Considering Accepting Money after the Eviction? Beware!

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I had an interesting question asked on one of my blog posts recently.  That post examined the eviction process here in Memphis, Tennessee and the reader asked if a landlord needed to pursue another eviction after accepting payment from the tenant who yet again has fallen behind.

The short answer to that question is yes.

The longer answer to that question is yes, and you also may now have more problems.  In fact, you may not even have a written lease anymore!

I have a feeling that the situation this landlord got herself into may be more common than we realize so I wanted to expand on it a bit with this post.

The landlord in this scenario took a tenant to court and obtained a judgment for eviction due to failure to pay rent.  The tenant failed to show up for their court hearing and the landlord got her eviction judgment.   However, the tenant contacted the landlord before he was set out and paid the past due rent and the landlord continued to let them live in the property for several more months.  The tenant has again fallen behind.

Related: Self-Help Evictions: What You Should NEVER Do as a Landlord

So, What Now?

At the very least, the landlord has to go through the eviction process again because of the amount of time that has passed.  At worst, the landlord may not even have a written lease in place to use in her defense.  Here is why:

When you sign a lease with a tenant, you grant that tenant possession of a particular property as per the terms of the lease.  An eviction order terminates that lease and gives possession of the property back to the landlord.  Technically, this is how a landlord is able to go in and remove someone’s possessions from a property.  The former tenant no longer has legal possession and is in effect trespassing.

But, if after an eviction is granted and the lease is terminated, you allow the tenant to stay in the property, because for example they catch up on the rent, you have basically executed a new rental contract agreement.  An unwritten one at that!  You technically no longer have the legal protections your lease may give you and it could all come down to a he said/she said type of scenario if the tenant was to hire a knowledgeable attorney.

How do you protect yourself?  Here are a few ways:

  1. Set them out and stop dealing with deadbeats.
  2. If you choose to accept back rental payments, accept those payments with “reservation of judgment.”  Write those words on the check or the receipt you hand to the tenant and keep a copy for yourself.  By stating that you accept payment with “reservation of judgment” you are stating that you still maintain your legal rights to move forward with the eviction in the near future if payments are not continued.  Note I said “near future.”
  3. Have the tenant sign a simple form stating that “payment is accepted as per the terms of the previous lease and future payments shall be accepted as per the terms of said lease dated…….”  In this way, you are assured that your lease is again in effect.

The morals to this story are, understand what you are doing by going down to the eviction court, follow through on any judgment you are awarded and if you do accept money after the eviction, just use the key phrases outlined above to protect you.

I hope the landlord described in this story has good luck in court, sounds like she may need it.

Do you have an experience similar to this? Share in the comments below…

 

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About Author

Kevin Perk is co-founder of Kevron Properties, LLC with his wife Terron and has been involved in real estate investing for 10 years. Kevin invests in and manages rental properties in Memphis, TN and is a past president and vice-president of the local REIA group, the Memphis Investors Group.

13 Comments

  1. Kevin,
    Thanks for the post. This is certainly a tough situation. I agree that if you’re accepting rent from someone who is living in your unit, you *probably* have to go through another eviction, although State laws will control and vary widely.
    Also, I’m not sure writing “reservation of judgment” does anything to protect you – after the tenant gives you the check, you can write whatever you want on it, that probably won’t be binding on the payor. If you want something enforceable, I think you would certainly have to have them sign something in connection with the payment.
    Another option is to make clear that the payments are being accepted to satisfy back rent only – which you probably got a judgment for in connection with the FED action (however, again, state laws vary, consult a local attorney to make sure this would work in your state).
    I think by far your option number one of kick them out quickly is the best – at least that’s what I would do.

    Adrian

    • Kevin Perk

      Adrian,

      Thanks for the reply. Some very good advice here. I appreciate you taking the time to help our readers who might find themselves in such a situation.

      Kevin

  2. Why would you not make them sign another lease? Seems like the simple solution but maybe I am missing something.

    • You stole my comment, haha. IF you were foolish enough to let the tenant stay after going to all the trouble of getting an eviction, then why on earth wouldn’t you just have a new lease signed.

    • Kevin Perk

      C,

      You could go that route for sure. But I have a feeling many landlords are not aware that their lease is voided after an eviction and continue on like nothing has changed and believing they still have their old lease in place. So I was trying to make that point and provide some quick and simple solutions.

      Thanks for adding to the dicussion, I do appreciate it,

      Kevin

  3. Nice article! Its soo tempting to want someone to pay the money and continue the monetary relationship, but always remember: Protect yourself and your investment, and you will always come out ahead in this game.

  4. Abel Vazquez on

    I have a friend who is constantly dealing with this problem and seems like he has not learned his lesson everytime he comes and tells me that his tenant is yet again late some times up to 3 months behind I am going to share this article with him maybe this will help him. Awesome article Kevin.

    Abel

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