Landlord cash for keys gone bad.

Landlord cash for keys gone bad.

William CollinsPro Member
Investor · Rocky Hill, CT · Member since 2013 · 373 posts · 299 votes

Here is a story of a real life issue I am currently working on. Not all landlord/investing things go right.

Setting: New Britain, Connecticut. A small city full of rentals mainly made for manufacturing plant workers housing. Most date from the 1900-1960 for construction.

In a triplex owned by my cousin and I we have a problem tenant on the third floor walk up. After December of 2018 things start going South. A mysterious relative has an issue, drawing the tenant out of state causing her not to pay on time. In Connecticut the law is that the rent is late on the 11th if due on the first. We serve her papers and she contacts us promising a catch up payment in the on the of February. We start down the process of eviction, and she registers a payment in our online Cozy portal, which bounces. She then promises to make a credit card payment which does occur and processes all the way through for just under $2000. In early March I get notice from Cozy that the charge has been disputed as fraud. Pursuing where the payment was made from and the credit card is not in the name of tenant on the lease. Cozy withdraws the money it deposited to my account and now we are sitting in the middle of March. Her electricity gets shut off and electric cords appear from the third floor going down to the basement to steal electricity from an owner outlet. We remove the cords and disable the plugs. The tenant swears it is a mix up, and go down the route of getting a lawyer enaged who recommends cash for keys. The apartment rents for $750, we offer $400 and it is taken. We meet the tenant on SUnday the 28th and we have her move out and then we change the locks.

As a horror story that one is pretty vanilla.... untilthe next day. That is when a couple with 3 children break into this 2 person apartment and claim they have been living their since November. They claim that tenant 1 sublet it to them and has robbed them off $60000. The law in CT prevents me from removing them with the cops and they become aggressive to my property manager. They also tell me that stage is now leaking from my sewer line every time they flush. They call the health department and claim that this has been happening a month. This get the city out there and they call the cops. Also a mysterious amount of trash appears (4 truckloads to be specific). So here I am sorting this out and the city calls saying they will condemn the place if not addressed by 10:00AM the next day. At this point I look like a slum Lord, not the business man I to be.

I rally the troops and I get out there clean all the crap, jet the sewer. I find out the sewer is backed up by a chunk of asphalt getting shoved inside it (wonder who did that). The city shows up with the fire marshall, health, and building department. They pictured going into world war three and in two minutes they realized the tenant number two (hereafter referred to as the squaters) are professional tenants who are trying to get a quick buck. Due to the city getting called the fire Marshall is required to make me bring the triplex to current fire code Thiswill cost me $4-5000. I now need to get the squaters out. That is $900 for an eviction, but the law says you can't evict someone who filled a health department complaint for 6 months. So let's see that will mean I am down 10x $750 in rent. 5,000 in fire upgrades and who knows what in damage at the end. Yeah that was a bad couple days.

Question for you- cash for keys the squaters or go long path on the eviction?

From a name search the squaters have been evicted 2x before. in the same town. On the note of screening. The original tenant met all of the checks,. good credit, 4x income, no evictions, no criminal record.

pay the squaters cash for keys to get moving on the repairs or evit

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
7y

You made 17 mistakes with the first tenant and then rewarded her with cash. She screwed you over and snuck in some squatters that are going to cost you even more. Now you are seriously considering paying them with cash?

Stop everything you are doing. Recognize that you do not know what you are doing. You've dug yourself into a hole and are trying to dig you way out.

Get the tenants out legally. While you are working on that, find a good property manager that can take over the property and turn it around. Either that or you should sell it and invest in mutual funds.

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  • Investor · Minneapolis, MN · Member since 2017 · 103 posts · 53 votes
    7y

    Wow!  That is a crazy story and I thought people shutting off the furnace in winter and freezing all my pipes was bad! 

    Man people can suck, what you described is my worst nightmare.

  • Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
    7y

    @William Collins, I'm not sure why they have a claim to the apartment? Does your lease allow sub-lets? Do they have a copy of the "sub lease?" Does your lease require that all adults living there are on the lease? If so, the "subs" aren't on the lease and I'd think that means they can't legally make a claim to the apartment.

    How are the "subs" making any claims to the apartment?

