If that was required by legislation (I’m sure there are a lot of people who’d go to their state capitols), how would that change the market for REI focused on lease/option deals? That is, if the funds had to be escrowed with a title company (title company keeps any interest on the acct), would that dis-incentivize lease/option dealers in the market or just make sure things stayed legit. Tax-wise, the lessor/seller shouldn’t get/claim those funds as income until the sale is complete or the tenant/buyer willfully releases their option.

The above story is quite true, in that anyone in the landlord business should have a cushion of 3 months or so to cover lost rents, damage, eviction costs, etc. I’m a Dave Ramsey fan when it comes to personal finances. Don’t carry stupid debt and keep an emergency fund and life is just easier when “hiccups” come along like non-paying tenant. Worst eviction cost I ever had was in Texas where the tenant dragged out the process until the Sheriff showed up and gave them notice. I think I needed to spend something like 6K to rehab that unit. Broken toilet (how do you live w/o a working toilet?), broken windows, dog urine stains on the hardwood floors, holes in walls, maggots in the fridge, etc. My property management firm nearly quit on the spot instead of dealing with it… but they came through and got the unit squared away and a new tenant. The evicted tenant came with the duplex, evidence that some landlords just sell their problem tenants away.

In Florida last year, it was taking a month to get someone evicted even in the easiest of circumstances with the most egregious tenant behavior (tenant has not paid rent in months, has no phone at which to be contacted, refuses to contact us to try to work anything out, has no job, no prospects for a job or being able to pay the rent in the future, AND was seen selling AK-47s out of his trunk at the property by a tradesman). I did everything I could to speed up the process in this case because the property in question is behind a house I was also renting- to a family with small children! It still took a month. The tradesman would not talk to the cops out of fear and there are plenty of tenant protections in place to slow down an eviction. I was terrified that something would happen to the kids and I would get sued. I called the police but they could do nothing without the tradesman talking to them.

At one point the sheriff’s office was so behind in serving the papers for one step of the process that it was taking 4-6 weeks for that ONE STEP in the process unless you paid $100+ for expedited service. I think that was in Miami-Dade, but this was last year sometime so hopefully it’s better now.

90%+ of my evictions were of people gaming the system to get as much free rent as possible and they had been evicted before. I did not originally rent to them, but I was foreclosing on the property and the tenants were already in there. There were a few tenants that were goood tenants that wanted to stay and were willing and able to pay market rent. This was frequently lower than the lease they had signed, but I was perfectly willing to accept their old lease or renegotiate a reasonable new lease with them if they wanted to stay. I was able to do this with every single one of my “legitimate” tenants. I was even willing to accept on the low end of the range of reasonable market rates to keep the tenants in place in most places because of the risk of damage/theft to an empty property and the concomitant higher insurance rates for same.

The cash out of pocket cost of eviction includes lawyers fees, filing fees, extra fee to sheriff for expedited service, and postage and/or having someone post the property for the legally required notices. Add in your lost rent, and you are talking about a LOT of money, even for a property that does not rent for much.

I personally was willing to work with every single tenant that wanted to stay and pay rent but was having temporary problems. We let some mow the lawn for a rent break, arranged twice a month payments to make cash flow easier, helped them sign up for section 8, offered to let them move to a less expensive property with no extra fees, etc. About 90% of them JUST DID NOT WANT TO PAY. They knew that if the property was in foreclosure that it would be harder to evict them and that they could frequently stay for months without paying, and that was their goal. They almost never said this outright, at least until the very end. They would say one thing and then another, tell you the check was in the mail, their daughter took money out of the account and that’s why the payment didn’t go thru, anything to delay a little longer.

