A tale of WHOA!!!
Let’s say you purchase a piece of commercial property. You then find a tenant for it, sign your lease, and start collecting rental income that will produce the intended positive cash flow on your commercial building.
Sometime down the road, you then find out that there is suspected criminal activity going on in your building by your tenant. You find this out by criminal charges being filed against you by the local district attorney. Now you have to fight – not simply for your right to make an income on your investment property – but to stay out of jail.
Sound impossible here in the U.S.? Think again.
A chilling story…
Recently, this story about a local commercial landlord was reported in the Burlington (Vermont) Free Press:
“Chittenden County’s top prosecutor said filing criminal charges against landlords that host spas that mask as prostitution sites is the latest effort by the state in helping local communities combat the problem. State’s Attorney T.J. Donovan admitted state and federal investigators have had little luck in the past 10 years pursuing prostitution at the spas. “We can do better in this community than what we’ve done. And frankly our approach to this problem in the past hasn’t worked. We need a new approach.” Donovan made the comments minutes after a Burlington man pleaded not guilty to a charge permitting his building in Williston to be used for prostitution.
Lunacy? You bet!
But wait – there’s more:
Once the landlord “received a warning letter last week from Donovan, the property owner took action to get the tenants to leave. He said they vacated the building, and the business is closed and in search of a new tenant…Donovan is trying to send a message to the community so landlords are on notice. Donovan said going after the landlord is a new philosophy in trying to battle prostitution.”
Kind of makes you want to see if Mr. Donovan owns any rental property, then rent it out, set up an illegal lemonade stand in front of it, then get him to charge himself with illegal activity….Oh, that’s right – that would be a conflict of interest…
Goose stepping ramifications
Imagine the ramifications of this particular case for property investors. Any landlord leasing out rental office space would be liable for the actions of their tenant. Let’s say you’re renting to a hedge fund company that absconds with their investors’ money, a la Bernie Madoff, for example. You get arrested. Let’s say your tenant leases warehouse space from you. To store their ( place your preferred name of contraband here). You get arrested. Let’s say you’re renting out an apartment – maybe it’s your vacant apartment upstairs in a building you happen to also live in. The tenant sets up a meth lab. You get arrested. Or puts in more unrelated “tenants” than your lease allows. Again, you’re on the hook to be arrested.
To paraphrase Mel Brooks, “what in the wide world of sports is going on here?”
Simple. Zealous prosecutors in a judicial system that is by definition political, and requires district attorneys to be elected to their office, create an environment of absolute insanity in a free market capitalist system for property investors.
A simple solution
What can be done? Again, simple solution. Vote against these zealots. Get them out of office. If you have one in your area, and they are clearly taking a broad stroke approach to fighting crime by going after landlords, then fight back! Get your friends and family to vote them out of office. Spread the word, write letters to the editor of your local paper…voice your opposition to Gestapo-like tactics by overzealous local prosecutors.
Besides our basic capitalist system being threatened, it’s your investment property dollars that are at stake. And that’s the bottom line.
photos courtesy of magnoliaforever.wordpress.com, thegreatestrealestateblog.com, clickpropertymanagement.co.nz, brookdale-pms.co.uk, tenantscreeningblog.com, futurity.org