Most tenants are fine, don’t get me wrong. But some of them can be an enormous pain. Tenants, like just about everything else in this world, follow the Pareto Principle: 20 percent will cause 80 percent of your problems. Furthermore, 20 percent of that 20 percent (or four percent) will cause 64 percent of your problems. And so on.
There are several types of typical problems that tenants will cause, of which the most common are:
- Nonpayment or asking for endless payment plans
- Damaging the unit and refusing to pay for such damages
- Endless complaints
- Making accusations of you or your staff
- Trying to make their problems your problems
We’ll deal with each one independently, but first, it’s important to talk about a basic principal of dealing with tenants. Be fair, but firm. And always act as your tenant’s ally. As I put it in a previous post:
“Make something other than yourself the ‘enemy.’ It could be the lease, the law, company policy or even the owner. But the enemy is certainly not the property manager. No, you as the property manager are the tenant’s ally. So for example: ‘I appreciate how hard this is; however, we have to follow the lease, and the lease mandates that we charge these expenses. We legally can’t make an exception for one unless we make it for all.’ Or perhaps, ‘I think we can find the best possible outcome given your situation that will fit with what the lease requires and the owner will accept.’ You are on their team trying to come up with the “best solution” (not necessarily what they want). The rules dictated by the lease, law, policy or owner are the “enemy” in this situation.”
This will calm down even the most indignant tenant and make almost any troublesome dispute better.
1. Nonpayment or Asking for Endless Payments
Of course, the best way to deal with nonpayment is to not have it in the first place. And the best way to ensure tenants pay their rent is to screen, screen and screen some more. That being said, even with careful screening, some tenants will fall behind.
The best way to deal with these situations is to simply create a policy for how you will go about nonpayment and payment plans. It simply cannot be overstated how important systems are in your business. If you fail to put in a policy, you are likely to fall victim to whatever sob story the tenant throws at you. And I can guarantee you, there will be a sob story every time.
Our policy is pretty simple. Rent is due on the first and considered late on the fifth. Immediately on the fifth, a late fee is charged with virtually no exceptions. On the first workday after the 12th, we send out 72-hour notices telling the tenant that we will file for eviction if they do not pay within 72 hours. Afterwards, if we do not hear from them, we file. At this point, all eviction charges are put on the tenant’s balance. For every 12-month lease, we accept one payment plan. If the tenant does not comply with the terms we agree to, then an eviction will be filed. (Make sure to check with an attorney regarding your state’s laws to make sure your lease and policies are in compliance.)
It may sound kind of harsh, but you have to systematize this, and take yourself out of the place where a tenant could convince you to change your policy. You just need to say something like “I’m sorry, but those are the company’s policies.”
2. Damaging the Unit and Refusing to Pay for Such Damages
Whenever you sign a lease, you should make it very clear to the tenant what they are signing. You are not going to just fix whatever breaks no questions asked. If the tenant damages something, it should obviously be their responsibility to pay for the damages.
Some things are obviously not their problem; such as the roof leaking or a furnace going out. Some are pretty obviously their fault, such as a hole in the drywall. Unfortunately, not everything is so cut and dry.
This is one reason it is important to document everything in these situations. Take pictures of how things were when you found them damaged and what it looked like after the work was done. Make notes in your property management software for conversations with the tenant, etc. As my brother likes to say, “If it it’s not in [our property management software], it didn’t happen.”
In many cases, you will have to make tough decisions regarding whether to charge the residents or not. We usually lean in the residents’ favor and take questionable costs on ourselves unless — but this is not necessarily the best way to do it. You should let the resident know when they sign the lease that there are some gray areas and that you will try to be as fair as possible, but for some maintenance items, even if they disagree, they will need to be charged. When this happens, sometimes they will yell at you. Part of being in management (and in real estate in general) is growing a thick skin. People yell sometimes; they will calm down eventually. Be fair (and calm), but firm.
And remember, tenants can’t expect you to get out there immediately. If they owned their own home, they wouldn’t be able to get someone out there to fix the washing machine that day, necessarily. You want to be quick (especially with HVAC and water issues), but don’t let them bully you here. It may take a few days and that’s not the end of the world.
As far as tenants refusing to pay their balances, in these situations we usually allow a balance to go up to 10 percent of the tenant’s rent before we are willing to file for an eviction. You can pick a different amount, but you need to be consistent.
3. Endless Complaints
Some tenants simply cannot be pleased. In many cases, they may just want to get out of the lease. For this reason, I would include a break-lease fee in your lease. Although, we’ve heard you’ll have more luck collecting it if you call it a, early termination option. Talk to a local attorney about what is allowed in your state. We charge, approximately but not exactly, two months rent for an early termination option. Regardless, you will want to be able to recommend this provision if it’s obvious the tenant wants to leave. That being said, I wouldn’t ever let the tenant out of their lease for free, just because they are a hassle. This sets a very bad precedent and could even be used against you regarding fair housing, unless of course, you are willing to do it for everyone.
If the person is asking for one maintenance issue after another, you should continue to send a maintenance crew out. But you can charge a trip fee if the issue turns out to be nothing. Just make sure to document or have the maintenance tech document this very carefully. Indeed, (again, check your state law). Just make sure you document it thoroughly and don’t overuse it. Lease violation fees are a disincentive for bad behavior, not a way to make money.
Regardless, with these tenants, it is usually best to elect to not renew their lease when their lease is up. Again, check your state laws, but usually you will have a right to do this without even giving cause. Tenants who are a huge hassle are usually just not worth your limited time and limited energy.
4. Making Accusations Against You and Your Staff
This is obviously one of the worst things that can happen to you. First of all, one of the reasons it’s important to be fair and respectful is that this reduces the likelihood of getting false or trumped up accusations thrown at you or your staff. For example, one study showed that doctors who spent more time with their patients were less likely to be sued on that fact alone.
The most common accusation I’ve heard is that of a maintenance tech or leasing agent stealing something. And the last time we were accused of this, it was demonstrably false. Even still, the first thing you should do is call an attorney. Once any sort of accusation has been made like this, you want to ensure you follow the letter of the law exactly.
What I can say is that you should make sure to document everything. And I would certainly ask those involved for detailed accounts of what happened, and get it in writing. Get all of the evidence you can. Unfortunately, with such things, there won’t be much but testimony. That being said, if you have a maintenance technician, for example, who has gotten multiple complaints or been accused multiple times, it’s probably worth seriously considering letting that person go.
5. Trying to Make Their Problems Your Problem
I remember once, when I was just getting started in management, I got pointlessly dragged into a dispute between two of our tenants. One of the women was accusing the other of being emotionally abusive and wanted out of the lease. So I went to their unit to try to work out a plan to get one of them out. Instead, I stood there in dumbstruck awe as each of them threw horrendous invective at each other.
Needless to say, I wasted an afternoon that day. In the end, you are not obliged to work out such disputes between tenants. You are there to set the rules (as long as those rules are within the law). Some tenants may want to make their problems yours and you simply have to refuse. Let them know that such issues have to be resolved themselves. You can give them their options, but you should leave it at that.
With regards to virtually every issue, it is best to create a system and stick to it as best as possible. Be polite and empathetic for sure, but don’t bend just because someone gets angry with you or tells you a sob story. And while you can’t come up with a system for each situation, you can for many and then add a policy for every new situation that comes up that you didn’t think of before. As time goes by, there will be less and less situations that come up that don’t have a policy on how to deal with them all ready to go.
Do you have any tips for dealing with problem tenants?
Share your advice below!