Rent Control, what do do when you can't collect last months rent?

Question

Looking for tips and creative ways to protect yourself when tenants don't give enough notice. Tags: Buffalo, Rochester, NYS

Nathan Gesner · Answer

You could switch to a month-to-month rental agreement. They pay, they stay.

Another option is to sell while the market is at a peak and invest in other areas that are more reasonable.

John W. · Answer

@Mike Chevalier I typically do month to month leases to begin with.

Mike Chevalier · Answer

@John W. Do you reach out to the tenant 60 days prior to lease expiration, to confirm their intention to renew the lease? The Book on Managing Rental Properties advises sending the tenant a "lease renewal decision form" prior to their lease expiration, and laying out options for them to renew the lease for a year, 6 months, or MtM. It also informs them of the notice they are required to provide (whether by the lease, or state law) if they intend to vacate.

Michael Robbins · Answer

Check with your lease and State laws but I attempt to take a proactive approach to avoid insufficient notice:

Proactive - at least 60 days before the lease is set to expire I sent out a "renewal rate offer letter." The letter goes over any rent increases, reminds them about their lease expiring, explains that written notice is required. It also goes over what their month to month rate will be and when it kicks in. The letter is mailed and also emailed.

Timothy Smith · Answer

Good morning, Jon. I'll be following this for creative ideas, as well. I also use 1 year leases, but have been considering changing to MtM. My initial reason for 1 year leases was false information consultants gave me that banks required seeing long-term leases for commercial loans and lines of credit. So far, not a single bank with which I've spoken has confirmed that!

One thing you may want to consult your attorney about is the legality of requiring a 60-day notice. To my knowledge (from a meeting with the housing court judge, actually) all time frames are reciprocal, so those imposed on tenants are same for LL. I guess that depends on who is interpreting.

John W. · Answer

I have rentals in A neighborhoods in Clarence. My main concern and where I lose money is when tenants move out and give a month or less notice, which creates turnover time where rental is not rented. Thankfully, repairing damage is not often the problem. The problem is they often do not give enough notice and there is no collecting last months rent anymore in order to really hold them to give 6-8 weeks notice. I am on the fence about month to month leases vs 1 year leases as I would rather have some one freely leave than be stuck with terrible tenants for at least a year. I now have it written in my lease that tenants will give 60 days of notice where they will pay rent, but in reality, all I actually have is their security deposit. Was wondering if anyone has creative ways to mitigate this problem, or if I'm missing something.

Adam McQuiston · Answer

You can no longer collect last months rent. Just first months and deposit. You will most likely have to go to a civil court and then try to garnish wages. Can be costly and time consuming.

Theresa Harris · Answer

@John W. How much of a security deposit are you allowed to collect? I don't collect last month's rent up front. I had one leave due to family emergency, but that was rented quickly with no vacancy. Otherwise I would have taken the rent out of the deposit.

Timothy Smith · Answer

Hey @John W., good to 'meet' you and hope to run into you around town some time. Can you be more specific about what your concern regarding lack of notice is? Scheduling work to turn unit around, lost projected rent, potential damage, all of the above?! Do you use MtM leases or longer terms? What class of rentals do you have?

You could write penalties into your lease, but would you really expect your tenants to be held accountable? This isn't a rhetorical question -- you know your tenants and class of units, so do you think if you built in penalties, they would pay up? Furthermore, would it be worth it to pursue legally?

Are you familiar with the new 30/60/90 day law in NYS? At one meeting with the housing court judge, he stated that this did not just apply to the LL but also Tenants -- they need to give the same notice depending on length of tenancy. That's all well and good, but what will really hold them to it?

Or, is it simply easier to have some contingency money set aside for unit turn-around, and hope that you can get it re-rented quickly. For me, I'd rather go the drama-free route and eat a month of rent, fix/upgrade/clean the unit, and get it marketed ASAP with tighter screening requirements. Honestly, I'd be happier to be rid of someone who skipped out than to pursue damages.

Full disclosure, I haven't had this issue. The only time I had someone leave unexpectedly was an inherited tenant and it was a blessing. But, my screening is extremely thorough and my units are all freshly rehabbed and rent $900-1200, if that gives any perspective.

Rent Control, what do do when you can't collect last months rent?

Rent Control, what do do when you can't collect last months rent?

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