Renting: Everything You Need to Know

Landlords and tenants have a lot of reasons to dislike each other – from the landlord charging too much to the tenants not taking care of the property, and dozens of reasons in between. But those two groups can bond over this one trait they both share. They’re idiots about their legal rights.

The real estate website Zillow quizzed landlords and tenants about the laws that affect them. Surprisingly, 47 percent of renters answered at least half of the questions wrong. Even more surprising, 50 percent of landlords graded about the same.

Both sides were most ignorant to background checks, credit requirements, and security deposits – with an amazing 82 percent of renters and 76 percent of landlords answering those questions wrong.

Renting While in Debt: Tips for a Successful Rental Experience

Renting a property can be a daunting task, especially when you’re dealing with the added burden of debt. However, being in debt doesn’t necessarily mean you can’t secure a rental and enjoy a comfortable living arrangement. With careful planning and proactive measures, you can navigate the rental process successfully, even with existing debt. Here are some tips to consider when renting while in debt:

1. Assess Your Financial Situation: Take a thorough look at your finances to understand your debt obligations, income, and expenses. Calculate your debt-to-income ratio to determine how much of your income goes towards debt repayment. This assessment will give you a clear picture of your financial capacity and help you set a realistic rental budget.
2. Create a Realistic Budget: Establish a budget that accounts for your monthly debt payments, living expenses, and rental costs. Be realistic about what you can afford, considering both your current debt obligations and the additional expenses associated with renting, such as security deposits and utilities.
3. Improve Your Credit Score: A good credit score is often a prerequisite for renting. Take steps to improve your credit score by paying bills on time, reducing debt balances, and addressing any errors on your credit report. A higher credit score can increase your chances of securing a rental and negotiating favorable rental terms.
4. Provide Strong References: If your credit score is not ideal, providing strong personal and professional references can help compensate. Obtain reference letters from previous landlords, employers, or reputable individuals who can vouch for your reliability, responsibility, and ability to meet financial commitments.
5. Offer a Larger Security Deposit: To alleviate concerns about your financial situation, consider offering a larger security deposit. This demonstrates your commitment to fulfilling your rental obligations and provides the landlord with added financial security.
6. Provide Proof of Income and Stability: Gather documents that showcase your stable employment and income. This can include recent pay stubs, employment verification letters, or tax returns. Demonstrating a consistent income stream and job stability can reassure landlords of your ability to afford rent payments.
7. Communicate Openly with Landlords: Be transparent about your debt situation with potential landlords. Explain any extenuating circumstances that led to your debt and highlight the steps you’re taking to address it. Open and honest communication can build trust and understanding between you and the landlord.
8. Seek Co-Signers or Guarantors: If your debt situation makes it challenging to secure a rental on your own, consider asking a trusted family member or friend to act as a co-signer or guarantor. Their strong financial standing can provide reassurance to the landlord and increase your chances of approval.
9. Consider Roommates or Shared Rentals: Sharing the rental costs with roommates or opting for shared rentals can help alleviate the financial burden. It allows you to split expenses while still enjoying a comfortable living space.
10. Maintain a Positive Rental History: If you have a history of being a responsible tenant, provide references from previous landlords who can vouch for your reliability, timely rent payments, and proper maintenance of the rental property.

Remember, each landlord has different criteria and preferences. By being proactive, transparent, and responsible, you can increase your chances of finding a rental property that suits your needs, even while managing existing debt.

Renting myths about renter’s rights

The law is supposed to help you navigate tricky situations. So, Debt.com consulted a nationally known rental expert to debunk the biggest rental myths…

A landlord has 60 days to return your security deposit… FALSE

Almost all the renters surveyed – 82 percent – believe the landlord has 60 days to return a security deposit after the tenant moves. In fact, “It’s typically less than 60 days, but the actual time frame varies by state,” says Ron Leshnower, a real estate attorney and author of Every Landlord’s Property Protection Guide: 10 Ways to Cut Your Risks Now. ^[2]

“For example,” he says, “landlords of Massachusetts properties have up to 30 days to return security deposits to tenants, but the time limit is only 20 days for tenants renting at properties in Rhode Island.”

