what should i do about a tenant who's previously had a eviction?

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what should i do about a tenant who's previously had a eviction?

Justin Frye
Investor · Columbus, OH · Member since 2015 · 142 posts · 52 votes

So I just recently purchased my first rental property a multi-family duplex and haven't closed on the property quite yet. The current landlord of the property has recently just put in a new tenant who's had a prior eviction back in 2015. The Landlord has given her a 1 year lease that has me extremely worried. The current landlord has told me the new tenant has paid her security deposit in full plus an extra $600.  Now I'm not one to normally judge anyone as we've all made mistakes in the past, but seeing how this is my first rental and I plan on living in the other side, I'm kind of torn as to what I should do. Im using a 203k loan to fix up half of the unit which ill be living in somewhat like a live in flip. If anybody could help and give some alternative options as to what I could/should possibly do that would be very much obliged. Thanks again

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Deanna McCormick
Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
9y

You know the history, you will need to follow the lease terms, nothing to worry about at this time. But follow your state landlord tenant guidelines and be prepared to give late noitces, and a pay or quit or what ever notices required if late rent is a issue and realize a eviction is something that could happen if she fails to pay on time.

The security deposit she has on account should transfer to you as new owner so with the extra 600 you have added protection. Make sure copy of all leases, move outs, for tenants for the past 2 years are part of the documents you require. And that rents are current with no balances due at possession. 

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  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    9y

    As a standard practice you should never place a tenant into a property that has a prior eviction. It sounds like that ship has already sailed though so there isn't anything you can do about it at this time. It's either going to go well, or it won't. Nothing you can do about it.

    3Reply
  • Andy D.
    Investor · Zürich, Zürich · Member since 2016 · 292 posts · 115 votes
    9y

    Assuming she is a good tenant and so far has indeed paid rent on time and not otherwise caused any concerns: why worry? Not to mention that she is on a one year lease which you will have to honor. Depending on when that lease term started it's over soon enough anyway and then you can either let her go or do M2M. If she wants to stay. And as you are living next door it should be easy for you to make her understand - in a nice way, when opportunity suits it - that she definitely has to follow the lease. Why turn something into a problem when it isn't?!

    2Reply
  • David Dachtera
    Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
    9y

    @Justin Frye,

    May be best to focus on the tenant's record since the eviction since it may have been for reasons other than non-payment or for some situation beyond the tenant's control.

    Exercise caution when making judgements until you have all the facts.

    Even bankruptcy lets you "start over", albeit with the "blemish".

    2Reply
  • Deanna McCormick
    Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
    9y

    You know the history, you will need to follow the lease terms, nothing to worry about at this time. But follow your state landlord tenant guidelines and be prepared to give late noitces, and a pay or quit or what ever notices required if late rent is a issue and realize a eviction is something that could happen if she fails to pay on time.

    The security deposit she has on account should transfer to you as new owner so with the extra 600 you have added protection. Make sure copy of all leases, move outs, for tenants for the past 2 years are part of the documents you require. And that rents are current with no balances due at possession. 

    4Reply
  • Shawn AckermanPro Member
    Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
    9y

    @Justin Frye past eviction is not always indicative of future eviction.  Since she is on a 1 year lease, you would have to honor the duration of the term my friend.  I would suggest that you familiarize yourself with the eviction process locally so that you are prepared and not scrambling at the last minute if the need to evict arises.  

    If you want her out because it's keeping you up at night you can offer her "cash for keys" wherein you basically pay her to leave.  And a good rule of thumb would be to refund her security plus give an additional one months rent($600) for the new rental on top to make the deal worth while for her.  Other than that my friend buckle up and enjoy the ride!!!!  Best of luck to you.

    2Reply
  • Justin Frye
    OP
    Investor · Columbus, OH · Member since 2015 · 142 posts · 52 votes
    9y

    @James Wise @Andy D.Something I was considering was adding an addendum to the existing contract and seeing if the current landlord would cover 9 months to 1 year of payment should the new tenant either default or not make payments. I think as far as a safety net that would be the best alternative option in this case.  

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  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    9y
    Originally posted by @Justin Frye:

    @James Wise @Andy D.Something I was considering was adding an addendum to the existing contract and seeing if the current landlord would cover 9 months to 1 year of payment should the new tenant either default or not make payments. I think as far as a safety net that would be the best alternative option in this case.  

     Do you have any contingencies in the contract that would allow for this? In other words what leverage do you have over the seller that would motivate the seller to do this for you?

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  • Justin Frye
    OP
    Investor · Columbus, OH · Member since 2015 · 142 posts · 52 votes
    9y

    @Shawn Ackerman thanks for the great advice.