On the other side I saw tenant after tenant that had been robbed of their deposit and money that they thought was going toward buying a house. However, in every case the market price of the house had fallen so far, that even after losing all that money they had put toward the house, they STILL needed to pay less to acquire it at current market rates. Oddly, this did not make them feel any better, for the most part. They still felt ripped off. But if you agreed to pay $150K for a house, put $10K down and paid the rent on a rent with option contract, and you are able to buy the house the next year for $120K- even having lost the $10K, you are coming out ahead. If the previous landlord hadn’t screwed you, the only way stay in the house would have been to pay the $150 you agreed to. If you realized the value had dropped and didn’t want to pay that much you would have to move if the previous landlord wasn’t willing to re-negotiate the price. In almost every case, the tenant would ask ME, the new owner, for the deposit they had given the previous owner AND want to buy the house for $120K. In only 2% of the cases had the previous landlord actually escrowed the deposit and turned it over to me. Every other one had pocketed the money.

Tenants can avoid problems by checking out their landlords before signing anything!!! Never pay in cash, but get a receipt if you have to pay cash for some reason! Keep that receipt!! Never pay anything until you get a copy of the lease you have signed! READ THE LEASE before signing! Keep your copy of the lease!!! Check county records to make sure your landlord is in fact the owner or can show papers signed by the owner that s/he is entitled to manage it, especially if they want cash or want to you to make the check out to them personally for both the deposit and the first month’s rent.

YOU should tell the tenants when an auction date has been set if you’re unable to conclude negotiations for the Deed-in-Lieu, or if you’ve concluded Deed-in-Lieu negotiations what that date of transfer from you to the lender will be.

The tenant owes rent to you until that date, why should they get to live free? I went through this personally with my now-wife’s home 7 years ago. The tenant didn’t figure they should pay, and got to live there for 6 months until the foreclosure auction. If the tenant had paid for those 6 months, we might have been able to address the delinquency with the lender (partly due to their paperwork fault, NEVER deal with Dovenmuehle mortgage servicer).

In other words… AB 189 if passed will only benefit tenants looking to game the system IMO.

Some of the prospective tenants for that property told me:

They were paying rent to somebody who did not even own the home while the home was being foreclosed on.

Somebody on Craigs list was advertising a home for lease and to send the deposit check out of the country…

Another tenant had 5 days to find a new place because their current place was foreclosed on.

Don’t even get me started on some of the rental contracts I’ve come across where owners have pulled them up from who knows where…

Anyways… good tips and the Clark County, NV website has step by step instructions on how to find out if the home you are renting (or planning on renting) is in foreclosure. You can also see who really owns the home.

And yes.. AB 189 is a knee jerk example of politicians getting involved in something they have little clue about. The excuse is to allow more time for certain people to pay their rent on time before being evicted…

I’ve never known a landlord who immediately evicted somebody because the tenant was six days late in paying… unless it was a constant problem and a good excuse to get rid of bad tenants.

In other words… AB 189 if passed will only benefit tenants looking to game the system IMO.

On another note.. I’ve seen bad behavior on both sides of the deal. The best policy is to treat your rental home as a five star hotel and tenants as five star guests.. works wonders for me.

Paul Francis, CRS’s last blog post: Report suggests 55% of Nevada Homes are worth less then their Mortgage

“Assembly Bill 189 which was introduced in the Nevada Assembly on Feb. 18, would make significant changes to Nevada’s eviction laws. For example, existing law includes procedures for summary eviction of certain tenants who fail to pay rent within five days after service of a written notice. Assembly Bill 189 would extend the five-day period to 10 days after service of the non-payment notice.

Existing law also provides that, under certain circumstances, a landlord may obtain an order from the court directing the sheriff to remove the tenant within 24 hours after receiving the order. However, Assembly Bill 189 provides that the sheriff may not remove the tenant earlier than 5 days after the sheriff receives the order. Assembly Bill 189 also provides that if the court issues an order for summary removal of the tenant, the order will not take effect until noon on the fifth day after the order is issued. Moreover, the order will not become effective if the tenant tenders payment of the rent and submits proof of the payment to the court before the five-day time period expires.”