Rental Property Investor · RI · Member since 2018 · 24 posts · 9 votes
Hi everyone, I just closed on my first property this past week in Rhode Island. It was a duplex with existing tenants on a month to month tenancy. The tenants did not pay rent for two months while we were under contract claiming to be "waiting for the new owner to to pay them". I have already delivered 5 day pay or quit notices that expire today. I have also sent 30 notices for the termination of their Tenancy.
The tenant sent me a message this morning stating they will be taking the missed rent up with the previous owner (my guess is they are hoping to never have to pay).
Do I inherit this missed rent making it my responsibility to collect it/issue repercussions?
Would the missed rent be my money at this point?
Potential lessons learned - 1) Always review the HUD-1 closing statement carefully to make sure that security deposits and rents are being prorated properly toward settlement costs 2) Ask seller at closing about the payment history of the tenants and inquire if payments are current prior to signing closing documents (I need to remember this one)
@Christopher Phillips thanks for your reply. That is my guess as well
As the missed rent did not happen during my ownership of the property, I am unclear whether it falls within my realm or if it belongs to the previous owner, meaning I can't pursue it?
@Brian Olencki Did you know prior to closing that rents were not paid? If so you willingly took this on. How was rent proration handled at closing? The seller should have credited rent prorated to day of closing based on units being occupied and under lease. If not that’s a red flag and possibly could have opened the doir to negotiate concessions from seller. The occupants waiting to take it up with seller is a diversion. Follow through with the eviction.
Hire a lawyer and file for eviction. Don't do this yourself, as you seem to be in over your head. You only can collect rent from the day you own it, but your lawyer will advise further.
@Jeff Ronningen the seller was a nightmare. And refused to mention this until after the signing a closing document. I will be going ahead with an eviction process
At closing there should be something on what you are buying and what prorated rent for the month you received. If you were current up until closing then he already took the loss on the back rent. Now if you had to pay their back rent and were expected to get it from them it is a different story (I have no idea who would have agreed to pay months worth of back rent to the old landlord waiting to collect). Now if he ate the loss then what do you care, let them start over and start filing your evictions from the first day you took over.
I guess I don't see how if you have owned the property for a week that you are owed months of back rent unless you paid the seller for it.
Congrats on closing on your first investment! Missed rent when you didn't own the property is not yours. Missed rent after you close is your problem. You should keep going with the eviction for sure. Make it swift, make no exceptions and show them that you mean business from the jump. I wish inherited tenants weren't always a pain in the ***, I've had 1 or 2 that were the exception to that rule, but on the whole, if it's not this, it'll be something else. Best of luck to you.
Potential lessons learned - 1) Always review the HUD-1 closing statement carefully to make sure that security deposits and rents are being prorated properly toward settlement costs 2) Ask seller at closing about the payment history of the tenants and inquire if payments are current prior to signing closing documents (I need to remember this one)
You just closed on your property a week ago. How is it that the current tenants owe you anything but October rent (it is only October 2), and how is it that you can file for eviction from rents that were never due to you on a property you didn't own at the time? How are you giving them a 5 day pay or quit notice on the 2nd of the month?
If you didn't receive prorated rents for September from the seller, then he either owes you that money or it was never written into the contract and he doesn't owe you anything. Again, that has nothing to do with current tenants. BTW: I hope the seller also paid you their damage deposits.
If the tenants are on a MTM lease, then they currently owe you October rent, and nothing else. Yes, you could have served them 30 day notices for lease termination already, but they would still only owe you for October rent.
Have you talked to them and simply say to them, starting today I am your new landlord, and any past missed rents they will have to deal with the prior owner? Although, I do agree with the termination of their lease. And, in the future, when dealing with a MTM tenant, simply have the seller terminate their lease and deliver you the property empty.
@Brian Olencki I would talk to an eviction attorney, but personally I think it is too soon to evict if you closed in late September and it's only October 2nd. Assuming rent is due on the 1st, and that they don't pay you October's rent, I believe you can't send a 5 day demand letter until the 16th (17th would be safer).
They may be professional tenants, we don't know. You can only start dealing with them yourself, as of the date you owned it. If they were professional or difficult tenants, you should have found that in your due diligence process and either asked for the units to be empty (better) or ensured you got a good enough deal to compensate you for dealing with the problem. Hopefully you at least got a copy of the leases so you know what you're working with, who to evict if you need to, etc.
