Landlording & Rental Properties

I Had a Warrant Out for My Arrest Due to One of My Rentals: Here’s What I Learned

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arrest-warrant

This past summer I had an arrest warrant issued for me over one of my rental properties. At first, I was a little in shock.

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I thought I had done quite a few things over the years to simplify my life as a real estate investor, but obviously something was amiss. If I happened to be driving through this small town just West of Philadelphia and got pulled over, they could’ve quickly seen that I had an outstanding warrant and then proceeded to lock me up.

So, How Did This Happen?

You’re probably starting to wonder what this criminal did. While it really wasn’t me per se, it was my tenant, who at first glance was a good, paying, and clean tenant who really took care of the property — or so I thought. What was I missing?

The warrant ended up being for not cutting the grass. When the township first cited us for this, I contacted my property management team to figure out what was going on, and they started to investigate.

Apparently, the tenant always did cut the grass, and they said it must be the house next door. Meanwhile, the township kept coming by and fining us (or should I say me) on a regular basis, and finally they issued the bench warrant.

wholesaling_mistake

Related: I Missed a Single Phone Call & It Cost Me a Deal: Here’s What I Learned

Last week, after posting some money with the court, we had our hearing. But before I get into how that went, let’s take a look at what I had done up to this point to simplify things, as well as what I could’ve done differently.

Delegation

As I was getting older, I realized that I needed to simplify my life for a few reasons. One of the biggest drivers was that if something happened to me, I didn’t want my heirs freaking out about having to deal with all of my properties and everything that goes along with managing them.

Besides transitioning to owning more notes than properties, I also started to think about delegating some tasks.

Bookkeeping was one of those tasks that I had always done. Even before computers, property management software, or Excel spreadsheets, I had my good ole ledger books.

As time went on, I realized that I needed to automate things, such as how I paid my mortgages, so I set up a separate bank account and credit card just for my properties.

But what I did next was the biggest thing that simplified my real estate investing.

I hired a property manager.

At one point, I was a property manager, so delegating this task was very difficult. But after my smaller real estate office was gobbled up by a larger, national firm who had a property management department, I was no longer able to perform this task, so I hired a local and reputable management firm.

It’s one of the best things I’ve ever done, as they not only managed tenants, handled repairs, and, of course, did all the bookkeeping, but they also did many other tasks, like meeting inspectors and contractors, paying my bills for me, and even going to eviction court.

So, last week was my court date, but as you can guess, I didn’t attend. I sent my property manager, and you’ll never believe that this was all over a tiny strip of grass or weeds between a walkway and the next-door neighbor that we didn’t even believe was our property or was worth cutting. Since the tenant also appeared in court, the township inspector was less concerned, as he saw that we did actually care about rectifying the situation, and yes, I’m still a free man, as the bench warrant was dropped.

discipline

Own Less and Control More

What could I do more of going forward to prevent such nonsense?

Probably the biggest thing is to shift my position so that I own less but I control more. For example, if that property was owned by a trust or an LLC that was owned and managed by a trust, it would’ve been much harder for them to track me down to issue a warrant to begin with. So, you can guess what I’m working on this week.

Related: What I’ve Learned Since Buying My First (Maggot-Infested) Property 10 Years Ago

Other strategies for avoiding ownership while still maintaining control include sandwich lease options and subject-to deals.

For example, if there was a similar grass cutting issue, where I was the meat in the middle of a sandwich lease option, the owner would be the one fined instead of me.

Subject-to deals can work in a similar way. For example, if you took over a property subject to the first mortgage and for some reason you didn’t pay the property taxes, they couldn’t come after you personally or ding your credit. They could only pursue the property.

So, I’m curious to hear from the BiggerPockets nation. What have you been doing to control more (and own less) or to simplify your real estate investing? Have YOU ever had a warrant out for your arrest?

Let me know with a comment!

