Los Angeles, CA · Member since 2015 · 117 posts · 13 votes
Hi everyone, so selling a quad in Louisiana and set to close on Jan 4th, however, I have 3 tenants that have been behind and despite months of asking my manager to process evictions if they did not catch up, I now have over $2K in tenant balances (with $595 & $575 rents by the way), which will likely be around $3K with Dec rents and by the time I sell. 1 of the tenants has a lease with current manager that started around Aug...other 2 had leases with previous managers and are now effectively on month-to-month and being managed by current manager who "will not file eviction in order to avoid losing sale". Any ideas on possible/feasible recourse against tenants either before or after the sale? Thank you, Payman
@Payman A. Only way I know you can collect from past due tenants after you sell is by getting a judgement against them while you still have ownership of your property. Eviction filing will be the first step and then comes collection once judge grants you eviction. This will put serious ding on their credit and future rent-ability but will also give you options to garnish their wages. This you can collect on even after the sale of your property. Hope this helps.
Thanks Al. Reality is I would not collect anything and it's not like these tenants have good credit to being with. My thought, instead of throwing good money after bad, was to hand them over to collection for a 50% fee. I've also reached out to my LA law firm through LegalShield to see what advice I might get.
@Payman A.I have an idea. I would get the contact info for the buyer, reach out on the phone, explain the entire situation to them and ask what they would prefer you do about the current tenants. My feeling is the buyer would appreciate you being upfront about it and giving them a choice in the matter. They may consider that they would like a clean slate and three vacant units to fill with their own really great tenants. They may prefer to work with existing tenants to get them caught up and paying. You never know, but they may really respect that and that could solidify the deal regardless of what they want to do.
You could also get a judgement for the debt when you evict. You can garnish their wages if you know where they work and potentially get some unexpected cash a few times over the next 7 years.
@Payman A.I have an idea. I would get the contact info for the buyer, reach out on the phone, explain the entire situation to them and ask what they would prefer you do about the current tenants. My feeling is the buyer would appreciate you being upfront about it and giving them a choice in the matter. They may consider that they would like a clean slate and three vacant units to fill with their own really great tenants. They may prefer to work with existing tenants to get them caught up and paying. You never know, but they may really respect that and that could solidify the deal regardless of what they want to do.
You could also get a judgement for the debt when you evict. You can garnish their wages if you know where they work and potentially get some unexpected cash a few times over the next 7 years.
Thanks Al. FYI, my agent/PM has mentioned that I'm not supposed to be in direct contact with other agent (who happens to be the buyer) so one of my considerations is to request tenant balances to be added to sale price if numbers don't turn around in the next couple of weeks. Of course, it's not likely that buyer would agree but given my months of instructions to evict, I don't think I would be in violation of the sales contract and it would make sure that everyone is on the same page.
@Payman A. Another option you might consider is reporting the debts these tenants owe you to a service like Rent Recovery Service or AOA Debt Reporting Service. They only charge a small fee and the debts get reported on the tenants credit reports. You don't even need a court judgment to do it. You'll do a service to other landlords (at least the ones who bother to screen their tenants), and - who knows - maybe someday they'll want it off their credit reports and decide to pay you off. There's really no down side to doing it, in my opinion.
@Payman A. Another option you might consider is reporting the debts these tenants owe you to a service like Rent Recovery Service or AOA Debt Reporting Service. They only charge a small fee and the debts get reported on the tenants credit reports. You don't even need a court judgment to do it. You'll do a service to other landlords (at least the ones who bother to screen their tenants), and - who knows - maybe someday they'll want it off their credit reports and decide to pay you off. There's really no down side to doing it, in my opinion.
Hi Kyle and thanks for the post. I agree and even know of Rent Recovery Service. My original reason for posting this thread was to find out how I as an owner with managed property can go about placing these debts in collection when the leases are not with but with PM.
Hi all and hope everyone has been well. I really appreciated all the feedback so just wanted to let you know that the PM was able to collect enough of the unpaid rents for me to let things be and walk with the capital gains that I was very happy to see despite my ownership experience in LA. Now looking forward to a market correction and reallocating funds in/around the Charlotte area. Thanks again for the input!