Tenant is walking, how do I report it?

18 Replies

Dear friends,

One of my tenants has a family situation and is moving out early, way before the lease is up. While I'm trying to be friendly and understanding, I also would like to explore my options as far as making it stick (should things turn south for any reason). My questions is: how do I make sure this early termination appears on his rental history? What agency or association do I need to contact?

Cheers

Josh

only if you Sue him for damages in court get a judgment 

tell them you'll terminate lease, but you won't return secuirity deposit. and they need to pay the last month's rent because technically you can sue for the rest of the term for the lease. Explain to them you'll be glad to help but they have a legally binding contract and if they don't want to do things your way and nice and smooth. You'll be forced to take legal matters which will effect their chances of finding a rentable place in the future not to mention blemish their credit report.

Hope this helps

The eviction will show as a judgement once the courts say so. And then report the debt to the credit beurus and maybe even a debt collection service. You may not get it, but if a future landlord screens them it will show.

I know in MA at least, judgements for $$ are automatically reported by the court to the credit bureaus and there is a public list online of every eviction and its updated fairly regularly and searchable for free.

Originally posted by @Josh Crawford :

Dear friends,

One of my tenants has a family situation and is moving out early, way before the lease is up. While I'm trying to be friendly and understanding, I also would like to explore my options as far as making it stick (should things turn south for any reason). My questions is: how do I make sure this early termination appears on his rental history? What agency or association do I need to contact?

Cheers

Josh

 If your property is in CA, your tenant can break the lease.  You have a duty to mitigate damages, which means you have to try and re-rent it asap using reasonable means.  Here's an article on it by Nolo Press:

http://www.nolo.com/legal-encyclopedia/free-books/...

You still need to go by the book on the pre-move-out inspection, or you can lose all right to the deposit.  That info is on this website:

http://www.dca.ca.gov/publications/landlordbook/se...

You can use the deposit for any rent owed and any damage.  But, if you don't do things the right way, you can be sued and have to give it all back, even if he leaves the place trashed.

So, give him his proper written notice about his right to an initial inspection, be sure and send him the itemized list of deductions within 21 days.  

If you evict him, you don't have to do the above.  Read the pages above, and you will know what to do.

CA is tenant-friendly, but the tenant still is responsible for rent until you find a new renter - as long as you make a reasonable attempt to do so.  Breaking the lease is not illegal or punishable, in and of itself.

And don't charge any non-refundable fees - they're not allowed.  In CA, the laws are designed for a tenant to get his full-deposit back, and any fee you collect, no matter what you call it - is a deposit that they can get back.

Then, if he leaves owing you money, and you want it to show on his credit report, and don't want to deal with court or a judgment, you could try one of the landlord collection agencies, like rentrecoveryservice.com, where for a flat fee they'll send out a collection notice, but they will also report the debt as a collection to all three bureaus.  Much cheaper than court, so if your only goal is to get it on a credit report, that's the way I'd go.

@SueK - thank you for the very detailed response. Fortunately, the unit is NOT in California so much less madness... Still, the question - how do I make sure the fact that he broke the lease appears on his rental history? I'm *not* talking about deposits and such - I'm only curious how to report an unscrupulous tenant? And what bureau/association do I need to contact? Any ideas?

Thanks

Josh 

Originally posted by @Ralph Pena :

The eviction will show as a judgement once the courts say so. And then report the debt to the credit beurus and maybe even a debt collection service. You may not get it, but if a future landlord screens them it will show.

 Can I still evict him even if he is leaving at his own accord?

Of course.  There's a contract.  That's called abandoning the property.  

Can you rent the property for more?  If it's in a rent controlled area, sometimes, landlords just wait until they can get rid of a tenant to raise rent.  Being that it's March, if they agree in writing to pay for April and pay a lease termination fee (equal to deposit?), then let them off the hook and find a new tenant for May.  Shouldn't be too hard if you're in a high demand area.

Also worth factoring in is his credit score.  The higher the credit score, the more likely he'll want to make good on the rent.  If you're dealing with a subprime tenant  (FICO < 580), threats for a judgment will probably just end up costing you money and wasted time, so you need to factor that in.

Originally posted by @Josh Crawford :

@SueK - thank you for the very detailed response. Fortunately, the unit is NOT in California so much less madness... Still, the question - how do I make sure the fact that he broke the lease appears on his rental history? I'm *not* talking about deposits and such - I'm only curious how to report an unscrupulous tenant? And what bureau/association do I need to contact? Any ideas?

Thanks

Josh 

 LOL, well you know what assuming does...

If he gives you 30 days notice and pays to the end of the 30 days, you can't evict him, unless he's done some other breach worthy of eviction.

As far as reporting him somewhere just for the fact that he breached his lease, not that I know of.  And I'm always amazed at how seldom landlords actually call previous landlords for references. 

You'll have to just look up the state laws where the property is, as far as if you can charge him for the full amount of the lease.  Some states allow that.  Then if he doesn't pay you, go to collections or get a judgment.  