Since 2007, Dave Van Horn has served as president and CEO of PPR The Note Co., a holding company that manages several funds that buy, sell, and hold residential mortgages nationwide. Dave’s expertise is derived from over 30 years of residential and commercial real estate experience as a licensed Realtor, a real estate investor, and a fundraiser. As the latter, Dave has raised over $100 million in both notes and commercial real estate. In addition to his investments and role as CEO, Dave’s biggest passion is to teach others how to share, build, and preserve wealth. He authored Real Estate Note Investing, an introduction to the note investing business, helping investors enter the “other side” of the real estate business.

    Kevin Yeats lender from Fort Pierce, Florida
    Replied almost 4 years ago
    Orange is the new Black, Dave
    Sonia Spangenberg from Manassas, VA
    Replied almost 4 years ago
    snicker, snicker…too funny Kevin. Dave, thanks for the lesson learned!
    Rich Urban wholesaler from Miami Beach, Florida
    Replied almost 4 years ago
    Damn.. a bench warrant for uncut grass? What in the hell kind of county is that? 🙂
    Michelle
    Replied almost 4 years ago
    Wonder what you get for peeling paint? The Death Penalty?
    Randy Phillips
    Replied almost 4 years ago
    I stuck a bandit sign in my own front yard where it sat happily for a year and a half, that stated, “I Buy Houses 4 $CASH$ & my phone number. I got a half dozen calls from neighbors wanting to sell their houses for at or near full price. Finally one day I got a call from a neighbor who was willing to discount her house cuz it needed a new air conditioning unit and her mother was going into a care home. I wholesaled that house for an $8,000 profit to a landlord buyer. I also send out a lot of mailings. I had this one homeowner that called me up to stop sending him mailings and threatening me with a class action lawsuit and he was gonna have me arrested for buying and selling RE with no license and operating with out a business license etc etc. I noticed him driving by my house slowly several times. Soon I got a letter from the city saying I needed a license, I wrote them back that no I did not. I never heard from the city again. Then I got a notice to remove my sign from the front yard or face a $100 a day fine. I will send that homeowner a few more letters offering to buy his house. Haha, he hates that. Reply Report comment
    Randy Phillips
    Replied almost 4 years ago
    I stuck a bandit sign in my own front yard where it sat happily for a year and a half, that stated, “I Buy Houses 4 $CASH$ & my phone number. I got a half dozen calls from neighbors wanting to sell their houses for at or near full price. Finally one day I got a call from a neighbor who was willing to discount her house cuz it needed a new air conditioning unit and her mother was going into a care home. I wholesaled that house for an $8,000 profit to a landlord buyer. I also send out a lot of mailings. I had this one homeowner that called me up to stop sending him mailings and threatening me with a class action lawsuit and he was gonna have me arrested for buying and selling RE with no license and operating with out a business license etc etc. I noticed him driving by my house slowly several times. Soon I got a letter from the city saying I needed a license, I wrote them back that no I did not. I never heard from the city again. Then I got a notice to remove my sign from the front yard or face a $100 a day fine. I will send that homeowner a few more letters offering to buy his house. Haha, he hates that.
    Alan Mackenthun from Prior Lake, Minnesota
    Replied almost 4 years ago
    Or you could just quit annoying him and maybe save yourself some trouble.
    Randy Phillips
    Replied almost 4 years ago
    Haha, that wud be the easy and smart thing to do, however when this homeowner calls and screams and threatens me he wont give me his name or address, he is on a list of 1200 names, so when ever I send out new postcards or letters he get another one of my unwanted mailings. It’s a vicious cycle.
    Tyisha G. from Long Island, New York
    Replied almost 4 years ago
    Randy, this made me chuckle.
    Douglas Skipworth rental_property_investor from Memphis, TN
    Replied almost 4 years ago
    Dave, we have been cited, fined, summons, and sued, but have never had a warrant out for our arrest…yet! Good post.
    Dave Van Horn from Berwyn, PA
    Replied almost 4 years ago
    Ha! Thanks Doug, hope others can learn from this story.
    Darren Sager realtor from Summit, NJ
    Replied almost 4 years ago
