*Note on Terminology: Conservatives and liberals can’t even agree on terminology, with conservatives using the pejorative “illegal aliens” and liberals using the cuddly “undocumented immigrants.” We’ll split the difference here and use the term “illegal immigrants,” because it’s clear and unambiguous. And because we don’t mind needling both sides a little.
Ready to plunge into some salty, politically-hot waters? Check all political righteousness at the door, because we’re going to have a pragmatic look at the pros and cons of signing a lease contract with illegal immigrant tenants. No pulled punches, no political correctness, just an honest discussion.
Illegal immigrants are a reality in the housing industry. There are an estimated 11-11.5 million undocumented immigrants living in the United States, and they aren’t homeowners – it’s awfully tough to buy a home without a valid ID.
So they rent, which means landlords and property managers must make a decision about whether to lease to them.
What are the practical advantages, risks and pitfalls of signing a lease contract with illegal immigrant renters?
Is It Legal to Rent to Illegal Immigrants? Conflicting Laws
On the state and local levels, laws run the gamut from doggedly pro-immigrant to unabashedly anti-immigrant.
In some states and municipalities, it is a crime for landlords to knowingly sign a lease contract with illegal immigrants. For example, property managers and landlords in Oklahoma risk criminal penalties for signing a lease with illegal immigrant tenants.
Nor is Oklahoma an outlier. According to the American Apartment Owner’s Association, a Kentucky real estate investor, named William Hadden was arrested and charged with crimes ranging from harboring fugitives to conspiracy. All because his property manager rented to illegals. Thankfully Mr. Hadden was acquitted, but had he been charged, he could literally have spent the rest of his life behind bars.
At the opposite side of the political and legal spectrum, for example in California and New York, it’s illegal for landlords or manager to even ask a rental applicant’s immigration status!
Consider a case where a property management firm were threatened with a lawsuit for demanding an applicant’s social security number to run a tenant credit screening. Why you ask? Apparently that was enough to violate California’s rental laws prohibiting inquiry about a rental applicant’s immigration status as part of a landlord’s tenant screening.
Before you do anything you might live to regret, make sure you understand your state and local laws. You might think you’re following your conscience, but the law may have something entirely different to say on the matter.
Federal Fair Housing Laws
Dip your toe in the waters of leasing to undocumented immigrants?
Under the current Trump Administration, states are actively combating federal policy on how to handle illegal immigrant tenants. And leaving many landlords in a damned-if-you-do, damned-if-you-don’t position.
Still, the Department of Housing and Urban Development has not changed its position on Fair Housing laws and where illegal immigrant tenants fit into them. In fact, HUD has actively pursued more Fair Housing lawsuits in the last few years, including some pretty innocuous cases with no ill will towards any group.
Don’t be the next landlord to be made an example.
As a refresher, landlords and property managers cannot discriminate based on national origin, race or ethnicity (among others). That means you can’t ask for any additional information or documents from one applicant that you don’t ask from any others.
Imagine you get two applicants, one an obvious American yokel, and the other a non-English speaker of unclear nationality and legal status. You cannot ask for any extra documentation or information from the latter, or run any identity/background checks, that you did not also collect on the former.
If you don’t ask for a copy of every applicant’s driver’s license, you can’t ask for it from any applicant. Likewise with running tenant screening reports. Keep records of all screening information collected for a year after filling vacant units, so that you can prove that you treated everyone the same if you’re ever taken to court over Fair Housing laws.
Tenant Screening & Lease Contract Challenges with Illegal Immigrants
All of the above are reasons to run tenant screening reports with every single rental application. Run a full credit report, nationwide criminal background check, nationwide eviction history report and an identity verification.
Illegal immigrants will probably not be visible on any of these records. Does that mean they will be a bad tenant?
Not at all, but it makes it harder to know. It’s difficult to vet someone who doesn’t exist on paper, with no past, no records of prior performance.
And then there’s the language barrier. Immigrants in the U.S. illegally are much less likely than their legal counterparts to speak English, making communication a challenge from the very start.
In some states, landlords may face foreign-language lease contract requirements. For example, in California if the lease terms were negotiated in another language, the landlord or property manager must provide copies of the lease contract in that language, plus an English copy.
Anecdotally, there are widespread accounts of illegal immigrants squeezing extra residents into rental properties, beyond those listed on the lease contract. More occupants mean more wear and tear on the rental property. It also means non-screened, unapproved adults living in your rental, unbeknownst to you.