 If it’s in the lease, it’s legally binding… FALSE

“Some landlords think if they include language in their lease and get tenants to agree to it, then they’re all set,” Leshnower says. Not true.

“If a lease clause goes against federal, state, or local law, then it’s unenforceable.” So, even if you signed that lease, no court will make you abide by it.

As the owner, the landlord can enter your home anytime… FALSE

The landlord may own the property, but when you’re living there, you have the right to live peacefully.

“Landlords who wish to enter an apartment for non-emergency reasons need to provide reasonable notice and do so at a reasonable time,” Leshnower says. The amount of notice varies by state, but your landlord generally can’t pop over with anything less than an hour’s notice, and never in the middle of the night unless there’s an emergency.

If a landlord wants to evict you, they can… FALSE

If a landlord decides to evict you, he has to have a justifiable reason — you broke the lease — and then go through the court system. He can’t simply toss your belongings on the street like they did in all those Depression-era black-and-white movies.

In fact, if you’re paying rent and sticking to the lease, he’s not even allowed to try something called a “constructive eviction.” Leshnower describes that as “turning off the heat, water, or other utilities, or removing windows.” If your landlord pulls this stunt, you have a court case against them.

A landlord can end your lease early to move in family… FALSE

In response to the Zillow survey, 62 percent of renters believe a landlord can end a lease early if he wants to move in one of his family members. Also, not true.

“A landlord doesn’t have the right to end a lease early and force a tenant to leave simply because he wishes to rent to his family,” Leshnower says.

A landlord doesn’t have to rent to someone recovering from drug abuse… FALSE

Apparently, a lot of people believe this – 76 percent of landlords and 82 percent of renters told Zillow a drug conviction in a tenant’s past is enough to deny them an apartment. Not so.

“Landlords can’t turn people away simply because they have used drugs in the past,” Leshnower says. If they do, they’re violating the Fair Housing Act, which Leshnower describes as “a federal law that protects prospects and tenants against discrimination based on a disability — which includes addiction.”

A landlord can opt-out of repairs in the lease… SORT-OF

Many renters believe a landlord only has to make repairs if he agrees to do so in the lease. But, a tenant is never responsible for all repairs. Leshnower says, “Landlords can’t stipulate that they have no duty to perform needed repairs.” In fact, all landlords are legally obligated to perform any repair that puts your health or safety at risk.

If you get evicted, you might have to pay a landlord’s court costs… FALSE

Some lease clauses insist the tenant must pay the landlord’s attorney fees and court costs if the tenant gets evicted. Leshnower says those aren’t uncommon — or legal. He calls it just another example of “a clause that would violate state or local law.”

So, what should you do if you’re a landlord or a tenant who has no clue what’s legal? Search online for your state and “rental law.” From Massachusetts to California, you’ll find your state government has compiled all you need to know.

Renter’s insurance myths

What do family heirlooms, your laptop and the undead have in common? If you’re a renter, quite a lot – at least according to a Nationwide Mutual Insurance Company survey. ^[1]

The survey asked more than 1,000 renters about their biggest fears. The two biggest were “fire” at 41 percent and “theft” at 31 percent. Fortunately, only 3 percent said “the zombie apocalypse.”

Whether they’re running from a horde of flesh eaters or another more likely disaster, 24 percent said they’d save their laptops before anything else – including family heirlooms.

But the most surprising result was this: 70 percent of those polled had rented for three years or more, but 56 percent did not have renters insurance. Most blamed many common myths – from high cost to a lack of coverage – for not having renters insurance.

Let’s separate fact from fiction…

My landlord will cover me… FALSE

While your landlord has insurance, that policy only covers the building itself – not your stuff.

Say, for example, the building catches fire. The landlord’s property insurance would pay to repair the damage to the building and the individual units. You’d be responsible for replacing your furniture and possessions – and finding a place to live while the repair work is being done.

If you have renters insurance, you can file a claim to replace your lost items. Many policies also cover temporary lodging.

Renter’s insurance is expensive… FALSE

Many renters skip renters insurance, thinking they won’t be able to afford it. But monthly premiums are surprisingly low.

“A common $20,000 personal property coverage with $100,000 of liability based on $1,000 deductible should range around $20 per month for most of central North America,” says Chris Michaut, an insurance agent with Williamson Insurance in Ohio.

