foreign diplomat as tenant, how to protect myself

Chicago, Illinois
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foreign diplomat as tenant, how to protect myself

Mona Zemsky
Investor · Chicago IL · Member since 2020 · 4 posts · 4 votes

Hello, I'm lucky enough that a foreign diplomat is interested in a 4-year lease on my house in Chicago.  It's the incoming Consul General for the country's Consulate General in Chicago and his family.

A foreign national has no SSN, no credit, and no assets in the US, so an app/credit check is pointless.  The consulate won't make itself a co-tenant but has provided a letter on its letterhead that they are paying.  

The consulate is working with a realtor and so am I.  I already require a security deposit so the tenant has some skin in the game.

Any ideas for how landlords in this situation protect themselves?  Thanks in advance for any advice!

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Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
3y
Quote from @Chris Seveney:

@Mona Zemsky

Consulate is not gonna stiff you on payments

Paying a debt would be a bigger concern if it was a US politician...

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  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    3y

    @Mona Zemsky 4 year lease would kill the deal for me. One year is my max on any new lease. Make sure the Consulate is legit and letter is signed by someone who can commit the organization. Check their feed back on line. Check them out like you would anyone else. Do they have a LL? Ask for bank reference?

    2Reply
  • Russell BrazilBusiness Member
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    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    3y

    Foreign diplomats are the best tenants you can have. I wouldn't worry about an ss number

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  • Chris SeveneyBusiness Member
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    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Mona Zemsky

    I would be doing backflips if everyone if my tenants was a foreign diplomat

    They make great tenants

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  • Patricia Steiner
    Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
    3y

    The term would not be acceptable to me. And, foreign diplomats are not created equal.  If you're inclined to do it, I would require a large security deposit, an annual rent escalation clause, Renter's Insurance with Landlord As Additionally Insured obtained from a US insurer, and know that their immunity prevents you from taking them to court for non-payment and/or eviction - so make sure the security deposit in your state can be used to offset rent.  Here's some information to know on the topic...

    https://www.nvar.com/realtors/...

    https://www.dailybeatny.com/20...

    https://mentorrent.rs/how-to-r...

    1Reply
  • Mona Zemsky
    OP
    Investor · Chicago IL · Member since 2020 · 4 posts · 4 votes
    3y

     @Chris Seveney

    Thanks Chris for this feedback.  Are there any steps you take with regard to obligating the consulate (like having them sign as a guarantor?)

    @Russell Brazil

    Thanks Russell -- appreciate that!  Same question -- is signing directly with the diplomat (only) sufficient for you or do you like to get the consulate as a guarantor?

    @Bjorn Ahlblad

    Thanks Bjorn for this feedback.  4 years for me is very desirable -- long commitment should be less wear & tear and fewer broker fees. Great points, especially the bank reference. The letter is signed/stamped by the current Consul General.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Mona Zemsky

    Consulate is not gonna stiff you on payments

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  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    3y
    Quote from @Chris Seveney:

    @Mona Zemsky

    Consulate is not gonna stiff you on payments

    Paying a debt would be a bigger concern if it was a US politician...

    4Reply
  • Mark AinleyBusiness Member
    Property Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes
    3y

    @Mona Zemsky we have had three over the years in our Chicago homes and one today in a commercial retail space for their office. Never had an issue.  If they want a 4 year lease build in a couple of rent bumps and what you don’t max out in rent should offset in easier management and lack of turnover.  

    Off course if you have a crappy property and deferred maintenace that may not be the case.  

    Just confirm they are who they are as a means of underwriting.  One of the consulates told me “last thing we want is publicity on our office, country, and people” which gave me peace of mind the first time. 

    Don’t watch “Lethal Weapon 2” in advance of signing the lease.  Lol that is a joke for anyone over 40.   


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  • Mona Zemsky
    OP
    Investor · Chicago IL · Member since 2020 · 4 posts · 4 votes
    3y

    @Patricia Steiner Wow what great advice, thanks for these links.

    @Mike Dymski LOL, right?

    @Mark Ainley Yes, thank you.  Great idea and feedback.

    @Chris Seveney Thanks again, very grateful for your thoughts.

    0Reply
  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
    3y
    Quote from @Mona Zemsky:

    Hello, I'm lucky enough that a foreign diplomat is interested in a 4-year lease on my house in Chicago.  It's the incoming Consul General for the country's Consulate General in Chicago and his family.

    A foreign national has no SSN, no credit, and no assets in the US, so an app/credit check is pointless.  The consulate won't make itself a co-tenant but has provided a letter on its letterhead that they are paying.  

    The consulate is working with a realtor and so am I.  I already require a security deposit so the tenant has some skin in the game.

    Any ideas for how landlords in this situation protect themselves?  Thanks in advance for any advice!

    For internationals, we use a service that checks on international credit.  I can't recall the name of it but you should be able to find it online.  We also request a copy of their visa.  If they are with the consulate I'd ask for a reference from a US representative.  I would also make the deposit larger than a one-month deposit.

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  • Nathan GesnerBusiness Member
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    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y

    I would definitely consider building in rent increases based on consumer-price-index or some other factor. Four years is a long time to go with no increases.

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  • Henry T.
    Member since 2022 · 1k+ posts · 1k+ votes
    3y

    Make sure he mows the lawn regularly. And no guns or wild parties either. Quiet hours after 10. and all prisoner  exchanges are to be done off property at the local Walmart :)

    0Reply
  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    3y

    Hey @Mona Zemsky - What area of Chicago is your property in?  Did you do anything specific to market to the foreign diplomat?

    Here are some suggestions for protecting yourself as a landlord when renting to a foreign diplomat:

    • - Do your research on the foreign government and the diplomat. This will help you assess the risk of non-payment of rent or other problems.
    • - Get everything in writing, including the lease agreement, the waiver of diplomatic immunity, and any other agreements or arrangements.
    •  -Be clear about your expectations and communicate them to the diplomat in writing.
    • Monitor the property closely and be prepared to take action if there are any problems.
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  • Mona Zemsky
    OP
    Investor · Chicago IL · Member since 2020 · 4 posts · 4 votes
    3y

    @Crystal Smith Great idea, will check on this.

    @Nathan Gesner Thanks for the feedback!

    @Henry T. LOL 

    @Jonathan Klemm Bosworth, south of North Av.  It's a nice house with relatively high price tag, so it doesn't surprise me that a person with this status wants it -- just hadn't really faced a situation like this with a non-citizen.  I didn't do anything special marketing-wise -- but in the future I probably will! Thanks for the advice. I found a great waiver clause to use.

    1Reply
  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    3y

    That's awesome @Mona Zemsky - sounds like you pretty much have all your ducks in a row then.  What will you end up getting for the rent and how big is the house?

    That area of Chicago in Wicker is super nice!

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