Odd tenant situation - what would you guys do?

Odd tenant situation - what would you guys do?

Chicago, IL · Member since 2012 · 3 posts · 2 votes

I've got a weird situation with a tenant that I'm not sure what to do. I recently bought a 2 flat in Chicago, and the leases from the previous owner were a complete joke with no security deposit. One of the tenants moved out and I moved into the apartment. They didn't pay their last month's rent and there is no security deposit. Per the lease, the tenant was supposed to have repairs done themselves, save receipts, and be reimbursed. This tenant said the repairs in total were the cost of the rent, but hasn't given me receipts for the repairs, so I cannot take them back to the previous owner to be reimbursed. I didn't want to serve the tenant with a 5 day notice because supposedly it could make it harder to get the tenant out of the building at the end of their lease (the lease was up at the end of that month). At the time, I was just happy they moved out, and figured I would take the receipts to the previous owner and get reimbursed for the missing rent. 

The tenant hasn't gotten me the receipts and won't answer any calls. So, I'm basically left without that last month's rent. I had originally just chalked the missing rent up to the cost to getting the tenant to move, but am hoping now that there's some possibility of getting the rent. The rent is $1,000 and I'm thinking it would probably cost more than 1k to get the money. Any ideas?

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Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
10y

I pick my battles. It would have likely cost you more to have gone through an eviction, with legal cost and missed rents etc. Chalk that up to the cost of business and move on and pick your own tenants.

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  • Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    10y

    I pick my battles. It would have likely cost you more to have gone through an eviction, with legal cost and missed rents etc. Chalk that up to the cost of business and move on and pick your own tenants.

  • Real Estate Agent · Odenton, MD · Member since 2016 · 35 posts · 5 votes
    10y

    I agree.   Fresh start moving forward. Save your sanity/time /money and get better tenants.

  • Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    10y

    Yep move on

  • Member since 2016 · 13k+ posts · 12k+ votes
    10y

    If you had been in the business for a while I would say go after him for every cent and more. Since you are so green I would say you have little option except to take the loss and move on. The previous landlord screwed you. Don't make the same mistakes he made.

  • Investor · Henderson, NC · Member since 2016 · 484 posts · 208 votes
    10y

    If you have any agreements in writing that were broken, you can take anybody to small claims court quite easily for much less than $1000. Lawyers are not allowed, and the filing fees are around $100. If you win, any court fees will be added to your judgement.

    If you are in the right, and have papers that prove it, small claims court is a very easy and cheap process.

  • Rental Property Investor · Westford, MA · Member since 2016 · 16 posts · 8 votes
    10y

    Small claims court is the easiest way to move forward. However, you mention that the lease was a "complete joke." I'm assuming the lease was countersigned by the previous owner, thus, you don't have a valid lease with these tenants.... which, might make small claims court a little more difficult. 

    I personally would call it cost of doing business/cost to evict someone and move on. Now you have a fresh start and can hand pick your new tenants with better lease agreements. Perhaps this is best considered an avoided risk? 

  • Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    10y

    The tenant just moving out without causing any grief about it is a win in my book.  Eat the $1k and move on. 

  • Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    10y

    The thing with court, small claims or otherwise, is that a judgment is only as good as the tenant's ability to pay. It causes stress and aggravation and in the end you may get your judgment and frame it and hang it on your wall, but may not really have a way to collect.

  • Investor · Everett, WA · Member since 2014 · 180 posts · 76 votes
    10y

    I agree with most here, just eat the $1000 cost. It is a cheap lesson to learn in the big picture.

  • Investor · Coral Springs, FL · Member since 2012 · 54 posts · 26 votes
    10y

    now you know the value of a tenant estopple letter as part of the due diligence and closing process.  Lesson learned?

  • Investor · Henderson, NC · Member since 2016 · 484 posts · 208 votes
    10y
    Originally posted by @Michaela G.:

    The thing with court, small claims or otherwise, is that a judgment is only as good as the tenant's ability to pay. It causes stress and aggravation and in the end you may get your judgment and frame it and hang it on your wall, but may not really have a way to collect.

     Usually people who say this don't know what they are talking about.

    It varies state by state, but judgements are good for 10-50 years or more. During this time, you will earn interest in the neighborhood of 9%, again, depending on the state. The person you are suing might be a loser now, but are they going to continue being a loser for the next 50 years? Maybe they will get a new job in only 1 year. Maybe grandma will die and leave $50,000. Maybe they try to sell a car but you have a lien. Judgments basically last indefinitely.

    If they ever get a job, a bank account, or any property of value, you can garnish those things very easily. The only way to not pay a judgement is to go bankrupt. Nothing else will work.

    Additionally, in a situation like this I feel it is important to make sure the other party gets an unpaid judgement on their record at the very least to warn anybody else who they might ever do business with. I think the filing fee for court is worth that alone.

    You could also refer it to a collection company who will likely take half. $500 is still better than $0.

  • Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    10y

    Ryan, 

    a judgment is only good for 10 years, unless you make sure that you renew it every 10 years. And it will only stay on a credit report for 10 years total and you can't renew that part. 

    Personally, I prefer to be more concerned about the bigger picture, instead of spending a lot of time and aggravation and money to chase after 1K, which I may or may not ever get paid. 