These accounts are impossible to substantiate with hard data – by their nature, these households are undocumented. But the advantages of leasing to illegal immigrants also hinges on anecdotal evidence; the knife cuts both ways.
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Eviction & Collection Challenges
What happens if an illegal immigrant doesn’t pay the rent?
“An illegal immigrant has a much greater chance of being ‘judgment proof,’” explains Maryland landlord-tenant attorney Brian Pendergraft. “My toolbox for collecting a judgment is neutered. There is no bank account for me to garnish, or legal job where I can garnish their pay checks, or miscellaneous assets I can levy.”
And what is a landlord to do if they leased to an illegal immigrant, in a state where it’s a criminal offense? They may well be afraid to file for eviction at all, and making it public that they leased to illegal immigrants.
Fortunately, in practice landlords usually have little to fear from rent court judges ordering prosecution for leasing to illegal immigrants. If you rented to illegal immigrants and they stopped paying the rent, I would urge you to serve an official eviction notice and start the eviction process immediately.
Advantages of Leasing to Illegal Immigrants
With all these risks associated with renting to illegal immigrants, what are the benefits?
It turns out the advantages are pretty persuasive, even if most are anecdotal.
Despite the risks outlined above, where’s the last place on earth illegal immigrants want to end up? Most will do everything in their power to avoid being taken to court, appearing on official dockets and potentially forced to show documents. That means they are much less likely to breach their lease agreement. If they do breach the lease, they typically move out rather than face eviction and court appearances.
Illegal immigrants are also less likely to sue their landlord, for the same reason.
Beyond paying their rent on time and avoiding court entanglements, illegal immigrants are less likely to contact the landlord to constantly complain or demand property updates. Living in the U.S. illegally mandates a certain amount of privacy; illegal renters tend not to want their landlord or anyone else coming through the property more often than absolutely necessary.
Because of the risks involved in applying to rent a new property, illegal immigrants tend to move less often than their legal counterparts. When they find a comfortable home with a landlord who doesn’t hassle them, they’re likely to stay for many years. Longer tenancies mean fewer turnovers, and we all know turnovers are profit-killers.
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So, Should You Rent to Illegal Immigrants? An Experience that Sums It Up
Early in my career, managing the personal real estate portfolios for the two owners of a nationwide mortgage lender, I had to fill a vacancy in a low-end neighborhood. Most residents were U.S. citizens, and an antagonistic pool of tenants.
I sat down with my boss to review the applications we’d received, and I mentioned a Hispanic applicant who was here legally but who had no credit history or credit references. My boss’s face lit up: “Awesome! Rent to them.” No further questions.
Surprised, I shrugged and did as he requested. I met the tenant at the property to sign the lease contract, and as soon as I had signed, he leaned out the back door and whistled. He honest-to-goodness whistled.
Six more adults filed into the property with their belongings. It was a two-bedroom rowhouse.
I gathered the lease agreement and left, deciding to ignore the blatant breach of the occupancy lease clause.
Sure enough, they paid like clockwork, the rent arriving a day or two early every month. The only time I ever heard from them about a repair request, the one documented tenant called me very apologetically. “Mr. Brian, I’m so sorry to bother you. We tried fixing it ourselves, but the roof leak is so bad, I think it needs a real roofer.”
When I showed up to meet a roofer there, I noticed they had actually made other small repairs and improvements around the property themselves, without calling me.
Pros and cons, risks and rewards. Still, there’s something to be said for a tenant who wants to avoid any trouble with their landlord, and who wants to remain living in your property as long as possible.♦
Blast away with your outrage! We’re ready for all the political indignation. “You’re taking advantage of a vulnerable population” or “You’re sheltering criminals” or some other such righteousness. Bring the controversy!
I don’t mind leasing to illegal immigrants. Good tenants who don’t make waves. Many have much better attitudes than other shifty, suspicious US-born tenants I’ve seen
I know what you mean Bob! Some American-born tenants just want to game the system, but I haven’t seen any “professional tenants” who were illegal immigrants.
I would take undocumented immigrants any day over some other types of tenants. In fact, in my lower-end properties, I WISH I had immigrants willing to live there. Uggh!
I hope your properties turn around Nancy, and that you get some good tenants moving forward!
As a (legal) immigrant myself, I do know some undocumented Hispanic immigrants who rent locally, and they are definitely more likely to pay on time and avoid even talking to the landlord. They tend to pack more people than average into the unit though, as the writer points out above. Pick your poison I guess, but I’d rather have on time rents than some deadbeat redneck that you hope will pay by the 20th every month
Thanks for the perspective J! And we’re generalizing, well… how else do you talk about a group of 11 million people? And I completely agree that on-time rents are more important to me as a landlord than how many people are living in the unit.
