Tenant won’t pay last month’s rent. Is eviction process worth it?

Lender · Santa Clara, CA · Member since 2018 · 46 posts · 74 votes

Hello BP Nation!

One of the inherited tenants (month to month lease) in my first investment property was given notice to vacate as we are looking to do some rehab work on the property. It is now the last month and tenant says they can not afford to pay it since they will need to put a deposit and first months rent for their next property. We have served the late notice, but nothing.

I know I should be looking at this through the lens of a business, but I also want to be as compassionate as possible.

Is it worth starting the eviction process now that we are in the middle of the month?

What other solutions are there?

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Russ B.

Investor · Cleveland, OH · Member since 2017 · 319 posts · 330 votes

The risk here is that you'll get into next month, they'll still be there, and still no rent. Then, it'll take at least another month to get rid of em. Most leases specify that the deposit can't be used as the last month for this reason, and because you'd be left with nothing to cover any damages.

I'd tell em that you need to do it by the book. You'll have their deposit ready to go on move out day (assuming they haven't destroyed anything), but if they don't pay, you'll have to initiate eviction proceedings.. which will make it much harder to get in anywhere else.

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Jonathan W.
Los Angeles, CA · Member since 2019 · 512 posts · 301 votes
6y
@Ashley Cao I find that to be foolish on the tenant. He will sacrifice rental record, his deposit that you should have received during the sale and he will have a judgement against him for money still owed. So it he will be in the deep red
Ideally you want them out as soon as possible but I think you should go back to the tenant and inform of existing ultimatums as the one they threatened you with doesn’t help them or anyone but them. They can pay for storage and a weekly place or they can find a place they can afford because that cost less then losing your deposit and being on the hook for one months rent. I imagine his rent is very low compared to market
Anyhow. I’m newer and in Nv so I really can’t tell you more if I wanted to and I’m sure someone will follow up with more advice
Good luck
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Nabil SuleimanBusiness Member
Real Estate Agent · Los Angeles, CA · Member since 2016 · 596 posts · 299 votes
6y
@Ashley Cao
Hi Ashley, How is your communication with them going? If you dont feel like any progress is happening and they are non responsive to your request to vacate and they aren't paying rent then all signs point to yes on the eviction. If there is a way for you to work out a way to get a portion of the rent and check In on them moving out and you work together to make it happen than you may be able to save yourself some headache, time and a little money.
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Account Closed
Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes
6y
Originally posted by @Ashley Cao:
Hello BP Nation!

One of the inherited tenants (month to month lease) in my first investment property was given notice to vacate as we are looking to do some rehab work on the property. It is now the last month and tenant says they can not afford to pay it since they will need to put a deposit and first months rent for their next property. We have served the late notice, but nothing.
I know I should be looking at this through the lens of a business, but I also want to be as compassionate as possible.

Is it worth starting the eviction process now that we are in the middle of the month?

What other solutions are there?

