Tenant is months behind on Rent. Evict or not?
I have an inherited a property with tenants that are 10 months past due on rents.(approx 15K not including late fees).
The tenants are both on the lease (which is missing) and they are brother and sister. The lease would have been more than a year old and I'm sure they would be month-to-month according to the missing lease.
Long story short, my Dad transferred title of property to me and my mother. My Dad continued to manage property and collect rents. My Dad passed away and left the management of the property to a relative. Turns out relative was not communicating with the tenants.
I became aware of the issue and went to talk with tenants about the past due amount. Their story is that they attempted to pay the rent but the payment was refused and went back into their account. It does not seem like any effort real effort was made by person managing property to contact the tenants and the tenants did not make any real effort to contact the property manager.
My recent discussion with the tenants revealed they have spent all the money that should have been going to rent. On top of that one of the tenants lost their job due due to covid.
What they say they can do is pay 3K now, skip next month (in hopes brother gets work), and pay 200 on top of their original rent until they get current (which would take about 4 years.)
The rental amount is also 700 dollars below market if you were to believe Zillow.
There is also apparently some repairs that need to be done and the tenant stated to me that the house is not "up to code". I think their point being if I evict them I'm going to have to pour some money into the property. In my mind that has to happen regardless of what they do.
I'm concerned that without the lease and no information other than their names (i.e. no SS number) I will not be able to recover anything from the tenants.
Any advice on the best way to move forward is appreciated.
(After typing all this I feel as I might have the answer , but I still would like to hear from people that may have had similar experience)
It would be smart to pick up the phone and call an "Eviction Attorney" who is local to the property and ask this question.
Then follow that persons directions--specifically and exactly.
If you are short on money, ask if they take credit cards.
It seems like you have a lot of issues going on here, lost lease, covid, etc...
Good Luck!
"House not up to code" is often just a threat that tenants hope scare uneducated owners. Since many houses are older, they may be grandfathered. If the house is truly not up to code, I would plan on spending the money regardless of what happens with these tenants. Let's take that issue out of the discussion.
Trying to hang on to these residents appears fraught with challenges. If they haven't been working when there are dozens of help wanted signs within a 1/2 mile tells you what they are like. If you are hoping to recover past-due rent, you are going to have challenges collecting without a lease.
Personally, I would just ask them to move out and give them two weeks. You can explain that if they stay, the rent is going to have to go up and you will want back rent paid quickly. Since you don't have a lease, put something in writing and have them sign a short contract that says that if they move out you won't evict or seek back rent. (That is a HUGE benefit for them) I'd also put a clause in there that the property needs to be in the same condition it is today or you will seek damages. Basically, you don't want them to trash the house on the way out.
Alternatively, you can have them sign a new lease at whatever rent you agree and a repayment plan on back rent. Just be prepared that there is a high probability you will have to evict in a short period of time.
The fact that they haven't paid rent in 10 months, and just assumed they could take advantage of the situation with the property manager tells me that these are not good people. They spent the money that they knew may be due in the future and had no intentions of paying it, if they did, they would have set the money aside in the event it would be asked for.
Get these tenants removed, either by an agreement, or an eviction, and get the house fixed back up, and either sell or get market rent.
What about countering their offer?
increase the rent to market value tell them this is a clean slate have them pay market value for rent staring immediately.
Wash the history. It’s money gone. Everyone made mistakes.
If your worried about continued non payment put a clause in the new rental agreement.
EVICT! Why is this even a question? 10 months behind. 4 year repayment plan? Heck NO! Hire a Landlord/Tenant Attorney and get them out. Afterwards, either sell the property or hire a professional PM.
Well, you have several suggestions as to how to handle this situation, and you stated that you thought you answered it yourself.
Sounds like a great learning experience, albeit not a cheap one. What is your next step?
Wishing you success in either case…
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They are very bad tenants and bad people to boot. Taking advantage of you and your family for 10 months is inexcusable. Evict tomorrow if not sooner. Sue them in Small Claims Court for the money owed you. Even if you aren't able to collect, you can still ruin their credit and their ability to buy anything in the future.
Yes, you will put in some money, but you need to anyway. Get the place fixed up to the neighborhoods level and get some new renters that will respect you and your property. Move on and be happy....
"You have 14 days to vacate. If you move out, I will use your deposit to clean/repair and go towards your unpaid balance, but I will forgive everything else you owe. If you fail to vacate within 14 days, I will start the eviction process and I will come after you for every dime owed."
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Get them to move out. If they didn't know who to pay the rent to, then they should have kept the money not spent it. If you want, tell them they can pay the $3K now and double rent for the next X months until it is paid. They owe $12.6K (based on what you wrote-4 years at $200/month plus $3K), so rent is about $1260 and market rent is closer to $2K. I'd still get them to move out. If they had contact info for the relative and can't show proof that they tried to pay and contact him (or your dad), then there is something wrong with them. There are lots of jobs out there, may not be what he wants to do, but it will pay the bills.
At market value ($700 more per month), you will make up that lost rent in just over a year.
The next steps is consult with eviction lawyer, and get them out.
Do the repairs (looking into the deferred maintenance, Capex comment from above), rent the property out at market rate.
Thanks again.
Quote from @Nathan Gesner:
"You have 14 days to vacate. If you move out, I will use your deposit to clean/repair and go towards your unpaid balance, but I will forgive everything else you owe. If you fail to vacate within 14 days, I will start the eviction process and I will come after you for every dime owed."
WORD.
Is it not worthwhile to pursue? Is it something that could be sold to a debt collector to get a portion of past due monies back?
Hire an evocation attorney today. If you cannot afford the cost of one go to your courthouse and start the process yourself. There are no other options. Don't try to justify any reasons not to evict immediately.
Now wondering if there are any avenues (post eviction) to recover the past due rents.
Seems like many feel that it is not worth the effort to get the past due rents.
In my city, the courthouse is very helpful when it comes to answering questions around eviction. Use them as an immediate resource.
One piece of advice: do not accept partial payments under any condition. This resets the time you need to give them before you can evict.
Quote from @David B.:
Eviction is imminent .
Now wondering if there are any avenues (post eviction) to recover the past due rents.
Seems like many feel that it is not worth the effort to get the past due rents.
I think the "forgive the debt" responses were based on your not having the lease. Now having the lease you can pursue the past due rent just go in with the reality you will likely never collect everything due.
Also weigh the cost of the legal proceedings and whether it is worthwhile at that point. $12,000 in past due rent is enough for me to pursue.
@David Broomfield If you ask them to leave and offer forgiveness I would also mention that in this market having anything show up on their background check related to eviction will be a non-starter for most landlords. Regardless of whether you get the eviction, it flags them as problem tenants. Many tenants are smart enough to do the math on that one.
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These people are most likely what are referred to as 'non-collectibles'. Sure you can get a Small Claims judgement against them, quite easily....and get it recorded. Sure, no problem. But then what? You have screwed them credit-wise (which IMO is definitely worth doing just to keep them from screwing another landlord), but getting your $12k back is another deal. What is your time worth? How many thousands are you prepared to throw down the rabbit hole to recover it?