This statement is incredibly bigoted and racist. What about an MS-13 gang member? If you were a landlord would you like to rent to a violent gang member?
There are good and bad tenants from all types of racial backgrounds. It’s just unfortunate that bigots like J. Rodriguez need to see things through the lens of “my race is good and all other races are bad.”
This is a topic that can be very touchy for some people and you have given a lighter perspective. There are many points in this article. As a landlord, there will be that fear of the unknown whether you rent to anyone, even after doing the proper tenant screening. For me, the risk is worth it when it comes to renting to an illegal immigrant. As you said, most don’t want to be taken to court and are fairly quiet with minimal concerns. Plus rent is always on time which is a big plus in my book.
Definitely a sensitive topic Eric! But yeah I’ve found illegal immigrants to be quiet and reliable tenants, which is great from a landlord’s perspective.
Wow, the lack of concern for the costs passed on to the local populace is so very conveniently obfuscated here.
How about the cost on local schools, police, low skilled pay etc. that overly densely packed apartments bring? Talk about ignorantly kicking the can down the road.
What do you think the kids of these illegals become? Americans… ding, ding, ding! Pyramid schemes always, and I mean always end up hurting more than helping in the long run.
Good thing illegal immigrants pay taxes then, in the form of income taxes, sales taxes, and indirectly paying property taxes through their rental dwellings 🙂
I have a small home rented. He has been slow in paying rent. He also threatened me with a ball bat. He lies about any things. He is Hispanic, however I do not know if he is a legal immigrant. When he signed RENT TO BUY, I did not ask him any questions. Is it legal for me to rent to this person without knowing the facts. I have tried Truth Finder and have not been successful. Thank you
I’m sorry to hear that Kathy. While I can’t speak to what’s legal or illegal, I would urge you to start the eviction process or simply non-renew his lease agreement. Keep documentation of any threats or other infractions, to help you in the eviction process.
Best of luck,
Brian
I wanted to ask if I am the person that is leasing an apartment and my husband just got her from out of the country and doesn’t have his green card yet but my landlord told me that to add him to my lease I would have to pay another deposit and one month of rent because he doesn’t have credit is there any laws against this or do I just have to pay?
I have woman she said she she is us citizen and her common law and his relatives undocumented she uses c ovid 19 for not to [pay rent stating other one person who sublets from her has no work can not provide me letter from employer and 3 undocumented or this woman did not get kease because lease would drown upon full payment of deposite and covid 19 moratorium hitsame timei need some help I gave her 3 days notice of none compliance because on application she said 7 people and now 8 she said family but she sublet to undocumented who pays her rentxhe ewants to live free till dec2020
Definitely going to be a lot of eviction challenges as more cities and states start allowing them again. Expect a backlog, and file early!
hi, I understand about the benefits of renting to illegal immigrants,
but I still don’t understand about the part if as landlords what if the tenant gets caught about their status here, I heard landlords have to be sent to jail for 5 years if they knowingly know that they are illegal immigrants?sorry if I had missed something here.
Hi Nancy, the potential legal penalty risk for landlords varies by state. In most states, there is no criminal penalty risk for landlords.
https://www.american-apartment-owners-association.org/property-management/latest-news/landlord-faced-criminal-charges-for-renting-to-illegals/
I would think twice before breaking Federal laws of harboring. I am suing a landlord next week for 25 tenants living in a 2 bedroom.
A sixty-nine year old Kentucky man was charged with more than 32 criminal counts by the federal government for renting to as many as 60 illegal aliens. The landlord faced forfeiture of his properties and up to 20 years in prison. The case is thought to be the first of its kind.
Dangerous precedent, forcing landlords to serve as unpaid law enforcement officers.
I got what you mean, regards for putting up. Woh I am glad
to find this website through google.
So if you turn a blind eye to the number of people in the low end unit, do you want each of those (extra tenants) on the lease or do they remain invisible? I guess what I’m getting at is, with one of your higher end units, do you give that citizen the same flexibility of (extra tenants)? I know my landlord would freak out if they saw (extra tenants) coming and going from my unit that wasn’t listed on the lease.
If possible, I used to put them on the lease agreement, but I wouldn’t press it. The simple fact is that lower-end rental units come with far more social problems and risks than higher-end units, so as a landlord I was willing to make tradeoffs with my lower-end units that I wouldn’t allow in my higher-end units. It’s one reason why the returns are much lower for higher-end units – they’re less risky investments.