    I'm sure you just want this behind you, but you should go after them with all you can. The only way this stops is by making it WAY more painful for them to do this crap then what they get out of it.

    @Edward Schenkel, any thoughts? This is some BS.

  • Lender · Farmington, CT · Member since 2015 · 542 posts · 321 votes
    7y

    @William Collins i am in shock right now. I have a few properties in new britain and lived there for about 11 years. that is a wild story. i can hardly believe it. yes, i have had issues but nothing like that. 

    to answer your question, as much as i would not want to give them one penny, i would offer a small amount. i would start at $100. in the end, they are losers and will always be losers. they will amount to nothing in their lives even if they make off with a few hundred dollars of yours. get them out of there asap and get your place back on track. a few hundred dollars is nothing compared to a $900 eviction, at 3 months time and whatever damage they cause while they are staying there. 

    if you need a good contractor in the area just let me know and ill be happy to help. Or, if there is anything else i can help with, please just send me a message.

    do you mind if i ask what street it is on? 

  • Attorney · New Haven, CT · Member since 2017 · 180 posts · 199 votes
    7y

    - so sorry to hear this! What a nightmare. 

    Unfortunately, if they claim they are subtenants, you will likely need to evict them. Do they have anything to prove this? Sometimes it is a fine line between a trespasser and subtenant that you did not consent to... the latter you have to evict. I see it all the time. For example, you rent to a man, his girlfriend moves in. You have to evict unfortunately. 

    If I were in your shoes I would try to negotiate cash for keys and see if you can reach a settlement. Sounds like a difficult eviction especially if they have young children. You can explain the situation to the police and see whether they will consider them trespassers but it is unlikely. 

    If you cannot negotiate an acceptable resolution, then you must evict. 

  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    7y

    You must be reeling from all this.  This 6 month with a health department complaint I would see if there is any legal way out of the health department regulation if they caused the problem  On cash for keys, If they have two evictions its likely cash for keys wont work but you can try since it is 6 months. Curious, If the health department is involved how can they have utilities off? 

    Also i would be quite clear with the other two tenants they should call the police or child services if needed and call the PM if they see anything like extensions to the basement.  In addition if this is how it is going to go I don't know if a security system would help. It would get you info on any future dumping trucks. ,, 

    credit card fraud is a place where you might report them as the suspected fraudsters. Surveillance of any other use plus their names may lead to a prosecution for something. 

  • Rental Property Investor · Indiana...mostly · Member since 2019 · 468 posts · 245 votes
    7y

    If this is how the laws work there, it appears you live in the wrong sort of state to own rental property and a lot of folks there are voting for lousy representatives.

    I'm sorry....I know that thought doesn't help. 

    I feel lousy that this would happen to anyone, especially someone who is thoughtful enough to share the story with us.  So, maybe we can learn from it.

    The problem I see with cash for keys with the 2nd group/squatters is:  what keeps another set from moving in as soon as these are gone?  In Connecticut do you have to physically move in  yourself to prevent random strangers from breaking the locks and moving in and say they've been living there?  What if you moved in and the squatters said you're squatting in a place they've been renting since November?  Based only on what I'm reading here, there could theoretically be no end to this cycle as long as some person gets into the unit - one way or another.

    I assume your lease allows for subletting without your approval?

    I must be missing something....

  • Savannah, GA · Member since 2017 · 14 posts · 14 votes
    7y

    At this point I'd let them condemn the building, then no one can stay there and just start over from scratch and it'll be easier to do upgrades anyways. 

  • Investor · Houston, TX · Member since 2014 · 94 posts · 40 votes
    7y
    Originally posted by @Scott P.:

    The problem I see with cash for keys with the 2nd group/squatters is:  what keeps another set from moving in as soon as these are gone?  In Connecticut do you have to physically move in  yourself to prevent random strangers from breaking the locks and moving in and say they've been living there?  What if you moved in and the squatters said you're squatting in a place they've been renting since November?  Based only on what I'm reading here, there could theoretically be no end to this cycle as long as some person gets into the unit - one way or another.

    I assume your lease allows for subletting without your approval?

    I must be missing something....

     This is what I am wondering, what keeps it from being another never ending cycle? Can they stick another piece of asphalt in the drain 5 1/2 months from now, get another health department complaint, and repeat indefinitely? 

