

Some prospective tenants will demand that a property be renovated or that certain changes be made to the property before the tenant moves in. In this case, the tenant might be demanding unreasonable changes and/or renovations, and this should be guarded against. These tenants usually prove difficult to work with and are prone to withholding rent or other payments if they do not get their way, and hence it might not make commercial sense to do business with this type of tenant.

Steps to avoid this type of tenant:

• Make sure that the property is maintained to a reasonable state.
• Talk to previous landlords to get a feel of what type of person the tenant is.
• Examine the payment history of the tenant on a platform such as TPN.
• Talk to the tenant to get a feel for what type of person the tenant is.
• Act in a calm and reasonable manner. The moment you become overly emotional, the tenant will abuse this to try and make their move.

Fake Proofs of Payment

This is, unfortunately, a common tenant scam used by some tenants to trick the landlord into thinking that payment has been made. In this case, the tenant would manipulate an existing proof of payment (“POP”) to show that payment has been made, or the tenant would create a completely fictitious proof of payment and provide it to the landlord. This tenant scam is hard to detect by looking at the proof of payment itself, but some investigation can quickly reveal the truth.

How to avoid:

• Wait for the funds to clear.
• Google the bank that supposedly issued the proof of payment, and phone the bank to confirm the details of the proof of payment.
• Examine the payment history of the tenant on a platform such as TPN. Some tenants that are prone to this tactic will usually have done it before.

Disclaimer: The above should not be accepted as legal advice, and you are advised to seek legal advice. The above is based on our own observations, and your circumstances may be different to warrant a different solution or outcome.