    0Reply
  • Shawn AckermanPro Member
    Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
    9y

    @Justin Frye you got it!

    0Reply
  • Justin Frye
    OP
    Investor · Columbus, OH · Member since 2015 · 142 posts · 52 votes
    9y

    Yes I do have some contingencies based on the appraisal and purchase price. The seller is very motivated to sell because he's run out of money and has to liquidate some of his assets. 

    0Reply
  • Andy D.
    Investor · Zürich, Zürich · Member since 2016 · 292 posts · 115 votes
    9y

    @Justin Frye The idea of such an addendum is an interesting one. Me, as a seller, would consider this (under my own terms) if I were confident in the tenant. He selected her for a reason, assuming he did indeed look into her history (since you know about it). But also as @James Wise said: why should he consider this? Are you the only person around willing to buy the place? Probably not...

    So I repeat what I wrote: why all this worrying? You are looking for something to be/go wrong. That's not good and certainly not a good way to start out.

    2Reply
  • MIchael Rickerd
    Flagstaff, AZ · Member since 2016 · 44 posts · 60 votes
    9y

    I would start by being familiar with the eviction process for your state. I'd have paperwork and the timeline ready to go, but tucked away in a drawer.

    I'd then sit back and enjoy myself. Not need to worry, if she pays her rent on time. 

    I'm wary of tenants with past evictions, but in your situation I wouldn't fret until the need arises.

    1Reply
  • David Dachtera
    Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
    9y

    @Justin Frye,

    I agree with @Andy D. If you're looking for a reason to not do the deal, then maybe it's best to stop now and move on.

    Good rule-of-thumb: Expect the best, but have a plan in case the worst shows up! (Tony Robbins)

    1Reply
  • Justin Frye
    OP
    Investor · Columbus, OH · Member since 2015 · 142 posts · 52 votes
    9y

    @Andy D. your right I guess its just the anxiety in me that makes me worry, and especially because its my first rental. I guess I just wanted to hear what others thought in regards on how to approach the situation. Thanks again

    0Reply
  • Marcia Maynard
    Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    9y

    Heed the advice you've been given in the posts by @Andy D., @David Dachtera, @Deanna McCormick, @Shawn Ackerman.

    Don't kill the deal for something like this. Close the deal and move forward. 

    Adopt a management style that will guide the tenant to succeed. Don't let your fear doom the landlord-tenant relationship before it even begins. 

    We've successfully rented to people who've had an "oops" in their past... past evictions, felonies, etc. Open and honest communication is best. Be friendly, fair, firm, flexible (when the situation warrants), fast (swift to make repairs, swift to enforce the terms of the lease agreement). Treat people with respect and you will likely get respect in return. Acknowledge the past and clarify what you need for the future. Then put the past on the shelf and move past it.

    4Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    9y

    We never place a tenant that has an eviction on their record. That is an automatic disqualification. I'm not hard-hearted, but I don't want to know nor do I care what the reason is/was for the eviction. A tenant that will not leave a house of their own accord when they can't afford to stay there, are unhappy about the condition, or because the landlord legally wants them out, is not a tenant that I want.

    Be that as it may, now you are going to have them. I would, upon closing, have the seller place an amount equal to the lease into escrow from the sale proceeds, to be released to the seller upon the tenant's successful completion of the lease terms. Let the seller be on the hook for the poor tenant that they have placed. 

    In the "for what it's worth" category: this is a major reason why we do not buy properties with existing tenants. The tenant is gone as of the day of closing or we don't close. We will place our own tenants with our own guidelines, thank you very much :)

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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    "Now I'm not one to normally judge anyone as we've all made mistakes in the past"

    Your entering into the wrong business if this is going to be your business approach. Landlords must judge applicants based on past mistakes, that is the whole purpose of screening. You look for reasons to reject. No landlord should ever accept any applicant with a eviction record regardless of the circumstances, let mom and pop rent to them.

    Your concerns in this situation are justified, the seller has placed the first applicant with a heart beat knowing it will not be their problem. I would add the condition to the offer that he be responsible for the rent but if he does not agree you had best know your state landlord tenant codes and be prepared to evict.

    Something to keep in mind about any person that has been evicted it that they have no respect what so ever for landlords, they will have a attitude and if push comes to shove they will force you to evict them.

    You will need to train this tenant hard from day one and make sure you let them know if for any reason they want out of the lease all they need to do is give you 60 days notice.

