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Chicago Property Management Blog

Risks Around Tenant Screening in 2024: Chicago Landlords … Don't Get Caught!

In 2024, the landscape has changed for Landlords in Chicago and the surrounding suburbs. Over the recent years, we have seen rental applications almost 100% shift from paper to digital format, which makes the process a lot more convenient. However,  that has created additional levels of risk not everyone has the ability to combat, or sees coming.

GC Realty & Development Was Defrauded

In 2021, GC Realty & Development fell victim to multiple lease applicant fraud scenarios. Ever since, we have made it our mission to not only prevent being defrauded again in any similar scenarios, but to also make the public aware of what they need to look out for so they never feel the same pain GC and our clients felt.    

In a single year, we had multiple applicants fraudulently apply for one of our units, and be approved, only to find out months later the person that applied was not the person living in the unit.  All the information of this approved applicant was 100% accurate, the entire life of some other random person they had bought information on.  When we found out we were duped, this gave us all a feeling of vulnerability and a new level of helplessness when there was little the police could do about it.  We had to take these residents,the fraudsters, through eviction court and get them officially removed.  

Fraudsters Target Easy Marks

You might ask how you get fooled three times and why we didn't learn our lesson after the first time?  Well, with no knowledge of the scam, we approved these three fraudsters all within a 30 day period, and it wasn't till all three were moved in that we realized the issue.  The situation revealed a crack in our screening system, and the word spread amongst scammers.  In the 12 months following, we caught 13 of these scammers trying to get approved and even today we still catch three to four annually.   

Who Do Applicant Scams Target In Chicago?

The scammers approach a Property Manager and if they get an application pushed through, word spreads that there is a glitch in our approval system for them to bring their friends.  This means if you have let any scammers through your system, you are vulnerable to even more scam applications. 

They also target one off property owners that might be conducting leasing themselves. They know most individual investors do not have the technology necessary to detect fraudulent documents, and the scammers are often aggressive to get approved, which intimidates the Landlord ultimately approving them faster.  

Realtors that are not primary leasing agents have become targets as well by these scammers.  The scammers know that a Realtor that only conducts a few leasing deals is all about getting the deal approved, so they can focus on sales.  I have seen many Chicagoland Realtors burned by what they thought was a solid tenant, but it turned out to be fraud.  

Where In Chicago Lease Application Fraud Happens

The crazy part is, these properties were not yucky apartments but they were nice single family homes in Naperville, La Grange, & Dolton.   We have also had colleagues and other investors, some which have been featured on Straight Up Chicago Investor podcast, report this happening to them in Jefferson Park, Schaumburg, and Wicker Park.   

Chicago & Suburb Leasing Fraud

In recent years, there has come to be an underground market for fake identities being sold that are actually real people’s information with just a tweak of the picture on the Drivers License.  For $500-$1,000 you can purchase and apply for an apartment with all fake information.  Everything is fake and their fake applications are identities of what you and I would call slam dunk approvals.  

Why Chicago Landlords Fall Victim To Scams

The old adage of “if it’s too good to be true, then it probably is” fits the description of why these scammers get approved.  These applicants have 800 credit scores, six figure incomes, come out of owning their home, and want to move in next week.  What Landlord doesn’t want this perfect scenario, and that is where they get you.  The red flags in hindsight all seem to disappear with the amazing credentials and financials the scammers provide.  

Technology to Combat Application Fraud

The good news for the fake identity issues is there is software available. For instance, after our issues in 2021, we invested in a software called Findig's, and this program can spot altered PDFs, helping to detect potential fraud. You must truly verify all applicant information, especially income and rental history.  Most of the mainstream online platforms do not have this technology widely available for users like yourself.

Who Can Help If You Are A Victim of Lease Fraud in Chicago

This answer you may not like.  Police will typically tell you it is a civil issue in Chicago and will not do anything more.  In the suburbs, the police will try to help, but typically they do little to get these fraudsters out of your home. They may also have little success helping you gain anything you have lost financially.  

What Do I Do if My Chicago Tenant is Fake

In this scenario, you have two options. Let me make the disclosure that I am not offering legal advice, but merely advice based on our experience.  Always seek the advice of any attorney and if you need an attorney referral, reach out and I can refer you to a specialist.  Your first option is to take steps to file for eviction and your other option is to offer the occupant money to leave, which is called “Cash For Keys” within the industry.  I know it hurts to pay a scammer like this who has already taken your home, money, and head space, but to pay someone $2,000 to be out in a week vs spending 4-6 months in the legal system often is the better financial approach for you as the owner.

Squatters in Chicago & Suburbs

Not only can applicants provide fake information, there is an even larger issue. Recently, we’ve seen squatters moving into and taking possession of available property.  They may make an appointment to view your available rental under a fake name, maybe leave a window open, or look over the shoulder of the leasing agent to get the combo.  These techniques can allow them access to the property and allow them to move in unbeknownst to anyone.

What Do I Do If I Have A Squatter?

As stated above, in these types of scenarios with fake applicant scammers, you don't have many advocates in your corner. If you catch a squatter within the first 24 hours, sometimes the police will help. But often the squatter will provide a fake lease and pretend they are the victim, and the police back down.  This is an entirely different article we will write in the future, but for now you should act fast, consult an attorney, and prepare to pay them to leave, or file for eviction if you are unable to sweet talk them out.  

Chicago & Illinois Laws

Changes in laws affect how you apply for housing. In the entire state of Illinois, income source is now a protected class. Landlords can't discriminate based on income source any longer. This includes Section 8, unemployment, and child support.  This has been the law in Chicago for a few years, however, now the entire state must comply.  

Cook County Just Housing Amendment

This Cook County specific law has been around since 2019, but we are now seeing Landlords and real estate professionals getting “secret shopped” and penalized for not following this law, which is all about protecting applicants with criminal records.  

Protecting Yourself From Chicago Screening Risks

Ensure you understand the risks and adhere to leasing requirements by downloading our comprehensive Chicago Tenant Screening Mastery Guide, which provides valuable insights for both Chicago and its suburbs.  

Where Do I Go From Here???

You can most certainly handle leasing and tenant screening on your own, however it is crucial to be well informed about the process. If you are working with a leasing agent, make sure they know all of your risks stated above and in the download below. You can also hire a company, like GC Realty & Development, LLC., to help you avoid all these risks. We are happy to handle only your leasing or conduct full service property management.  

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