Credit collection addendum to lease agreement?

Question

Hello everyone!  This may be my first post.  :-)

I recently heard advice from a very experienced landlord/investor/agent in which he includes a "Credit collection agency" addendum with all his leases now which he believes help keep his tenants on track better.  I am also a Texas RE agent and have looked everywhere for some sort of template, etc but am not sure if yall have any leads with coming up with such a letter that the tenant can initial/acknowledge that they any failure to pay dues, damages, etc.... blah blah that I will send their report their offense and send their info over to credit collections agency X, Y or Z to track, follow, etc...   Any leads or help appreciated.  :-)

Fred Heller · Answer

Honestly, it seems like overkill to me. Paragraph 27 of the TAR residential lease is pretty specific about the tenant's liability for unpaid rent, damages, collection fees, etc. in the event of a default.

Paragraph 34 states that any unpaid charges listed above are reportable to credit reporting agencies.

Greg H. · Answer

I agree with Fred that no extra addendum is needed to report to credit agencies.   The difficulty in Texas in not in reporting but collections.  It is extremely difficult to collect a judgement in Texas.  The list of exempt items to satisfy any judgement is so long that unless someone owns a non homesteaded property it is very unlikely that you will ever collect.  You cannot garnish wages in Texas.  All of this is offset somewhat in that we can typically evict a tenant in +-21 days

@Mike Reynolds  The only garnishment for an income tax return is the IRS, federally backed student loans and back child support.  A car loan is consumer debt and cannot be attached

Michael Laniak · Answer

Thank you so much Fred & Greg for the reassurance and foresight.  :-)

Mike Reynolds · Answer

@Michael Laniak My wife tells me that Texas law says that if someone defaults on their car loan they will take whats owed out of their taxes. I was wondering if there is a clause about that for past due rent.

Michael Laniak · Answer

Thank you much Andrew.  I am in Texas and there isn't anything freely available.  I guess I would have to work with a RE attorney on drafting such addendum.  But I will definitely start trying to put together a fee sheet.  Does BP have anything regarding a residential fee sheet template to adjust or you just threw together numbers/figures from experience?

I know the apartment industry does this and forgot about it but the cost of repairing apartment items are usually much less than for SF residential so maybe I will take an apartment cost sheet and adjust for SF pricing.  Good tip!

Andrew Kerr · Answer

@Michael Laniak - I haven't seen a template like this. It seems like a stern upfront approach to tenants know they will be pursued for any damages and back rent. What I have done is included a repair estimate document in my leases. I found this to be helpful as it gives ranges of what it costs me to fix items, its a softer approach that let's tenants know I want to give you your deposit back, but here are examples of what it costs me to fix items.

Also, if someone doesn't pay back rent or damages above security deposits, I just turn the tenant file over to a collection agency. I don't need an addendum to do it. But there might be some states where this is required, not sure about your area.

Credit collection addendum to lease agreement?

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