  • Investor · Henderson, NC · Member since 2016 · 484 posts · 208 votes
    10y
    Originally posted by @Michaela G.:

    Ryan, 

    a judgment is only good for 10 years, unless you make sure that you renew it every 10 years. And it will only stay on a credit report for 10 years total and you can't renew that part. 

    Like I said, every state is different. It is very easy to renew a judgement. Small claims court is not "a lot of time and aggravation", that is what regular circuit court is like. Small claims court was created to be cheap and easy for situations like this, and it is. 

    If, and only if, you have clear proof that you are right, then you will win, it will be cheap, and easy, and won't take you more than half a day. I guess you must make a lot of money if a half a day is not worth $1000.

  • Member since 2016 · 13k+ posts · 12k+ votes
    10y

    Ryan I agree with you 100% on the value of taking them all to small claims court. It is always my preferred course and usually what I advise but in this case he probably has enough on his plate without also learning the process of bringing what I label as criminals to justice. He will have plenty of opportunity in the future but for now it will only be a stressful distraction. He is still on the learning curve and small claims court can wait till the next time. Small claims court is a very simple avenue to follow and part of the process of collecting rent from bad tenants. It isn't just good tenants that have to pay rent.

    The $1000 lost will hopefully be a reminder that will motivate him in the future to chase them down.

  • Software Developer · Vidor, TX · Member since 2015 · 922 posts · 639 votes
    10y

    Whether or not your go to small claims, you have control of the property now and that's a good thing.

  • Investor · Henderson, NC · Member since 2016 · 484 posts · 208 votes
    10y
    Originally posted by @Thomas S.:

    but in this case he probably has enough on his plate without also learning the process of bringing what I label as criminals to justice. He will have plenty of opportunity in the future but for now it will only be a stressful distraction. He is still on the learning curve and small claims court can wait till the next time.

    You're assuming way too much about somebody you do not know. I would say the opposite, this is a good opportunity to learn how the court process works. If you are going to be a landlord for very long, court will become a part of your job, and you should be relatively proficient at it.

  • Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    10y

    You have some industrial tenants, which is different than being a residential landlord.

  • Investor · Henderson, NC · Member since 2016 · 484 posts · 208 votes
    10y
    Originally posted by @Michaela G.:

    You have some industrial tenants, which is different than being a residential landlord.

     1. I don't post all my assets online for every idiot to read about. You have no idea what I have or manage.

    2. Collecting owed debts is the same whether residential or commercial.

  • Real Estate Agent · San Juan Capistrano, CA · Member since 2016 · 3 posts · 0 votes
    10y

    small claims shouldnt cost that much serve them with the papers and see the rent magically appear or if you know an attorney (even if they dont specialize in RE) get them to write a letter tellingthem what will happen if they dont pay up

  • Investor · Henderson, NC · Member since 2016 · 484 posts · 208 votes
    10y
    Originally posted by @Becki Kolander:

    small claims shouldnt cost that much serve them with the papers and see the rent magically appear or if you know an attorney (even if they dont specialize in RE) get them to write a letter tellingthem what will happen if they dont pay up

     Agreed. The mere threat of legal action is enough to make most people pay. Many lawsuits are settled out of court. They will not take you seriously until they get a letter from the court or a lawyer.

  • Member since 2016 · 13k+ posts · 12k+ votes
    10y

    Ryan I can not argue your point. I am a very strong supporter of making tenants pay what is owed even if it is only the stress of having a legal judgement against them.

    Small claims court is simply another method for landlords to collect what their "special" tenants owe.

    Personally I enjoy the challenge of hunting them down other landlords dread that responsibility and simply let the tenants win. I do not understand their lack of commitment to their responsibilities but then some businesses people are successful and others are not. 

  • Investor · Chicago, IL · Member since 2010 · 76 posts · 55 votes
    10y

    This is Chicago, just be thankful you didn't need to evict them.  $1000 is nothing in the big scheme of things, and an eviction would cost you much more.

    It is recommended you don't take security deposits in Chicago, due to the ultra tenant / lawyer friendly laws.  So collecting last month's rent from deadbeats is a cost of doing business here.  One of the reasons you can cash flow so well in nice areas, and another example of how local real estate is.

  • Lender · Chicago, IL · Member since 2015 · 83 posts · 13 votes
    10y

    Like many said before me I would just chalk this one up to the cost of doing business and move on. You have the tenant out of your building and can start fresh with your own handpicked tenant and hopefully a new leasing agreement. 

  • Bowie, MD · Member since 2014 · 9 posts · 5 votes
    10y

    Consider small claims court or issuing an IRS Form 1099 and write it off on your taxes as a loss. They'll have to pay Unkie Sam. I did this on a former tenant and lo-and-behold, I got a phone call that that opened up the dialog for repayment.

  • Real Estate Agent · Lawrenceburg, IN · Member since 2015 · 44 posts · 35 votes
    10y

    I just dealt with the same situation.  The owner before me did not collect a security deposit (idiot).  I ended up losing $600 rent plus I paid them $250 to get the f@#$ out!.  They were total losers so even if I would get a judgement, the odds of collecting are slim to none.  Move on and always, always, always get a security deposit.

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