    Maintaining the exterior of a rental property is one of the few things I don’t let my tenants do because of this very issue. I have no interest in getting fined for something they didn’t do, even if I could word my lease to say that any fines I might get for something they may do (or not do in this case) can be considered additional rent. Just make sure you manage this aspect yourself!
    Dave Van Horn from Berwyn, PA
    Replied almost 4 years ago
    Hi Darren, You’re right, if I did cut the grass I wouldn’t have run into this arrest warrant issue. But it’s funny, in 25 years with over 100+ properties this only happened to me once. If I cut everyone’s grass, it would really cut into my cashflow (roughly $300-$600/year per property) so I’m not sure it always makes sense. The middle ground I’ve found and my major point of the article is this: own less and control more. The arrest warrant was just one example. Townships like this one don’t like landlords and don’t always play fair, so if it wasn’t grass it would be something else. I’ve had fines for trash, for example, that if went through a similar mix up could have also ended up in another bench warrant. You can’t always predict what townships like these will do next. Setting up a trust is a great form of removing liability and protecting yourself as well as your assets. It gives you, the owner, anonymity and helps with avoiding crazy scenarios like these when they happen. Thanks for reading. Best, Dave
    Mindy Jensen from Longmont, CO
    Replied almost 4 years ago
    As I read through this post, I kept wishing for a “like” button for all the awesome sentences you had in here. Great advice, thanks for sharing!
    Dave Van Horn from Berwyn, PA
    Replied almost 4 years ago
    Thanks Mindy!
    Account Closed from Los Angeles, CA
    Replied almost 4 years ago
    yes, thank you for sharing this story! def-ly its better to have LLC in first place
    Deanna Opgenort rental_property_investor from San Diego, CA
    Replied almost 4 years ago
    My brother lived in an area with very restrictive HOA rules (no parking your own car in your own driveway for more than X days)…we always wondered what would have happened if we had parked his airplane in the driveway instead…
    Dave Van Horn from Berwyn, PA
    Replied almost 4 years ago
    Would love to read an article about that happening!
    Vanna L.
    Replied almost 4 years ago
    I will definitely have to remember this Dave. Thanks for posting. Hope I will not have similar problems.
    Mark Pace from Saint Petersburg, Florida
    Replied almost 4 years ago
    I agree Dave. With the right property manager it becomes like mailbox money.
    Bryce Cutler investor from Wynantskill, New York
    Replied almost 4 years ago
    Dave, thanks for sharing. It reminded me of when I was arrested and had a bench warrant out for my arrest because my tenants didn’t put the garbage cans out street side (about 8 feet away from the sidewalk) on several occasions. The city sent the notice letters to my tenants but they never gave them to me because they didn’t want me to know they forgot to put it out on several occasions. Not fun, but definitely a learning lesson. The judge laughed me out of the courtroom as I followed a guy dealing drugs and was let go with no fine and a warning to keep my tenants in line. Bryce
    Dave Van Horn from Berwyn, PA
    Replied almost 4 years ago
    Thanks for sharing Bryce. This is just another example of what I talked about in the comments above. Townships and tenants can be unpredictable sometimes, even for a hands on investor, so it’s better to be safe than sorry by utilizing things like trusts or LLCs. Best, Dave
    James Tolbert lll contractor from Birmingham, Al
    Replied almost 4 years ago
    Dave ,I had a city tell me I could not buy a permit for repairs until I pay trash bill from the last owner before I bought the house and threatened to put me in jail if I do any work before this bill was paid 1500 dollars so join the club
    Account Closed from Los Angeles, CA
    Replied almost 4 years ago
    James Tolbert , how did it end for you???
    Denise Southard wholesaler from Denver, Colorado
    Replied almost 4 years ago
    Bryce, did you mean it was wrong to not put the cans out at all some weeks…or that the cans weren’t placed 8 feet from the curb when they were put out?
    Wendy Hoechstetter from Pittsburgh, Pennsylvania
    Replied almost 4 years ago
    WTH kind of world is it in which one can actually be jailed (or even just threatened with it) for things like not cutting a small strip of grass or putting trash cans a few feet from where they are supposed to be??? The world has gone freaking nuts. SMH.
    Phil Gaulrapp from Polo, Illinois
    Replied almost 4 years ago
