Okay, the scenario is a little complicated. I'll do my best to make it concise.
I wholesaled a rental property a little over a year ago. The seller offered the property for what he owed on it, with the buyer making his payments directly to the bank on his behalf. The person I wholesaled the property called me a few months after he placed a tenant in it. The buyer had to move out of town for job reasons and wanted to know if I wanted to take the property back over. The property was cashflow positive, producing cash 25% in excess of monthly expenses, including taxes and insurance. I took the property back from the buyer without refunding my wholesale fee.
The existing lease agreement was issued by the person I wholesaled the property to, but neither he nor the tenant could find a signed copy of the agreement.
The lease expires at the end of this month. The tenant moved out of the house without telling me and without paying April or May rent. I just got access to the house yesterday and it is trashed. Broken doors. Broken window. Garbage everywhere. Broken cabinets. Ruined carpet. It will cost thousands of dollars to get the house rentable.
I spent enough time in the corporate world to know that when you involve attorneys, the attorneys are the only ones who win. I would like to avoid suing the tenant. I also would like to recover at least part of my damages for lost rent and for having the property restored.
I could go the small claims court route, but I don't know if it will be a problem that I cannot find a signed lease agreement. I don't want to take the tenant to court if I am operating from a position of weakness.
My other option is to tell the tenant that I will not sue her if she agrees to pay at least half the cost of repairing the damage and half the back rent. I would be willing to let her work out a payment plan, but would enforce the plan with a contract that allows me to take her to court if she is late on any of the payments.
Any insights on what my options are? Do I risk anything by trying to work out an arrangement with her while telling her that I will take her to court if she does not agree?
You're out of luck @Rob Young . You have no paperwork. No proof that a security deposit was paid. No proof that the property wasn't trashed before this tenant moved in. No lease. No case. Chalk it up to you need to do more due diligence next time. Best of luck.
I would personally try to work something out with the tenant. The reasoning behind that is California isn't very landlord friendly, so i would probably be just adding lawyer fees to the damages already needing to be repaired. I would most likely just be paying out of pocket to get the property rentable again.
I have a non-executed copy of the lease agreement, given to me by the tenant himself. I have electronic rent receipts I provided to the tenant. I was in the house multiple times during the lease period, and it was not trashed at that time. I also have testimony from a contractor that the house was not trashed when he was in the house a few months ago. The only thing I don't have is a signed copy of the lease agreement from the previous landlord. It seems to me that, as a whole, these things should make up for the lack of an executed copy of the agreement.
How long was it vacant before you found it? Can you prove the tenant trashed it?
Try to work something out with the tenant if you can, although I doubt you will, but by no means are you screwed. Small claims is a court of equity as well as the letter of the law, no normal judge would "assume" someone moved into a place that was "thrashed" that's ridiculous. Secondly the defendant doesn't know you misplaced your signed lease and may bring theirs there for evidence. Third, I think the court could infer a reasonable lease term if you and your client are at odds, I'm not sure what part of the any lease, signed or unsigned, allows skipping out on two months of rent and thrashing the place. Fourth no need to even hire a lawyer for small claims, save the money.
In Ohio, as a landlord you have to give the tenant an invoice of the repairs within 30 days of moving out. Otherwise, you could be liable up to 3x the deposit. You have to make sure you send her a registered letter to the last known address.
In my Lucas county, small claim court is for $3k max and the fee is $50 to file a claim. Thi might scare her and force her to settle. A mediator will try to see both sides and if she doesn't Show up, you have a judgment against her. I would not worry about the signature first, if the damages are worth it to you.
I've filed a claim against a bad tenant without showing evidence in the claim. I got an absentee judgment but collecting is another story.
Getting a judgment is feasible, but collecting will be difficult.
Clearly, the tenant is irresponsible just based on what you have disclosed.
The pattern of behavior exhibited by the tenants leads me to believe you'll have a hard time getting any money regardless of the route you pursue.
Personally, I say you negotiate with the tenant. Explain that a legal proceeding is going to be detrimental to them, and you are willing to help them out.
Try to collect as much possible upfront, and spread the rest of the payments on a plan.
You are obviously in the right and are entitled to money, whether that money is for damaged, lost rent or what, that would be up to a judge. The only question is how much of your time and money is it worth for something you may never collect on. If the tenant is a 19 year old college student, someday they will need to pay off a judgment to buy a car, home, etc.
If the tenant is a 45 year old 'professional tenant' I wouldn't waste 5 minutes on trying to collect.
Sorry to hear about your experience. I agree, it isn't worth your time to sue, its just a lesson to learn from.
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!