Many insurance companies also offer discounts. For example, if you insure your car and your rental property with the same company, both policies will cost less.

It’s hard to get insured… FALSE

If you’re new to carrying your own insurance, the process of applying and starting a policy can seem daunting, maybe even too much to handle. It really isn’t. All you need is some basic information, your address, and maybe proof of income. In most cases, you can apply and get approved online.

If a natural disaster happens, I’m out of luck… FALSE

Your insurance company will cover you for most natural disasters. According to Michaut, most insurance companies cover 17 common perils including:

• fire
• lightning
• windstorm
• hail

However, he warns, “Flooding is not commonly offered by most companies, and earthquakes can be limited depending on location.” If you live in an area prone to either, you might want to consider getting an additional policy designed specifically for those disasters.

I can’t file a claim for accidents… FALSE

Mistakenly, 30 percent of the renters in the Nationwide survey insisted renters insurance never covers them for damage if they or a guest were at fault. In reality, your renters insurance may cover you if your property is damaged during a party, or if you do something silly on your own. To make sure, ask your insurance agent if “accidental damage” is covered before you sign up.

 If I’m robbed, the insurance company won’t pay… FALSE

Renters insurance covers losses due to theft. If you come home to find your valuables missing, you can file a claim. Your renters insurance will also cover you if your personal belongings are vandalized – say, for example, your furniture was trashed while the thieves were looking for high-value items.

I need to save my laptop… FALSE

While a good number of renters think they should save their laptop above all else, “Each insurance company has a way to cover electronics,” Michaut says. The only time you’d need to worry is if you have a very expensive gaming computer that exceeds your normal policy amounts. For that, you may need an additional rider to cover the extra cost.

Rights to know when facing eviction

If you are facing possible eviction you need to understand your tenant rights so you can figure out how to proceed, whether that means fighting the eviction in court, working out a different solution with your landlord or packing up your stuff and moving on.

Here are six things to know about tenants’ rights when facing a possible eviction.

Renter rights vary by city and state

The Fair Housing Act offers federal protections against housing discrimination, but tenant eviction rights are determined by state and city laws. You can look up links to each state’s local laws and resources on tenant rights at the U.S. Department of Housing and Urban Development (HUD). You may also find information on tenant rights on your official state attorney general’s website, ending in “.gov.” For municipal tenant rights laws, visit your city’s official website, also ending in “.gov.”

Your landlord can’t just lock you out

There are shady landlords out there who flout the law, hoping their tenants don’t know enough about tenant rights to stand up for themselves. Such a landlord might change the locks on your door or tell you that if you don’t catch up on your rent by the end of the week, they’ll move your belongings outside and rent the place to another tenant. However, these landlords are breaking the law.

Your landlord must first give you notice that if you don’t catch up the rent by a certain date – within three or 14 days, for example – he or she will get to work on the eviction process. To evict you, the landlord must first file a lawsuit in court, asking you to pay or turn over possession of the rental dwelling.

Try to work out a payment plan

If you can find a way to scrounge up enough to pay what you owe, this is the point where you can avoid a lot of hassle, stress and damage to your credit report and rental history.

If you have a job, maybe you could propose paying $100 and then an extra $50 or $100 a month until the back rent is paid. Most landlords don’t want to pay a fee to file a lawsuit, go to court and find a new tenant, so this tactic is worth a shot. Just make sure you stick to the agreement if approved.

Learn: How to Apply for Emergency Rental Assistance

You get a chance to answer an eviction lawsuit

If your landlord files a lawsuit to evict, you’ll receive a summons showing the date and time that you must appear in court. The summons will also include the date you must submit what’s known as an “answer” to the court, explaining the reasons you believe your landlord is wrong to try to evict you.

For example, if your landlord falsely claims that you haven’t paid the rent when you caught up back rent last week, let the judge know. The same goes for if you have a good reason for refusing to pay rent, such as renting an apartment with no heat due to a broken furnace, faulty plumbing or another issue that keeps your dwelling from being habitable.