Depends on the state. It honestly stinks when a tenant will do this to a landlord. You said you are doing rehab so would they have lost the majority of their deposit anyhow?
Depending on the state it may not be worth it. But in reality have a process and stick to it. I learned the hard way of not putting the eviction notice out immediately and it cost me additional months of lost rent.
They will stay until they have to vacate and then leave with nothing on their record and you out months of rent. Good luck keep us posted.
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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
6y
While not ideal, you can take it out of their deposit (assuming it is a full month's rent). You can give them notice and tell them you will start with an eviction, but it likely isn't worth it. Tell them they need to pay you rent or leave.
1 Reply
Russ B.
Investor · Cleveland, OH · Member since 2017 · 319 posts · 330 votes
6y
The risk here is that you'll get into next month, they'll still be there, and still no rent. Then, it'll take at least another month to get rid of em. Most leases specify that the deposit can't be used as the last month for this reason, and because you'd be left with nothing to cover any damages.
I'd tell em that you need to do it by the book. You'll have their deposit ready to go on move out day (assuming they haven't destroyed anything), but if they don't pay, you'll have to initiate eviction proceedings.. which will make it much harder to get in anywhere else.
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Wesley W.
Rental Property Investor · The Vampire State · Member since 2013 · 2k+ posts · 2k+ votes
6y
I completely agree with @Russ B.. Always always always begin evictions immediately. Even odds they will still be there next month and now you are two months short on rent. As far as I am concerned, their word is worthless. They "said" they would pay you rent every month - but they are not doing that. They "say" they are moving at the end of the month.
Food for thought: Always respond to what a tenant does ( or doesn't do), never to what they say.
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Solomon Rosenberg
Investor · Rockland County, NY · Member since 2018 · 46 posts · 55 votes
6y
It may make sense to offer them money if they leave by say the end of the week, so they can go somewhere else, and you avoid the eviction process and costs, I did it once and it worked. But I would talk to someone more experienced first.
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Bryan Devitt
Contractor · Oxford, MA · Member since 2018 · 807 posts · 745 votes
6y
@Ashley Cao YES!! There is no guarantee they'll be gone at the end it the month. This could drag on for months and you'll be a month behind in the legal process. Do everything by the books and don't hold back because they say they're going to leave
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James Mc Ree
Rental Property Investor · Malvern, PA · Member since 2016 · 1k+ posts · 934 votes
6y
Send them a 10-day pay or quit letter (or whatever timeframe CA requires). In that letter, you tell them they owe you $X rent plus late fees before moving out and need to move out within 10 days if they don't pay it. You continue the letter stating you intend to follow the eviction legal process immediately thereafter and they will be responsible for reimbursing you for all of your legal costs. Further, if they do move out without paying rent, you will sue for a judgement for what is owed plus court costs. Either way, you tell them they will have a serious credit issue on their credit report, eviction or judgement, if they don't pay what they owe you.
If you do the above, all you did was write a letter and it is usually sufficient to scare them into compliance. It also gets you started on the legal process. Read up on the CA eviction process.
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Robert D DismukesPro Member
Flipper/Rehabber · Memphis, TN · Member since 2019 · 37 posts · 36 votes
6y
@Ashley Cao After Day 1 ! Start the process. I’ve heard every excuse on this planet on why not to pay rent . You are a business! You won’t be a business if you continue. My short n sweet .02 cents.
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Jeff Filali
Rental Property Investor · Broken Arrow, OK · Member since 2016 · 1k+ posts · 1k+ votes
6y
It's a business, treat it like one. Always follow the lease and law with no delays, otherwise you are setting yourself up to lose a lot of money over your REI life.
Right now it’s one tenant, one month. Next it will be two months, plus legal fees, court costs, etc. & a judgment that you May never collect on. What happens when you have 50 doors, 100, 1000, and it happens a few times a year?
If you can’t stand up for your asset, get a property manager to manage your properties.
Good luck!!
2 Reply
Mary M.
Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
6y
From a different perspective, if you are looking to vacate the property to reno and raise rents (is this in CA? Did you follow the new tenant laws?) I would not want to start a battle that would make my goals harder to achieve. Therefore, I would send them notice to pay rent, but If the goal is to get tenant to move then offer them $$, etc You always have the deposit to use too.
But first and foremost check all local applicable laws re tenant notices to vacate etc
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Kathy Johnson
Real Estate Professional · Hayfork, CA · Member since 2015 · 231 posts · 212 votes
6y
Go ahead and start the eviction because sometimes they still stay in the unit even after they have used the deposit up for rent and the longer you wait, the more rent you are out.
1 Reply
Todd Powell
Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
6y
@Ashley Cao some would say be ruthless, but I just see it as part of buying the turn around project. There are always horrible tenants to get out and I count my blessings when I can get them out at all costs.
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Myeasha Jones
Property Manager · San Francisco, CA · Member since 2020 · 53 posts · 17 votes
6y
This depends on what attorney office you are using for your evictions. I’ve worked with an attorney to evict someone and it has taken 3-4 months which is not necessary. Had I chose an attorney who didn’t have many cases it may could have went faster.
Since it’s their last month, I suggested at the time or move out taking the rent from the deposit. When the deposit does not cover the rest of their rent, send a demand letter of what they owe. Give them 30 days to pay, or send the account to collections.
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Account Closed
Rental Property Investor · Canton, OH · Member since 2017 · 1k+ posts · 1k+ votes
6y
@Ashley Cao
This has happened to me before and I usually look at it on a case-by-case scenario and factor in how much time and money is at risk. I will ask though what happens if you don't file, and they don't move out? You're back at square one!
If your local tenant laws allow, perhaps see if the tenant will move out by this weekend and in return you will not file the eviction. Explain you have to follow the lease and unfortunately, if you file, it will hit their public record and you will be forced to send any upaid rents/damanges to collections.
1 Reply
Amy Beth
Rental Property Investor · Edison, NJ · Member since 2016 · 753 posts · 565 votes
6y
@Ashley Cao. I would file because they may not actually leave next month. Perhaps they will not find a place which they like in their budget to move to. And then you have lost another month in rent. I would file the papers to ensure that they leave. And perhaps if they care about their credit, it will motivate them to pay. If not you still have them out sooner so that you can re rent it.
1 Reply
Michael Robbins
Property Manager · Henderson, NV · Member since 2018 · 501 posts · 317 votes
6y
I would keep it simple and follow the lease and let them know you have no choice but to move forward with the eviction. Its so difficult to predict what will happen. Will the tenant even move out? Will the tenant leave the place in good condition? With all the unknowns I say follow the process.
1 Reply
Rick Albert
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
6y
Hey @Ashley Cao, a couple of questions.
1. Why are you planning on remodeling it? Does it have to do with getting higher rents?
2. If it is, is the delta between the increase rent versus the cost and vacancy of the rental worth it rather than just raising rent on the existing tenants?
3. What are the rent control laws in Santa Clara? How complicated is the evicting process?
4. Since you are going to remodel the unit, how much of the deposit can you give back to them?
Those questions might help in directing you towards a solution. Keep in mind their financial burdens are theirs and only theirs, not yours and are not your responsibility.
Best,
Rick
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Ashley Cao
OP
Lender · Santa Clara, CA · Member since 2018 · 46 posts · 74 votes
6y
Originally posted by @Theresa Harris:
While not ideal, you can take it out of their deposit (assuming it is a full month's rent). You can give them notice and tell them you will start with an eviction, but it likely isn't worth it. Tell them they need to pay you rent or leave.