  • Member since 2016 · 13k+ posts · 12k+ votes
    7y
    Cash for keys will not work. Squatters, especially this type, do not want money they want a place to live for free. The amount you would have to pay them to leave, as opposed to them getting 6 months free rent, would be astronomical. They are extremely professional and will not leave until evicted and removed by the sheriff. Sad that our legal system enables and encourages this form of criminal behaviour.
  • Rental Property Investor · Farmington, UT · Member since 2018 · 171 posts · 148 votes
    7y

    @William Collins whatever you do I’d get a priest to come in there and do an exorcism on that unit!!! I give you kudos for the most horrifying renter case I’ve heard all year!!!

  • Cheshire, CT · Member since 2018 · 87 posts · 60 votes
    7y

    @William Collins that suuuuucks dude.

    I am so sorry to hear about that happening. I would have to think you'd be able to prove your property wasnt always this way and to dispute everything you can with the city and health department. Are you other tenants able to argue on your behalf? It sounds like you would have 2 other groups of tenats suffering because this one group of ********.

  • William CollinsPro Member
    OP
    Investor · Rocky Hill, CT · Member since 2013 · 373 posts · 299 votes
    7y
    Originally posted by @Jaysen Medhurst:

    @William Collins, I'm not sure why they have a claim to the apartment? Does your lease allow sub-lets? Do they have a copy of the "sub lease?" Does your lease require that all adults living there are on the lease? If so, the "subs" aren't on the lease and I'd think that means they can't legally make a claim to the apartment.

    How are the "subs" making any claims to the apartment?

    I'm sure you just want this behind you, but you should go after them with all you can. The only way this stops is by making it WAY more painful for them to do this crap then what they get out of it.

    @Edward Schenkel, any thoughts? This is some BS.

     Jaysen my lease expressly forbids it.  But in Connecticut, they do not allow forcible eviction not handled through the court.  The issue comes to cashflow as well.  The nice thing is this is a triplex (950. 900 and 750).  The apartment which they are messing with is the lowest rent- so this is still cashflow slightly positive.  The question comes in for the 6x 750 + 900 or $5150 lost potential future rent and eviction costs versus the cash for keys of about 1/10 of that- when I know I will need to do repairs.

  • William CollinsPro Member
    OP
    Investor · Rocky Hill, CT · Member since 2013 · 373 posts · 299 votes
    7y
    Originally posted by @Edward Schenkel:

    - so sorry to hear this! What a nightmare. 

    Unfortunately, if they claim they are subtenants, you will likely need to evict them. Do they have anything to prove this? Sometimes it is a fine line between a trespasser and subtenant that you did not consent to... the latter you have to evict. I see it all the time. For example, you rent to a man, his girlfriend moves in. You have to evict unfortunately. 

    If I were in your shoes I would try to negotiate cash for keys and see if you can reach a settlement. Sounds like a difficult eviction especially if they have young children. You can explain the situation to the police and see whether they will consider them trespassers but it is unlikely. 

    If you cannot negotiate an acceptable resolution, then you must evict. 

    Ed,  Thank you for your advice.

  • William CollinsPro Member
    OP
    Investor · Rocky Hill, CT · Member since 2013 · 373 posts · 299 votes
    7y
    Originally posted by @Scott P.:

    If this is how the laws work there, it appears you live in the wrong sort of state to own rental property and a lot of folks there are voting for lousy representatives.

    I'm sorry....I know that thought doesn't help. 

    I feel lousy that this would happen to anyone, especially someone who is thoughtful enough to share the story with us.  So, maybe we can learn from it.

    The problem I see with cash for keys with the 2nd group/squatters is:  what keeps another set from moving in as soon as these are gone?  In Connecticut do you have to physically move in  yourself to prevent random strangers from breaking the locks and moving in and say they've been living there?  What if you moved in and the squatters said you're squatting in a place they've been renting since November?  Based only on what I'm reading here, there could theoretically be no end to this cycle as long as some person gets into the unit - one way or another.

    I assume your lease allows for subletting without your approval?

    I must be missing something....