You have a right to legal counsel

If you’re facing eviction, you can make a case for yourself in court, but you’re probably wise to seek legal counsel instead. Before you shrug off that idea, citing the fact that if you’re too broke to pay the rent, you can’t afford a lawyer, keep in mind that many cities and states offer free legal counsel and other landlord/tenant resources to assist those who face eviction. Contact your local bar association or legal aid office for information on who to contact.

You’re entitled to your day in court

If your landlord files suit to evict you, you’ll receive a summons showing a date and time to appear in court as well as a date to submit an “answer” to the court explaining the reason you think your landlord is wrong to evict. ^[7] For example, maybe the landlord’s assertion that you didn’t pay rent is false or he refused to repair a broken furnace or stove.

Depending on state law, the summons could be posted on your door, arrive in the mail or get served in person.

Whatever you do, don’t ignore the summons and blow off your court date. If you don’t show up in court, your landlord will automatically win the eviction case by default. When you show up, make a case for yourself, maybe offer at least some payment to catch up on back rent. Ask the judge whether you can work out a payment plan with the landlord. If you have a good reason for not being able to move, maybe the judge can grant a stay of eviction to buy more time before you have to move.

And who knows? The judge may give you a break if you offer up other solutions, allowing you to avoid eviction. Even if you don’t win, at least you’ll know you did everything you could to try to avoid being evicted.

Move on

If the judge rules in the landlord’s favor, you must vacate the premises. Depending on state law, you will have to move out by a certain date, typically within 14 to 30 days. If you have good reason for not being able to leave, you may be able to buy some time by requesting a stay of eviction to postpone moving out.^[9]

You have the right to not be haunted forever by eviction

If you are evicted, there is good news and bad news. The bad news is that an eviction is a judgment that stays on your credit report for up to seven years, damaging your credit. If you pay the judgment in full, however, that payment will also appear on the credit report, which could sway future landlords into renting to you, even with a past eviction.

Now for the good news. After seven years, the eviction automatically drops off your credit report. So, that means you get a clean start. Seven years sounds like a long time, but if you use that time to improve your credit by paying all your bills on time, after seven years, your creditworthiness can once again be in good shape.

Advice for renters who owe back rent and could be facing eviction

No matter what your situation, here is some advice from financial experts if you are behind on rent.

Landlords and renters are in it together

Roughly four out of every ten renters in the U.S. rent a single-family home.^[4] This effectively means that their landlord only receives rental income from a single source. If a family hasn’t been able to pay, their landlord may be struggling to keep up with their payments, too.

Given that the average rent in 2020 in the U.S. was $1,124 per month, that’s tens of thousands of dollars in back rent potentially. If a renter hasn’t paid for ten months, that’s $11,240 that would need to be made up.^[5]

EXPERT: Bill Gassett, RE/MAX Realtor, Maximum Exposure Real Estate

“Both landlords and tenants are in a very difficult situation. While tenants have not been able to pay, landlords—of course—might not be taking in expected rent. It is an awful situation for all who are involved. There is no easy solution for landlords who are not in a financial position to not get their rent month after month.”

This means that it’s in both parties’ best interest to work together.

Keep lines of communication open to understand your options

EXPERT: David Howard, Executive Director, National Rental Home Council

“Start by talking to your landlord. Eviction is always a last resort for a property owner, especially in the single-family rental home market where the cost of an unoccupied property cannot be spread across multiple units like, for example, in an apartment building.”

“The National Rental Home Council (NHRC) has encouraged member companies to reach out to residents who might be experiencing economic hardship to find out how they can be of assistance,” Howard explains. “Property owners have offered a range of options for struggling residents.”

Here are a few options that the NHRC recommended landlords should extend to distressed renters:

• Payment programs
• Accessing funds held in security deposits
• Waiving fees
• Terminating leases upon request

Find local resources through 211

EXPERT: Aaron Norris, VP Market Insights, Property Radar

“One of the big opportunities right now are local resources, and landlords and renters aren’t likely paying attention. 211 is like 411 but for nonprofit and government programs. Our Riverside County 211 has received over $30 million in funding for small businesses and tenants over the past six months. One local landlord just got a grant of over $500k that was specifically aimed at catching up past-due renters.”

Norris advises renters to be proactive to call 211 themselves to see if rental relief grants may be available.

