Former Landlord kept rents mailed post closing. What would you do

Former Landlord kept rents mailed post closing. What would you do

Shiloh LundahlPro Member
Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes

My partner and I purchased a duplex in Phoenix, Arizona about a month ago.  It was being wholesaled at 102k with both rents equaling $1300 a month.  We closed on April 18 and the rents for the rest of April were pro-rated and credited to us on the closing statement, along with the tenants security deposits.  

We didn't have any access to the tenants prior to the closing.  It took us several days to get their contact information after we had to send one of our team members out to the property to get in touch with the tenants.  

The tenants stated that they sent their rent payments for May to the former landlord already and showed proof (deposit receipts) of doing so.  

I took a while to get a hold of the former landlord and when he finally answered our call he stated that he had not received one of the tenants rents at first.  Then when showed a picture of the receipt for the other rent deposit, he stated that he was charged an extra $300 deposit and pro-rated the rents for may at closing.

After looking over the settlement statement, I saw that the the rents for April were the only ones that were pro-rated and credited and the the tenant's $300 deposits were also credited (as they should be).  But there were no credits for the month of May.  

So I checked with the wholesaler and the title agency who did the closing.  Both stated that the former landlord should send the rents to us because they were rightfully ours.

After trying to contact the former landlord by phone with no success, I sent him a text following up and asking when we should expect to get the rents for May that were sent to him.  He responded saying "I think we are settled on the rents."

What would you do if you were in this situation?

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Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
9y

I'd take his butt to small claims court.  Get him served and make him show up.  The rents were obviously the property of the new owner (you).  

When I close on tenant-occupied property, I require my seller to bring a letter informing the tenants of the ownership change to the closing.  It can be a general letter stating that as of xx/xx/xxxx a new owner/manager named -------- will be stepping in.  My favorite day to close is the 3rd.  Prorated rents to me at closing for that month, then ample time to get things situated going forward.   

Then I mail the letters tenant letters, signed by the seller myself.  A couple days later I mail my welcome letter that has the pertinent instructions that would have prevented this problem.

Don't take this lying down and 'move on' @Shiloh Lundahl.  Take this guy to task.

Good luck and please keep us posted!

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  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    9y

    @Jennifer Rysdam The tenants can not put a stop payment on the rent because they deposited the rents directly into his account.

  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    9y

    @Russ B. Good point.  If I pass the problem to the new tenants, who had no idea that the property was being sold, then it could get us off on a bad footing.  So I have decided to try to settle for $800, even though my lawyer stated that I would most likely win the small claims suite.  I just want to recoup what I can and move forward.  I heard it said once that going to court to battle something is like two fighters at the ultimate fighting championships.  Whereas one person leaves the ring as a winner, they both leave pretty beaten up and bloodied.  

  • Investor · Houston, TX · Member since 2011 · 209 posts · 56 votes
    9y

    This is easy. Tell the tenant that they didn't pay you for May's rent. After 10 days, service the tenant with a 10 day pay or quit. I PROMISE you the tenant will be on the former LL like white on rice. THEY will go to the police and file a report for theft it it comes to that. The LL will cave at the thought of being thrown in jail and will promptly pay it back. If this is someone with anything going on in life, this is the way the situation will play out.

  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    9y

    Thanks to everyone who added to this discussion.  I definitely gained some good ideas for the next time this happens.  To give a follow up, I did end up getting a check in the mail for $800 which I just deposited in the bank.  So as long as the check clears, I think I'm ready to move on.  Next time I will use some of the ideas on this thread in order to get  everything that is owed us. 

  • Sun Prairie, WI · Member since 2013 · 150 posts · 69 votes
    9y

    I'm glad he paid you the $800. Lesson learned!

  • Pocatello, ID · Member since 2016 · 5 posts · 0 votes
    9y

    this happened to me.  I contacted the title company and they got the money from the guy and gave me a check.

  • Pleasant Valley, NY · Member since 2016 · 43 posts · 4 votes
    9y

    Glad everything worked out.

    I got some great advice from reading this post !

  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    9y

    @Wesston Faux  we called and talked with the title company after closing just to verify that the payment that he collected after closing were supposed to come to us. They confirmed that they should've come to us, however the title company was all done with the transaction, it had been two weeks since the closing. So I didn't know that we could ask title to reimburse us for that, or if they would have done that.

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