Unpaid rent from vacating tenants

10 Replies

Hello BP community,

My wife and I purchased a duplex in a B class area about 1.5 yrs ago and inherited 3 adult tenants in one of the two units. This was my 1st property.

I live in one of the duplex units (my wife lives in another state) right after purchasing the duplex. 

My tenants would pay rent late almost every month with late fees. Eventually one of the 3 adults became unemployed. The rent couldn't get paid. I gave them a pay-or-vacate notice, they decided to move out. It looks like they are moving out at the end of the month (we'll see).

The tenants are telling me they would like to pay the remaining rent, when they are able to, after they move out.

The letter I mentioned above was a pay OR vacate letter, not a pay AND vacate letter. But if they want to pay unpaid rent ... I don't see why I would say no. 

I was looking into promissory notes as a way to collect that unpaid rent, but don't know a lot about them.

What do other landlords out there do with unpaid rent from tenants who vacate before the pay-or-vacate term is up? 

@Greg Mayer Tell them you expect to be paid in full before they vacate or you will send them to collections for the past due amount and see what they say/do. If they have something to lose they will pay, if they don't they won't. Until their feet are held to the fire you won't know which. 

@Greg Mayer tenants will often say they intend to pay everything owed but it's extremely rare that they make good on it. I'm assuming they owe more than the deposit can handle.

After they move out, use the deposit to cover cleaning and repairs first. Then apply it towards unpaid utilities or other expenses, with rent being the very last thing you apply it towards. Contact them in writing and demand payment of any unpaid balance. Assign them a deadline of 30 days to make good. If they ask for more time, give them up to 90 days but develop a written payment plan that includes everyone's signature as proof of agreement. If they miss a deadline, take them to Small Claims. That may prompt them to pay. If not, get the judgment and send them to collections.

@Greg Mayer ... all depends on how much they owe you. If it is in the hundreds I would wash my hands of it and not bother. It is more important to get them out, fix up the property, and get in a new paying tenant ASAP.

@Greg Mayer they are responsible for rent up to the last day they are there. For example, let's say they didn't pay rent for November by November 1. Rent is $600. You serve them notice to vacate and they move out today, November 22nd. They were in the duplex for 22 of 30 days. You calculate rent based on days they were in the property. So the math looks like this:

(22/30) X $600 = $440

They owe you $440 plus any allowable late fees. They don't owe you rent for the last 8 days of the month, because you asked them to leave.

Assuming you have a deposit, you take damaged first. Then you take any unpaid rents and late fees. Then you either return what is left or send them a bill for what is owed. If they don't pay the bill, you can either take them to small claims court or send them to collections. If it is a small dollar amount you may choose to just write it off and move on.

As @Nathan G. stated, it is pretty rare to have people pay you later. That being said, I have sent people bills and have had them pay the bills. I always try and if they don't pay, I get a judgement. Tenants are aware this is my process, you either pay or you end up with a landlord judgement on your credit report. I tell them, good luck with renting a place from landlords who run credit reports and good luck buying a home without paying off your judgments.

Could be a legality in your jurisdiction to check on, but in mine, the lease clearly indicates various breaches, non payment on time being one. It also specifies that an unresolved breach automatically forfeits the security deposit, which can no longer be held to offset damages once a notice to vacate has been issued for the breach. At my discretion, I can then pursue payment to reimburse for repairs in any fashion permitted by law. These are initialed clauses which makes a small claim judgement a gavel drop. Such judgements, when filed, show up on credit reports. This puts the ex tenant in a bind when their credit report is needed for a car, a new rental etc. Sharing this with them at signing is the best time. But any time may make a check show up sooner, not later.

You inherited this errant tenant(s).  One of my main drivers in running a rental business is to avoid evictions.  I have painful and expensive experiences from earlier in my career.

It seems like these tenants are still in the property.  And there are three adult tenants, who may not be related.  Bad situation.  Two agree to move out, and one needs more time.  They still have possession of the unit.

Since they are not paying, your main focus should be to get possession of that unit.  Give them the legal required notice.  Give them incentives to leave before you file an eviction.   File the eviction.  Evict them.

Now for collections.  They can't pay the rent.  And they need a new place to stay.  These people are probably poor.  You can get a judgement and try to collect it.  I haven't been super successful with this.  Can't even find most of the people after they leave.  I don't like to spend good money and time over small amounts of money.

I focus on getting the place back in to my possession.  Once, a tenant skipped out on paying rent for two months before leaving, and I knew they had a good job.  In this situation, I went after the back rent.

They typically all say they will pay after they leave.

They don't.

They typically all say they are moving out at the end of the month, next week, in a few days.

They often don't. 

They are buying time.  Milking the situation as long as they can.  I used to trust, but now I don't.  Been played too many times.

Whatever they say, follow the program.  Keep doing the paperwork required for eviction, step by step, no matter what they say.  Take them to court to collect lost rent above what their deposit covers, and for breaking of their lease, if allowed in your state by the circumstances.