Rental Brokers: How They Can Work for You

With home sales declining to record lows, many homeowners who can't sell their homes are turning to rental brokers to ease their financial burden. Instead of paying the mortgage on an empty house, they opt to rent it to help cover the mortgage until the market turns around. However, things don't always work out as planned.

A tenant in Cornelius, N.C. was startled one afternoon by a visit from the sheriff. She was served with foreclosure papers for the property, which she was renting from an out-of-town homeowner. She immediately called her rental broker, John Bradford of Park Avenue Properties, to see what her rights were as a renter of a foreclosed property.

Bradford is a member and Southeast regional vice president of the National Association of Residential Property Managers, which is an association that supports the professional and ethical practices of rental home management companies through networking, education, and designation. Here are his tips on choosing and working with a rental broker:

1. Choose a rental broker that adheres to a code of ethics. Rental brokers that are NARPM members are required to be committed to treating all tenants professionally when applying for, living in and vacating a managed residence.

2. Choose a rental broker who is licensed. A licensed broker is required to ensure all landlord and tenant laws of your city, state and federal government are represented and enforced. They should protect your rights against discrimination by race, color, religion, sex, national origin, familial status or handicap, and comply with all federal, state and local laws concerning discrimination. They should protect you from exaggeration, misrepresentation, misinformation or concealed pertinent facts relating to the property.

3. Choose a "No-Fee" rental broker. Rental brokers' ultimate fiduciary responsibility is to the property owner, not the tenant, so why pay them a fee? Most property management fees are paid by the property owner. Even though brokers are being paid by the property owner, rental brokers are legally required to represent you according to all federal laws and regulations, as well as those in your city and state. They will provide you with a rental agreement that specifies all aspects of the landlord/tenant relationship.

4. Choose a local rental broker. If you are running late on sending in your monthly payment, choosing a local rental broker allows you to make a last-minute payment more quickly than if you have to mail it to an out-of-state landlord. A local broker can take the payment at the local office.

5. A rental broker will protect your security deposit. The rental agent is required to hold the tenant's security deposit in a trust account. With many property owners falling into foreclosure or bankruptcy, this protects renters from losing a security deposit as a result of landlords' mishandling of funds. They also provide tenants with the opportunity to document the condition of the property before signing the rental agreement, and again before vacating the property, which can prevent a delay in the deposit refund.

6. A rental broker will know rate values and vacancy factors. An experienced and licensed rental broker will understand the values of different areas and properties and be able to advise you and negotiate for you if there are factors that could influence the cost or length of the lease.

7. A rental broker will respond promptly to requests for repairs. With many homeowners out of state, it may be slow to get repairs completed should the occasion arise. Since rental brokers have relationships with reputable maintenance professionals, you can get quick service when problems occur.

8. Get everything in writing. Your rental agreement should list all fees, deposits, possession dates and any other details pertinent to the leasing of this property. It doesn't matter what your rental broker has told you; if you don't have it in writing, it is not binding. The rental agreement must be signed by both the tenant and the landlord.

After the tenant in Cornelius spoke to her rental broker, she learned that the homeowner asked to be sent the tenant's security deposit. John Bradford was reluctant to give it to the homeowner, since he felt that under the current financial situation the homeowner would spend it and her tenant would never see the money again. Bradford was able to advise the tenant of a state clause that allowed her to get her entire security deposit back if she vacated the property within 10 days of the foreclosure papers being served. She was thankful that she worked with a licensed rental broker who was informed and able to protect her rights.

Barbara Green is the Design Diva and owner of Sensibly Chic Interior Design. Follow her on Twitter @thedesigndiva.
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