Although renting an empty house has many advantages, the fear of a default by the tenant or the housing suffering damage discourages many owners. In this rental guide, we explain the 6 different alternatives available to owners to rent a house safely, among which the careful selection of the tenant or the contracting of insurance covering unpaid and damage.
The owner has a number of alternatives to ‘shield’ when it comes to taking your floor to the market and avoid shocks. They are the following:
1- Make a careful selection of the tenant
The best remedy to avoid the headaches involved in finding a delinquent tenant is prevention. Caring for the tenant selection can be one of the most important aspects to take into account in the process of renting a home safely.
To know the solvency of a tenant we can request your payroll and employment contract, in order to check your ability to pay and job stability. In addition, there are different records of defaulters to be able to consult in which to find out if the potential tenant has already had incidents of payment in advance and, in such case, be warned to request other types of guarantees or even to reject the tenant. This point can be much easier if the rent is managed through a professional because although the potential tenant may be reluctant to give their personal and economic data to a private individual, they will be more willing to risk study. Realize a real estate professional
2- Hiring insurance for non-payment or damage
An interesting alternative to consider the guarantees or additional guarantees that are required of the tenant is the contracting of insurance like HomeLet. It covers the defaults or damages caused by the tenant in the dwelling. This avoids the initial payment effort on the part of the tenant that requires the constitution of the guarantee or the delivery of a high bond and that can become unaffordable when there are not enough savings
Different companies offer insurance policies with a range of covers that cover different scenarios: non-payment by the tenant, damage caused to the home, legal costs of attorney and Orange County estate planning attorney in case of having to reach eviction, etc. the cost will depend on the coverage of the policy, that is, the amount of money insured in case of non-payment or damages, as well as the rent of the home and the chosen insurance company. The amount, however, can be paid by landlord or tenant and is usually of the order of the cost of a home insurance, less than 200 Euros per year -although it will vary depending on the coverage.
3- Request additional guarantees
In addition to the payment of the deposit -which covers possible damage to the dwelling caused by the tenant at the end of the contracts, the law allows that any type of guarantee of compliance with the payment obligations is established in an additional way at the moment of signing the contract.
Through this additional guarantee (for example, through the payment of one or two extra monthly payments) it is a question of covering the payment obligations not met by the tenant or the damages that this may cause in the house. Its amount is free by agreement between owner and tenant
4- Requirement of endorsement
The endorsement is a support given by a third party on the payments assumed by the tenant. In the event that the latter fails to pay, the guarantor will be responsible for paying the debt as if it were his. In the case of rental housing, the owner can require two types of guarantees:
- personal endorsement: another person, usually a relative, can guarantee the tenant’s payments. If he stopped paying, it would be the guarantor who answered the debt
- bank guarantee: in this case it is a financial entity that is responsible for the payments if the tenant leaves pending debts. Due to the solvency that is supposed, this type of entities is more reliable in order to give security to the owner. The problem is that the tenant can have difficulties to obtain it, since the bank to give this endorsement can, according to the profile of the potential tenant:
- Endorse payments for only a certain length of time (for example, six months or one year, after which they will have to be renewed), with an associated cost.
- Ask the tenant to leave deposited the amount of the guarantee in the bank (worth several months of rent) during the duration of the guarantee. This is the most common practice. The problem is that many tenants will not have this amount of money to leave it in deposit.
Both the cost and the difficulty in obtaining an endorsement, the requirement by the owner of this requirement can act as a brake to find a tenant
5- Submit the contract to arbitration
It is a conflict resolution alternative to the judicial route and regulated by law. It consists in that both the tenant and the landlord sign an annex to the contract in which, in case of conflict, they agree to submit to the decision taken by an impartial arbitrator in order to solve it.
Thus, in case of non-payment of the rent, an arbitrator will mediate in the conflict, without needing to resort to the judicial way or hire a lawyer and solicitor, to try to find a solution
The negative point is that if once the arbitration decision is known, and although both as tenant and owner have signed in advance to accept the decision, if one of the two parties does not comply, the other party will have to initiate an enforcement proceeding before the ordinary courts
6- Rent through official agencies
Many autonomous communities and municipalities have a public service available to citizens to intermediate in the rent and provide guarantees, both to the landlord and the tenant. The owner offers his flat, at a cheaper price than the market, receiving the guarantee of the public body that his apartment will be careful, with what he earns in tranquility. For its part, the tenant benefits from a cost, a priori, more reduced and also has the intermediation of a public body in the event of a problem in the housing.