Thanks, Theresa! Does the lease have to explicitly say that if they do not pay, it can be taken from the deposit?
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Ashley Cao
OP
Lender · Santa Clara, CA · Member since 2018 · 46 posts · 74 votes
6y
Originally posted by @Rick Albert:
Hey @Ashley Cao, a couple of questions.
Why are you planning on remodeling it? Does it have to do with getting higher rents?
Yes, the property is a bit worn, so looking to give the home a fresh look and increase rent.
If it is, is the delta between the increase rent versus the cost and vacancy of the rental worth it rather than just raising rent on the existing tenants?
Tenants have a history of paying late, so would prefer to choose a different tenant; Good call though - "If you don't ask the answer is always no"
What are the rent control laws in Santa Clara? How complicated is the evicting process?
This property is in Columbus, OH which I understand is not as complicated as CA.
Since you are going to remodel the unit, how much of the deposit can you give back to them?
I walked the property and it looks like there is a lot of wear, so I don't think much will be given back.
Those questions might help in directing you towards a solution. Keep in mind their financial burdens are theirs and only theirs, not yours and are not your responsibility.
Best,
Rick
Appreciate the feedback, Rick!
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Rick Albert
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
6y
Of course! Best of luck!
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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
6y
Originally posted by @Ashley Cao:
Originally posted by @Theresa Harris:
While not ideal, you can take it out of their deposit (assuming it is a full month's rent). You can give them notice and tell them you will start with an eviction, but it likely isn't worth it. Tell them they need to pay you rent or leave.

Thanks, Theresa! Does the lease have to explicitly say that if they do not pay, it can be taken from the deposit?

No. The deposit is used for any outstanding bills. Typically you do not want to use the deposit for last month's rent. If they leave and there are damages, the deposit won't cover both the rent and the damages/cleaning. Make sure you give them an itemized list of what the deductions are for when returning the deposit. Also check your local laws to see how long you have to do this. You want to try and return it quickly, but make sure you go through the place thoroughly and get everything fixed before you do, so you don't have unexpected expenses.
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