Good luck.  You might want to share where the property is, to get some better answers.

There really is no nationwide eviction reporting service that I know of. Some states maintain them (I think NY does for public housing purposes) but what you are really saying is how do I put on record that fact that he may be a bad credit risk, and for that I commend you.  Simple answer is nationwide credit bureau's only look at late pays from companies with accounts with them, public judgments and public collections. You will have none of them unless you have monetary damages and can prove them with a favorable ruling in court (usually small claims) and at that point you would request that the judgment be granted, and it becomes a public record which usually gets picked up automatically by the big 3 reporting companies.  And you may rent the place quickly without any monetary damages ( you usually do have to mitigate the damages by attempting to re-rent) and thus have nothing to go to court for. Evicting someone is only for the purpose of legally obtaining possession of your property, and doesn't automatically give you a monetary judgment nor does it usually affect the credit.  You have no adverse possession issues, so evicting would be a waste of time and money, since he is giving up his rights to the property (and you should get that in writing). You can always sue him later if you do suffer monetary damages.

Originally posted by @Josh Crawford :

@SueK - thank you for the very detailed response. Fortunately, the unit is NOT in California so much less madness... Still, the question - how do I make sure the fact that he broke the lease appears on his rental history? I'm *not* talking about deposits and such - I'm only curious how to report an unscrupulous tenant? And what bureau/association do I need to contact? Any ideas?

Thanks

Josh 

From what you shared, there is nothing unscrupulous in the tenant's behavior. He notified you he needs to move out before the lease is up for family reasons, yes?  Many tenants need to break leases early. It is not the end of the world. If you were prepared, you would have a clause in your lease to cover situations such as this. I believe it is common to charge 2 months rent for breaking a lease, if it is noted in the lease. Some compassionate landlords will let a tenant out of their lease without penalty, depending on the situation. 

You shouldn't start an eviction process on someone who is clearly in the process of moving out on their own. It it not abandonment either. It seems to me you are being vengeful in trying to tarnish a tenant's rental history. Why not go for a win-win? Everything is negotiable. If you work with the tenant and their needs instead of fighting them, you may have better luck with the move-out going smoothly and be able to mitigate damages.

Marcia Maynard, Fischer Properties | Podcast Guest on Show #83

Yeah what they said. If they cooperative and let you know they want to leave and you agree,  you can't evict. If they say the hell with you and your terms and don't cooperate, pick up and leave it's abandonment.  

An unscrupulous tenant would be one who signed the lease knowing full well they could not stay for the term of the lease. Most of the time that isn't the case. It is inconvenient when a lease is broken and it may tick you off but things happens. Even if this is truly an unscrupulous tenant life is too short. 

The only judgment you could get and report would be for the time of vacancy and you have a duty to mitigate that. As others have said try to make it work for you.  Have them agree to showings immediately and maybe you have no economic loss. 

Originally posted by @Matt Sicignano :

There really is no nationwide eviction reporting service that I know of. Some states maintain them (I think NY does for public housing purposes) but what you are really saying is how do I put on record that fact that he may be a bad credit risk, and for that I commend you.  Simple answer is nationwide credit bureau's only look at late pays from companies with accounts with them, public judgments and public collections. You will have none of them unless you have monetary damages and can prove them with a favorable ruling in court (usually small claims) and at that point you would request that the judgment be granted, and it becomes a public record which usually gets picked up automatically by the big 3 reporting companies.  And you may rent the place quickly without any monetary damages ( you usually do have to mitigate the damages by attempting to re-rent) and thus have nothing to go to court for. Evicting someone is only for the purpose of legally obtaining possession of your property, and doesn't automatically give you a monetary judgment nor does it usually affect the credit.  You have no adverse possession issues, so evicting would be a waste of time and money, since he is giving up his rights to the property (and you should get that in writing). You can always sue him later if you do suffer monetary damages.

 Thank you Matt! That's exactly the information I was looking for.

Cheers

Josh

To further @Marcia Maynard 's comments.

We call it a "lease buy-out".  It can be a win-win if a tenant, for reasons outside their control, needs to move prior to the end of the term of the lease.  We too charge the equivalent of two months rent (but don't phrase it that way).

You don't need to have it in the lease.  They are bound by the terms of the lease for the entire term and, by breaking it, are in default.  (Here in Utah, judges rarely award the remaining balance on the lease--only the rents for a typical vacancy period.)  

Simply explain to the tenant that they are bound by the terms of the lease, but you have a solution to their need to relocate called a lease buy-out.

Charge it as a one time fee separate from rents and provide them with a termination of contract and a recommendation letter if they need it.  As a one time termination fee, you don't need to refund anything back to them if you rent it sooner.

We have also released tenants with a promissory note for the buy-out into several monthly payments if they are facing hardship.  If you are self-managed, this can prevail in small claims if they default on the promissory note.

Good luck.