As others have said, you don't inherit missed rent, rent for the month of closing is (or should be) pro-rated on the closing docs to the date of closing. Everything before the closing date is the former owner's responsibility, everything after is yours. If the former owner can get the rent for the time he owned it, it belongs to him, but as a practical matter he has very little leverage with the tenants now (he's no longer the owner so he can't evict) so he should just mentally write that off (and so should you, since any rent covering the time before you closed was never yours to begin with).
I would have suggested just starting fresh with these people and explaining that there's a new sheriff in town, laying out the rules, saying you're tough but fair, etc. You may have already burned that bridge with them by sending out notices to start with, but on the other hand, it might be likely you don't want them anyway and maybe sending the 30 day notice of termination when you did was good (especially if you sent it prior to 10/1).
I would have an eviction attorney's contact info in your phone as it sounds like you will more likely than not need it, but personally I wouldn't proceed with the 5-day until the 17th. If I were you I'd put the eviction attorney on speed dial, get copies of the leases and your deed together (the attorney will want those), and see how the next 2 weeks go with these people.
@Brian Olencki a great real estate lawyer should be part of any investors team. Get with the lawyer and start the eviction process immediately. Also find the best placement agency and start getting applications for the units.
Rent is due on the 1st, late on the 2nd, start eviction on the 5th. No mercy, this is a business, not a charity.
Given the fact that you just began ownership of the property, you can not formally issue a 5 day demand until the 16th day of the month. Technically, in the eyes of law, you will not have the ability to take action until that date. The previous owner's rent or lack there of is not a factor in you collecting yours. Have the 5 day ready to go on the 16th. Make sure it is mailed and posted that day. Pictures always help. If they do not make the payment from there, you should most likely have a court date 9 days following the conclusion of the 5th day. Best of luck.
Don't mess around with it! Lawyer up. Do not change the locks or anything else like turn the water or power off. You could get in big trouble. It is tempting BUT DON"T DO IT!!!
@Brian Olencki
What a terrible way to start off landlording . Well you might as well learn the awful truth now right out of the gate and that truth is landlording is a savage job .the good news is once you get rid of these lowlife grifters you’ll be in a much better position and will be that much better . Use this trial as a learning experience
I will speak to a lawyer as you just closed and they owe you October rent for now. The lawyer will be able to provide details of when you can evict. Treat this as a business and be more strict with your tenants. This is a business at the end of the day and don't let them give you b.s. You can ask the lawyer you used to close on this property. Best of luck.
@Brian Olencki Congrats on your first property! I've unfortunately had to turnover a few tenants in RI in similar situations, i.e. bad previous landlord mismanaged and developed bad habits or just got bad tenants to begin with. You'll spend 3-6 months and a lot of pain to only end at the same conclusion, which is you want to screen your own tenants.
@Brian Olencki if the non payment of rent happened with the previous owner why are you pursuing it? The minute they are late at paying you rent start with an eviction immediately. I presume the previous owner gave you the Tennant damage deposit and last month's rent as it is legally yours.
@Brian Olencki
Congrats!!! but... Go ahead begin the eviction process. Start wIth a clean slate so you can make the rules with your own lease and your new tenant. Take your feelings out of it and see to it they leave your property. Did the previous owners give you the current tenants‘ security deposit? That belongs to the tenants and will be spent by you to make repairs of things they damaged (barring you have a move in evaluation from the previous management company/owners). You are responsible for their deposit! Document everything and don’t fix anything yourself- unless you are licensed, bonded and insured contractor. You can hire a property management firm to find you a new tenant- make sure they’re screened thoroughly. Good luck! Have periodic inspections this time around- every three months is reasonable.
I'd ask for evidence of tenant paying on time each month (bank statements, e-transfers, etc.) and speak to a tenant before purchasing a place with an inherited tenant unless the offer price was a really good one.
Talking to the owner about the tenant, its possible they hide anything bad about the tenant especially if they're a non-paying one.
You would be owed rent from the day you took possession of the property.
@Brian Olencki
Blood sucking losers. Just did this 3 weeks ago. Get local representation and get them out of there. In the event they are somewhat unsophisticated make sure to hang the carrot over their head and share “...in 7 days this will be on your permanent record. You will be evicted, and you won’t get your next place due to the collection action and rent possssion.”
Also make sure to communicate with them that even if you do file, they should still pay rent and you can remove it if they get caught up. (Not happening, get them out at all
Costs).
Lastly- be prepared to work up a cash for keys offer to get them to vacate withoUt putting concrete down your plumbing.
Andy