    2Reply
  • Stephen E.
    St Thomas, Ontario · Member since 2013 · 575 posts · 408 votes
    9y

    Of course a landlord from Ontario would never be able to make a decision based on prior evictions because all eviction records are sealed in Ontario. You cannot make a leasing decision based on information that is not disclosed, therefore this is a hypothetical. But to continue, @Justin Frye I think the advice you have been given about trying to make the current landlord liable for any default by the new tenant makes some sense, but there are caveats. The key here is your observation that the landlord is out of cash and needs to sell to liquidate assets. This is your leverage. I don't know what your purchase agreement states but if you are not too locked in I would threaten not to close without such financial commitments from the landlord. Even if you are locked in you could engage in a bit of theatre, bang the table and say you won't take the property on these terms.

    I guess the underlying question is not how much cash does he have but how much cash do you have. We know you are using a lot of debt financing. We also know that you are extremely worried. What would happen if the tenant fails to pay rent for two, three or four months? This is a very material consideration. If nonpayment by the tenant is a risk you cannot endure due to lack of capital I would walk away from this deal for sure without cast iron commitments from the landlord. In such circumstances if he is willing to make contractual agreements to indemnify you against nonpayment of rent I would get him to complete an application form and screen him for ability to pay. We know the landlord has financial problems. If he is in fact a man of straw and hence judgment proof then his assurances will mean nothing and you should walk unless he is willing to sweeten the deal in some other way so as to offset potential losses. Good luck.

    2Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    all eviction records are sealed in Ontario.

    That is true which is why some landlord groups keep secret records of past tenants that they share among their group. It is also why requesting past landlords contact info is important when doing back ground checks.

    1Reply
  • Daniel O.
    Investor · Takoma Park, MD · Member since 2016 · 166 posts · 147 votes
    9y

    As part of your due diligence, you should make sure any utilities in the tenant's name are paid in full at the time you close. If the tenant is behind in the utility payments, that is a sign of how they will be with the rent. And since you own the property, you could end up eating the bill that the tenant doesn't pay before skipping or being evicted.

    1Reply
  • Amy A.
    Portland, ME · Member since 2012 · 616 posts · 550 votes
    9y

    I once had a landlord do this while I was under contract.  He rented to somebody who had a criminal record and income of about $1100 when rent was $825.  I had her out in about 3 months and the other tenants were relieved.  My advice is to be prepared for the worst.  Can you pay your bills if you don't have any rent for a few months and have to rehab the apartment when she leaves?  Is it still a good deal after you go through that?  If so, it might be worth the risk.   

     Also, I've had side deals in writing with sellers that they'd pay for X after closing.  They never pay and it would cost more to take them to court to enforce it than it's worth.

    0Reply
  • Donavon Davies
    Investor · West Palm Beach, FL · Member since 2016 · 61 posts · 15 votes
    9y

    @James Wise  you were featured on Podcast 127 and at just about the 18 minute mark you spoke about this topic. @Justin Frye its worth it to hear them hash it out.

    I just heard the podcast today... :-)

    2Reply
  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    Find a new tenant

    1Reply
  • Justin B.
    Investor · Gaithersburg, MD · Member since 2013 · 659 posts · 441 votes
    9y

    It's been said before, but I don't rent to folks with an eviction in the last 7 years.  However, it's too late.  It would not be worth it to try and break a lease because of that.  That's a battle that I just don't think you will win.  Have a talk with your PM so it doesn't happen again.  Tell him your requirements and they will add them to theirs.  Hopefully it all works out and they will pay rent.  I'm sure there are lots of folks out there with an eviction that will be perfect tenants and never get evicted again, but it's not a risk I'm willing to take.  However, in your case, it's too late.

    I doubt any court would remove a tenant paying rent because you found out about an eviction.  If there is a lease, they need to violate the lease in order to get them out (even in the most landlord friendly states).  However, if they pay rent for the entire lease, at that point, I'd keep renting to them if they wanted to stay.  That just means you got one of the good ones.

    1Reply
  • Stephen E.
    St Thomas, Ontario · Member since 2013 · 575 posts · 408 votes
    9y
    Originally posted by @Thomas S.:

    all eviction records are sealed in Ontario.

    That is true which is why some landlord groups keep secret records of past tenants that they share among their group. It is also why requesting past landlords contact info is important when doing back ground checks.

    I think the post essentially said that adopting a position that one could not oneself take due to absence of information is likely not based on experience. Secret lists if they exist would be held to breach privacy laws for the same reasons the Privacy Commissioner ruled against publication of eviction records in the first place. Not ideal I know but it is what it is. I would not base decisions on any covert lists for these reasons and because such information is in all probability unverifiable. Of course calling former landlords makes sense, but that was not the position of your initial post, it suggested a practice that could not in fact have occurred based on actual eviction records given that they are private. It would be helpful to see material that is better grounded.

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