Considering Accepting Money after the Eviction? Beware!

2 min read
Kevin Perk

Kevin Perk is a full-time buy and hold and fix and flip real estate investor with over 15 years of experience. He and his wife Terron operate Kevron Properties, LLC, a boutique real estate investing company in Memphis, Tenn.

Experience
Kevin was a past president and is a current board member of the Memphis Investors Group. He’s also a blogger and writer who has authored hundreds of real estate investing articles on BiggerPockets and his own blog, SmarterLandlording.com, some of which have been featured on The Motley Fool and MONEY: Personal Finance News & Advice.

Kevin is also host of the SmarterLandlording podcast.

Originally from the Washington D.C. area, Kevin moved to Memphis to attend graduate school at The University of Memphis. After receiving his master’s degree in City and Regional Planning, Kevin climbed the planning career ladder to eventually become planning director of a county in the Memphis metro area. He “retired” from planning in 2003 to pursue real estate investing full-time.

Since “retiring,” Kevin’s main real estate investment strategy has been to buy and hold, otherwise known as landlording. Generally working in historic Midtown Memphis, Kevin is also known to fix and flip grand, historic homes when the right opportunity presents itself. He and his wife Terron (who is the principal broker at Perk Realty) have participated in dozens of real estate transactions in the Memphis metro area.

Kevin has the heart of a teacher and believes in helping others through education. An instructor of college-level geography for over 25 years, Kevin also regularly participates in seminars and panel discussions at such forums as the Memphis Investor’s Group and the Single-Family Rental Summit.

In addition, Kevin has been interviewed in publications such as the Memphis Commercial Appeal, the Memphis Daily News, and the Foreclosure News Report.

Education
Kevin earned a master’s in City and Regional Planning from The University of Memphis.

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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…