    There is a mistake I made with this unit.  To keep the "charm" of the older building I kept the older- less securable wood doors.  I am going to replace them all for both security and fire marshall compliance.  The other thing I will do is change the common door key locks on the eviction.  So this was the third-floor unit.  If I had change the common door locks as well the breaking and entry claim would have better grounds.

  • Rental Property Investor · Kalamazoo, MI · Member since 2018 · 117 posts · 235 votes
    7y

    @William Collins

    This makes me sick. I’d hire. Team of people to go in and squat on the squatters. I’d hire kids to throw eggs at them everyday when they walk outside. I’d sneak in and board up the main door and say you don’t know who did it. Something. It makes me sick that we live in a world where this kind of behavior punishes the good guy. All I can say is that if you keep with it this will be in the past and you’ll go on to be a millionaire at the same time these dumpster divers are trying to steal copper at 3am stubbing their toes in the darkness.

  • Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
    7y

    @Edward Schenkel, I'm having trouble understanding one point: if the squatters have nothing to prove they sub-leased (we'll leave aside whether a sub-lease was authorized or not), how are they anything but trespassers? Is it the law that as long as someone gets inside an apartment, they have a legal right to stay there?

  • Rental Property Investor · Boston, MA · Member since 2016 · 61 posts · 18 votes
    7y

    MAN. What a terrifying situation. So they broke the door down in the middle of the night? Is it possible security cameras may have prevented such a crime or at least given you the leverage needed in a court of law to prove these are trespassers?

    How is the specific neighborhood? Do you know how these professional tenants even scoped out this vacancy? Could they have been in contact with tenant #1?

    I'm trying to piece together the lessons out of this disaster. Glad to hear you are at the least still cash flowing. Good luck man! Wishing you a quick resolution!

  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    You made 17 mistakes with the first tenant and then rewarded her with cash. She screwed you over and snuck in some squatters that are going to cost you even more. Now you are seriously considering paying them with cash?

    Stop everything you are doing. Recognize that you do not know what you are doing. You've dug yourself into a hole and are trying to dig you way out.

    Get the tenants out legally. While you are working on that, find a good property manager that can take over the property and turn it around. Either that or you should sell it and invest in mutual funds.

    The DIY Landlord Book4.7247 Reviews
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    7y

    Eviction is the only way to lawfully regain rights to your property. Evict named lease tenant and "all other occupants". I wish people on BP would stop pushing cash for keys. I would demand that your attorney do the eviction at no cost since they suggested cash for keys in the first place. Bad legal advice!!

    As far as your original tenant, the credit card fraud is criminal. She either used a stolen card or lied to the credit card company about the fraud, which is itself fraud. If they were subleasing and stole the money, that is also criminal. I would open a police report and fight the credit card reversal. 

    Cozy needs to get their sh1t together on credit cards. This is not the first landlord who has had this happen.

  • Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    7y

    This is ugly, and it is going to cost you money, and the laws of Connecticut are clearly not on your side. I would hire local attorneys with investigators and experience handling complicated evictions and get these people out.

    You really should not get into this game if you are not prepared for how ugly things can get. This is why landlords sell and get out all the time. But that's not advice for you, but for other watching this thread. For you, bite the bullet and work the eviction, take the losses and plan to do better next time.

  • Rental Property Investor · Medford, MA · Member since 2016 · 288 posts · 171 votes
    7y

    Dude that really sucks, but try and look at this way. In the school of hard knocks, you paid for the Master Class. As long as you walk away learning something, it's not a total loss.

  • Cheshire, CT · Member since 2018 · 87 posts · 60 votes
    7y

    I am wondering out loud, as well, if you cant call CPS if that couple willingly moves their children into situations like this?

    Kind of a nuclear option though.

  • Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y

    @Nathan G.

    Ha I was going to say the same thing ! I agree 100%

  • Hartford, CT · Member since 2017 · 19 posts · 10 votes
    7y

    @Johnny SumnerThat sounds like a good one that’s if he has the money However the other If you is he has to put them up in a hotel or another apartment until all the repairs are done

  • Rental Property Investor · Jacksonville, Florida Area · Member since 2016 · 106 posts · 48 votes
    7y

    @William Collins. I would absolutely talk to an attorney. It's crazy how low some human beings will go to take advantage of a landlord. I call them slum-squatters! Please have your attorney involved, for what you do next. Time to take the gloves off!

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