“Many landlords don’t live in the county where they hold assets,” Norris says, “so it’s incredibly important to look at the county and city level to see if resources exist for the landlord or the tenant.”

Tenants can also use 211 to find resources outside of housing, including:

• Utility bill assistance
• Food stamps for households that are food insecure
• Work resources for those facing ongoing unemployment

If you can afford to pay anything, pay it

EXPERT: Dr. Francesca Ortegren, Data Scientist, Clever Real Estate

“If they haven’t already, renters should talk with their landlords about a repayment plan for rent they’ve missed over the past year. Many landlords are likely to be open to the prospect of an official plan. It increases the chances they’ll see that rent in the future, as many renters can’t cover months of rent at once—especially not during a recession.”

If you’ve missed any payments due to unemployment or underemployment, total up what you owe in back rent. Then review your budget to see what you can reasonably afford to pay. Even if it’s just a small percentage of what you owe, it will show your landlord that you’re serious about working with them to find a solution.

Don’t dodge your landlord

Even if you’re still in a situation where you can’t afford to pay anything on the back rent you owe or make your current payments, don’t keep your landlord in the dark.

EXPERT: Dustin Heiner, Founder, Master Passive Income

“Lack of communication is the quickest way to be evicted when times are tough. If you are a renter, you should be in direct communication with the landlord or property manager about your situation. Inform them of your situation so they are not left in the dark with a tenant who is not paying rent.”

Know your rights

While many landlords are willing and ready to work with tenants to get through this tough situation, there are going to be those who aren’t. If you’re in a situation where your landlord or property manager is uncooperative, make sure you’re fully informed of your rights.

EXPERT: Ina Li, Chief of Staff to CTO, REX Real Estate

“It’s crucial for renters to know their rights in the process of negotiation, especially when the landlords refuse to cooperate. State-specific information on COVID-related tenant protections can be found on Nolo.com, and renters should consider hiring an attorney if the situation escalates.”

Li also directs renters to know what federal resources and protections are available.

“Federal resources can be found at the Department of Housing and Urban Development and the Consumer Financial Protection Bureau,” Li says. She also encourages renters to get familiar with their state’s eviction protection policies. “Specific state and local moratorium details can be found at the COVID-19 Housing Policy Scorecard by Eviction Lab.”

Eviction Scams

Tenants facing eviction are now in the sights of scammers offering false promises of grants, loans and government relief to stave off eviction. That’s according to the Better Business Bureau (BBB), which recently issued a warning about eviction moratorium scammers taking advantage of desperate tenants.

“Watch out for scammers offering loans, peddling credit repair services, or promoting government programs,” warns the BBB. “These cons are a way to trick desperate people out of money they don’t have.”

Scammers have risen to the occasion, armed with an assortment of shady promises and practices designed to steal money from renters down on their luck. Here are the most common eviction moratorium scams and how to spot them.

Phony disaster relief grants and programs

During the pandemic, the BBB Scam Tracker has received numerous reports of phony “pandemic relief” grants or fake government programs allegedly providing relief to people impacted by the pandemic. Once you “qualify for the grant,” the scammer asks you to pay a processing or delivery fee to receive the funds. “Of course, the grant doesn’t exist, and if you pay upfront, you just gave money to scammers,” says the BBB.

Scammers have taken it on the road and are targeting people who have been affected by natural disasters such as hurricanes or tornados.

Advance fee “guaranteed” loans

If a company “guarantees” approval on a loan without checking your credit, the loan offer is likely a scam, says the BBB. The scammer asks for an upfront fee to “lock in” the loan and then disappears, never delivering the promised funds. Credible lenders never guarantee a loan in advance, says the BBB.

“They will check your credit score and other documents before providing an interest rate and/or loan amount and will not ask you to pay an upfront fee,” according to the BBB. “Fees are never paid via Green Dot MoneyPaks, iTunes cards, or wiring money. Unusual payment methods and payments to an individual are a big tip off.”

Credit score and money transfer scams

The BBB Scam tracker report describes one scenario that more people are likely to encounter now that the eviction moratorium has ended. Victims receive a call from a “lender” congratulating them on approval for a loan after they’ve applied for several loans due to their dire financial situation. There’s just one catch, however. The phony loan provider won’t lend the money until the borrower increases his or her credit score.