    Usually the resident gets plenty of warning from the city before being arrested. First a neighbor will complain, then the cops get called. The city will come by and issue a warning, then again for a citation, then again and again until the warrant is issued. It’s not like they come by once and arrest you. I had a neighbor who would let his whole yard go to seed before he would cut it. It makes little sense to let it get that long because it takes 3 times as long to mow it once! Anyway, the neighbor on the other side would always call the city to report it, but they never issued him an actual ticket, only warnings.
    MarZia RiVera from Cape Coral, Florida
    Replied almost 4 years ago
    Great article Dave, I especially loved the part of hiring a trusted Property Manager. I am amazed reading all the horrer stories coming from self managed investors. Another amazement to me is why more investors don’t factor into the investment equation a PM. With the profits from utilizing a Property Manager to manage the investments so they can concentrate on the business of investing as an Investors time would be better spent on. As we all know time is money.
    Dave Van Horn from Berwyn, PA
    Replied almost 4 years ago
    Couldn’t agree more!
    Lee Carrell investor from St. Louis, Missouri
    Replied almost 4 years ago
    I just go out of jail last week because of one of my tenants!! I always screen tenant’s police reports, credit reports, business and personal references, etc. However, there is no report that will show beforehand if your potential tenant is a.. (how shall I word it?) NUT CASE!!! For no reason she kept sending me texts that got increasingly irrational and aggressive. She accused me of; coming in the apartment while she and her son were asleep, stalking her, stealing her son’s socks, doing drugs in the apartment, eating food out of the refrigerator, twice she accused me of burning her son’s homework! I tried to reason with her that she had me confused with someone else and that if someone is breaking in that she should call the police, but to no avail. I told my lawyer that I needed to evict her before she accused me of something that would really cause me problems! Well, too late! She and her son accused me of kidnapping her son and beating him up! I was handcuffed and processed into the county jail! I was in jail most of the night, until I was transported to the city jail where I was questioned by the detectives for several more hours. Fortunately, I had witnesses, receipts, text messages, and character references to show them that I was totally innocent. The detectives read all of her text messages and as they released me, they laughed and said that I needed to hurry up and get rid of her! Of course, she is now being evicted due to lease violations. I have always enjoyed being an active landlord who interacts with the tenants on a positive basis, but now, I am looking to privatize myself from them!
    Karl H. Billings
    Replied almost 4 years ago
    Great article Dave, sounds like it is time to sell single residencies and purchase a multiple unit building. With the correct PM in place this could simplify life for someone.
    Dave Van Horn from Berwyn, PA
    Replied almost 4 years ago
    Thanks for the comment Karl. Definitely something I’m toying with! It’s also a reason why I love working with notes. Best, Dave
    Karl H. Billings
    Replied almost 4 years ago
    Great article Dave, sounds like it is time to sell single residencies and purchase a multiple unit building. With the correct PM in place this could simplify life for someone. Reply Report comment
    Michael Woodward from Greenback, Tennessee
    Replied almost 4 years ago
    If this kind of thing isn’t enough to infuriate each and every American then I’m really frightened to think of where this country is headed. How can the people living in those areas think this is okay? Why would you allow your elected officials to have this kind of power over such a frivolous thing? Arrested for not cutting your grass???!!! Are you kidding me???? If you live in a place that does this sort of thing then don’t ever claim that you live in a free state…… what you have is a police state. I looked up the term to make sure I had the right context. Judge for yourself. po·lice state noun a totalitarian state controlled by a political police force that secretly supervises the citizens’ activities.
    Randy Phillips
    Replied almost 4 years ago
    Haha, you can be arrested for not licensing your dog here in California. We have to have our firearm in a locked box when we go to the range to shoot it, our guns can only have a 10 round magazine and you have to have a special tool to release the magazine to reload. We can only purchase one hand gun a month. We have to register our drones. If you want to experience a police state, come to California.
    Randy Phillips
    Replied almost 4 years ago
