Prohibitted Subletting - Best Options with Unwanted Occupants

8 Replies

Hi BP community!

We have a rental property that suddenly went south. The tenants abandoned the property in September due to domestic issues and parted ways. Because they are still on the hook for rent until a new tenant is found, they illegally subletted the house to a random couple. My PM left a 3 day notice to vacate, which they did not follow. He then called local PD, but did not stay to meet them at the property. Because of his negligence, the new "tenants" claimed they rent the house and the cops went away. (We actually fired our PM last month and are transitioning to a different company next week).

We are open to all options... a few we came up with: 

1) The subs don't know the new PM; opportunity to start fresh, ask for formal application process, formally terminate the prior lease and start a lease with them, at a higher rate to offset our risk.

2) Cash for keys - I've read it can be more effective that going through eviction?

3) Reach out to co-signers (parents of tenants) on lease who are now financially responsible and put pressure on them otherwise they will have to begin rent payments and be held responsible for property damage, eviction court fees, etc.

4) Reach out to tenants and explain subletting is prohibited by law in Texas. We will cancel the lease and they don't have to pay additional rent (they already paid for Oct) as long as they get the subs out of the house. They are young and were likely trying to solve the problem the only way they knew how.

5) New PM call the cops, report act of vandalism (house has damage to front door and door leading to garage).

6) Eviction as last resort.

I would like to avoid eviction and find a better recourse. Any thoughts? 

My previous PM is grossly incompetent - I don't want him near this anymore; he created this problem in the first place. So I'm researching what options we have until new management takes over next week. Terrible timing, but that's life.

Thank you all.

0. Call a lawyer ASAP. In the meantime, I suggest not cashing any rent checks from the randos. 

Honestly (in addition to talking to lawyer), I'd go talk to the people. For all you know, they had no idea anything funky was going on, and have solid income and credit. Go get a feel for what's really going on "in the trenches."

@Rebecca Jackson eviction is the only correct answer. if your tenants were that bad, do you honestly think they would allow good people to rent your home? Of course not. They moved in the first person with cash in hand. If they were decent tenants, they would have already tried to reach out to you by now.

Hire an attorney and start the eviction process immediately. If you get lucky, the individuals will see you're serious and will move out of their own accord and save you the expense.

At the same time, do your research to figure out how to screen property management companies and choose one of quality, not the one that's cheapest or first in the phone book. Feel free to send me a private message and I'll share some tips

You have a new PM.  Did you hire the PM knowing this scenario was in place?  If so, did you discuss courses of action, solutions?  Here's my problem:  if you hire a PM but then you seek advice on how to fix the problem, are you - in fact - doing the PM's job and setting yourself up for more of the same?  If you don't have confidence that the PM can handle this, please terminate them today.  

There are a lot of ways to resolve the "occupant issue" without paying for keys or a whole lot of hoopla. There is an easy solution here to all of this.  Actually more than one.  I don't mind helping anyone - especially another investor/landlord - but you've engaged a new PM to handle it.   You should be having this conversation/problem solving session with that person.

@Scott Mac that’s the idea. The tenants always paid on time and were never an issue. Even paid for October even though they moved out! They probably didn’t know they couldn’t sublease since my previous PM was ineffective, but fortunately we are done with him.

I’m actively working with new management on a strategy. I don’t like the nuclear option as the first option. 

Hi @Patricia Steiner

No I was not aware of the issue at the time I hired the new PM. There’s a 30 day notice period per the management contract, and during the transition is when the issue came up. I only found out by chance- and thank goodness I verified- again, previous PM lackadaisical communication was one of many reasons he was not suitable for our needs.

Agreed there are many options, I’d love to hear your suggestions. Thanks.

@Rebecca Jackson

This is not a catastrophic situation...your tenants (not to be confused with occupants) most likely found you a tenant. They didn't go about it the right way but I certainly admire them for problem solving versus just stiffing you.  Start there.  Call the occupants or send your new PM and start over with them.  Ask them to fill out an application so you have their contact information.  Did they pay a security deposit?  If not, well, the old tenants forfeited their's when they broke the lease terms.  Go over your lease terms with the occupants and see if it's a viable option to have them be the legal tenants. Tell them who and where to make rent payments. If not, let them know that new tenants will be moving in (in 2 days; some short order) and that they do not have the legal right to be there.  Advise there is no eviction - that basically they're squatting.  Their remedy is go after whoever  "sub-rented" to them.  Start here.  Be amiable with the occupants - they could be your next tenants and, if not, realize they get to leave right away while being treated with respect.  

And, send a Notice To Quit to the legal tenants - advising that they do not have the legal right to sub-lease and as such have violated the terms of the contract.  End it in writing with them if you have not already.  

There are a lot of excellent PMs out there; what makes them excellent in the majority of cases is that they have an excellent owner/investor for a client.  There is no passive investing in rentals.  It's not investing - it's running a business. When you don't actively and regularly engage your PM, the bad ones/incompetent ones will run your investment in the ground and leave you with no ROI.

Forget the lawyers, the court filings and start with what you have in front of you - but do it today.  Time is of the essence.  I think you're real close to having this back on track.  Fingers crossed for you...

@Patricia Steiner

Absolutely agree with the thought process. We are working on this with new PM company even though their start date is Monday, they are already in motion.

We have October rent and full month security deposit; now it’s a matter of transitioning occupancy to tenancy if they agree, and pass screening process.

Thanks for your time:)