Renting your home out is a great way to earn some extra cash. Rental income can either help to pay for the mortgage, or pad your retirement income if you own your home free and clear. There are several reasons to screen your tenants though, one of which I will highlight below.
Sub-letting is legal in New York, but cannot be done without the landlord’s consent. A sub-let is when a tenant assigns his lease over to a new tenant. The first tenant remains responsible to the landlord, while the sub-letting tenant is responsible to the first tenant (unless the sublet is able to assume the new lease, in which case the first tenant is no longer on the hook). The sub-letter holds a smaller interest in the land. The landlord can withhold his consent without cause.
Of course, when you fail to screen your tenant properly you could end up with a very ugly sub-let situation. Some sub-lets turn into flophouses, in which there are multiple people rooming under your roof without your consent. The first tenant charges each sub-letted tenant a nominal fee to throw a mattress down on the floor.
As a former youth worker, I often went into homes where I had to drag drug-addicted teens out of such flop-houses. The landlords were usually out of country and had no idea what their tenant was up to. I would step over comatose bodies and pick up my listless teen from the vomit-laced carpet. There were needles and various other drug paraphernalia to step over.
I have also seen illegal sub-lets where an immigrant family (and legitimate first tenant) houses their extended family while they attempt to remain in the country (legally or otherwise). Since the extended family has no financial means or place to go, they are more than happy to sleep on the floor of their family members’ home. Meanwhile, your initial tenant is probably cashing in on these illegal sub-lets, unbeknownst to you.
The illegal sub-let is a hot topic in the UK right now, what with the city of London flush with tourists hoping to catch a glimpse of the summer Olympics. Illegal sub-letters here will render the landlord financially responsible if anything happens to them. Insurance does not cover illegal tenants. London also fines landlords for allowing too many tenants in their rental homes.
Sub-letting is governed by state law and the rules will differ from state to state. Regardless of law, you will want to ensure that your tenant has a reputable rental background. Always check multiple references and ensure that they are employed. Sometimes it’s also prudent to do your own investigative work – look them up on Facebook, Twitter, Google+, etc. You might be surprised at how much information you can find.
If you either don’t have the time or resources (or simply can’t find the information you are looking for), consider hiring a private eye to conduct a background check. Here at NAI, we have conducted hundreds of background checks on potential employees, tenants and even spouses. If there is a sketchy past to be found, we can usually find it.
The point is, there are dozens of potentially unsavory tenant situations. To prevent yourself from falling victim to one of them be sure to do thorough screening of your tenants before signing the lease. Once they are moved in, conduct regular visits to your property to make sure everything is in order. If you find that your tenant has sub-let your home, you may have grounds for eviction (but be sure to check with your local tenancy act before evicting!).