The fake lender then offers a way to “solve” that problem, offering to send money – $1,000, for example – to the borrower’s bank account so the person can send it back to “boost the score.” Of course, this method isn’t really a way to increase your credit score, just a ploy for scammers to get their hands on your money when you send back $1,000 that the fake lender never actually transferred to your account.

How to protect yourself from eviction scams

• Verify any government program before signing up. “Take a close look at their website and read reviews. If you think you might be dealing with an impostor, find the official contact information and call the company to make sure the offer is legitimate,” says the BBB.
• Never pay for a “free” government grant or program. “A real government agency will not ask for an advanced processing fee,” says the BBB. “Instead, find out if the grant is legitimate by checking grants.gov.”
• Avoid guarantees and unusual payment methods. Real lenders don’t ask you to pay upfront fees or pay them via gift cards, CashApp or a prepaid debit card.

Local eviction relief may be available

If you’re facing eviction, check for state and local government programs available for renter assistance in your region. Try to work out a realistic payment plan with your landlord to catch up and avoid eviction. Contact your city’s free legal aid office, which can direct you to local assistance or relief resources.

Before you break a lease on your apartment…

Maybe you’re considering moving to a less expensive apartment or town to save money.

But what happens when you still have months left on the 12-month lease you signed when you moved in? That depends. You could end up on the hook for all the rent owed for the remainder of your lease – or maybe you can find a way to get around that financial obligation.

1. Know the terms of your rental agreement

Before you approach your landlord or apartment manager about breaking your lease, dig the rental agreement out of your files and review the terms.

Is there information about subletting if you need to break the lease? Are any fees associated with breaking the lease? Are there exemptions that allow you to break the lease without penalty such as accepting a job offer in another city? How far in advance must you give notice?

Arming yourself with this information will make you a better negotiator and let the landlord know you’re an informed, responsible tenant.

2. Be upfront about your situation

When it comes to needing to move because you can no longer afford the rent, honesty is the best policy. So be upfront with your landlord or apartment complex manager about what is going on in your life that is prompting you to move to a less expensive place.

Remember, the landlord has financial obligations related to your rental space too such as a mortgage, insurance, and maintenance. They depend on your rent to take care of those expenses. So he or she wants a tenant who can afford to pay on time.

If you offer a valid reason why you can’t afford the apartment – losing your job, for example –  the landlord may let you out of the lease with no (or a reduced) penalty.

3. Ask about subletting

Renters who wish to break a lease early often sublet to another renter who then lives in the apartment until the lease is up. Ask your landlord if you can find someone to sublet your apartment for the remaining months on the lease.

To find a subletter, ask friends, family, neighbors, your hairdresser, and everyone you know. Let people on social media know that you’re looking for someone to sublet. Advertise on Craigslist and post a notice in the apartment complex multi-use rooms that a sublet opportunity is available.

Find out: Don’t Get Blindsided by These 11 First Apartment Expenses

4. Try to find a new renter

If you come to your landlord with the name of a friend who wants to rent with a new lease, your apartment manager or owner may be open to starting fresh with a new tenant who can afford to pay rent on time.

Many apartment managers are also open to letting you out of your lease early and without penalty if they are able to find a new renter to take your place in that apartment. If you must move without a new person to rent yet, ask if you can be off the hook for the remaining months once a new person rents the apartment.

5. Negotiate with your landlord

If your lease says you must pay fees, forfeit your security deposit and pay rent for the remaining months on the rental agreement, try to negotiate with the landlord or apartment complex manager for a better exit situation.

For example, maybe you could pay the fees outlined in your lease but still keep all or half of your security deposit. Or, perhaps you could offer one extra month’s rent in exchange for being allowed to break the lease early without penalty.

Find out: How to Spot a Terrible Landlord Before You Rent

6. Get agreements in writing

Make sure you get in writing any agreement to let you break your lease early with no penalty or with reduced fees. If your landlord agrees to let you find someone to sublet, get that agreement and all the terms and conditions in writing.

Never accept only an oral agreement that it’s okay to break your lease. Make sure you keep thorough records of all communications about breaking your lease with the landlord so you don’t run into problems after you move out.