    Haha, you can be arrested for not licensing your dog here in California. We have to have our firearm in a locked box when we go to the range to shoot it, our guns can only have a 10 round magazine and you have to have a special tool to release the magazine to reload. We can only purchase one hand gun a month. We have to register our drones. If you want to experience a police state, come to California.
    Terry Gillis from Valencia, Pennsylvania
    Replied almost 4 years ago
    Beginning to take my first steps into REI with hold and rent has me now questioning my sanity. Back to the options to prevent in future, LLC was one option mentioned. How about LLC LP? Any experience with that option?
    Dave Van Horn from Berwyn, PA
    Replied almost 4 years ago
    Hi Terry, Yes, I have experience with both. Do you have a particular question? Best, Dave
    Terry Gillis from Valencia, Pennsylvania
    Replied almost 4 years ago
    Dave, sorry for delay- yes was wondering the benefit of LLC vs LLC LP and if overkill for just getting started? Also, is there significant difference required in book keeping and tax filing between the two? thank you.
    Adam D. investor from Castle Rock, Colorado
    Replied almost 4 years ago
    This is one of the reasons we always take title to properties in an LLC. The address of our LLCs is our attorney’s office, never our home or P.O. Box. There’s another layer of protection because of attorney client privilege.
    Account Closed from Los Angeles, CA
    Replied almost 4 years ago
    good point! thanks!
    Brenda A. from Woodland Hills, California
    Replied almost 4 years ago
    Thanks Dave I just learned another good thing about caring for the property exterior myself. Makes a lot os sense what you’re saying.
    Brenda A. from Woodland Hills, California
    Replied almost 4 years ago
    Thanks Dave I just learned another good thing about caring for the property exterior myself. Makes a lot os sense what you’re saying.
    Jacob Beeson from Mesa, Arizona
    Replied over 3 years ago
    Great article! This is not an uncommon occurrence! We were hired to manage a property NOT knowing that the owner had been cited repeatedly for weeds. We were able to stand up for him in court and tell the judge that we would be looking out for the property, and even provided an executed copy of the management agreement to the court. He had to hire and pay a criminal defense attorney to avoid being deemed a “habitual offender”! All for not cutting down the weeds!
    Steve Vaughan rental_property_investor from East Wenatchee, WA
    Replied over 3 years ago
    Thanks for sharing, Dave. We keep getting cited for having noxious weeds in the front of a rental. No one else will take care of it, so we do. I see how an anonymous entity would shield us personally, but the fines and such would eventually become liens on the property if not taken care of. Sometimes it might be best to just take care of it. Not start mowing all of your lawns, but hiring a kid to cut and weed a lawn once would be easier than all this I would think!
    Jon
    Replied over 2 years ago
    As a non-american, I would have assumed this was a hoax if Dave had not written it! It seems bizarre to me you can be arrested for not mowing grass. Here they will only take action if your yard is creating a substantial health hazard for neighbours. Ones I’ve heard of were a serious fire risk (a large collection of car wrecks) , vermin infestation or subsidence caused by DIY basement excavation. Building owners can impose some rules, like no external satellite dishes, but these are purely a civil matter – breach of contract allowing eviction or damages claims, nor criminal.
    Javier Marchena from Winter Springs, Florida
    Replied about 2 years ago
    I always try to take very serious City/County certified letters and make sure that I call the code enforcement officials that wrote the violation. If you can get in a good relationship with these officials, they would help you take care of your properties. After I correct the situation, I call the city official again and make sure he/she comes back to my property and check if it was corrected up to his/her satisfaction.
    David Krulac from Mechanicsburg, Pennsylvania
    Replied about 2 years ago
    Hi Dave, Great article. I’m on the same path. I am on the simplification path, reducing workloads, reducing obligations, reducing the number of properties, and reducing the amount of debt. All for the sake of simplification and ease of succession. After buying and selling 900 properties, there are many properties still in fold, rentals, developments, scattered lots, and properties needing some work or augmentation like surveys, right of ways, clear titles, etc. While I have enjoyed the challenges, the kids and family has no interest in all these properties, so I’ve been simplifying not only for me but for the heirs.