Tenant thinking that they are Landlords

35 Replies

We are in great state of Pennsylvania and have tenants who have been renting from us for 2+ years. When they initially rented from us, they rented an apartment in a property that I personally owned. Now they are renting at a property that I currently manage and own small %age of.

This current property is SFR was fully rehabbed to 2019 standards before renting to them.

Maintenance Issues & Concession given to them

We had a heating issue in late Feb-March, after a few HVAC service calls it was determined in April that furnace need replacement. However, it was still operational. We bought space heater for them. Later, our HVAC temporarily replace the part to fix the unit. We wanted to convert from Oil to gas (better investment), but PennDOT rejected the utility company's permit due to conflicting work on the same road by another contractor.

We also cooperated with tenants and accepted late payment for the 2-3 months since she was working every 2 weeks, during Covid-19. No late payments were charged.

Heating issues remain because of slowness (5+ months already) of government agencies to approve the permits. Tenant agreed to manage with room heaters and insisted on put Central Air for winters. (HVAC tech suggested to convert to propane as an alternative for winter)

About the tenants and habits
They are in early 20s and have a toddler. The guy has been unemployed since 2017 and cannot find a job until now. They fought with each other, I have personally heard that. (None of my business to interfere if it is not abusive) The tenant has been mostly on-time when it comes to payments. Mostly they are cooperative and understanding to maintenance issues after some convincing. Tenants are bit messy and unorganized (that how they chose to live, and we never interfered how they live). The guy punched a door on my personal property, and I deducted it from the security deposit to train them. (Thanks to BP community)

Updates to property after tenancy
At tenant previous requests, we installed Central Air in June 2020 for the summer expecting that they would live another year. They insisted that we should put Central Air in. Now it’s whole another story, read below.

Lease Terms & Security Deposits
Dec 2019 – Ending 6/30/2020 (Expired). The expired lease says automatically renewed for 1 year. Nominal% increase at renewal. $100,000 renter’s insurance required. 2 months written notice to vacate. We have their 1-year security deposit. 2 months penalty to break the lease in middle is also stated. Our lease states, we need not send any renewal notice to tenant or notice increase in rent may be sent.

The dispute and underlying reasons
Last week of May, we started asking the tenants that they need to increase their renter’s liability insurance to $300,000. Additionally, add our company as a “interested party”. Then, tenant asked to renew lease for 6 months, we refused, and they were OK with 1 year. We offered them no rent in exchange of new insurance and liability requirements. At that time, they seem to have agreed.

After repeatedly following-up about a 3-4 weeks and 5-6 times in June, tenant does not want to comply to new insurance requirements, stating that they have consulted with other people and it is not a standard practice to add an “interested party”. However, did raise the coverage to $300K. This was done 3-4 weeks after continuous follow-up and was not done right.

Then, they wanted to speak to the owner directly. After the call was arranged, when I told them the call would be 3 way and from an unknown caller, now they do not want to talk stating we want to know the owner’s number. They wasted owners time as well. They demanded to see owner in person and that was an outrageous request. Then we had them call our insurance broker, which they did. Then they seem to understand why we want to be an interested party.

On June 30th (Last Day for lease). We gave them following three options: -

  1. 1 Year Renewal, No Rent Increase for the year if they raise the liability to 300K and add us as an interested party
  2. 1 Year Renewal rent increase by nominal % as stated in lease. Compliance to new insurance requirement is optional.
  3. Or Give a notice in writing by July 1st and move out by August 31st

On July 1st, the tenant chose option 3 and she notifies me via text that they will drop notice in my mailbox. Of course, no notice came in my mailbox. I later get a text saying, if it is OK that if they can stay 1-2 months after (They are assuming we cannot rent that fast after).

On July 2nd, we replied that is not an option and month to month is lot expensive and it is not offered currently. I insisted, review 3 option given before at let us know by July 3rd.

Later that day, I get a call from the guy stating that they are looking to buy a house. The call was pleasant (No cuss words or threats, etc. from him, that he typically does). Of course not, he is trying to negotiate favorable terms with us. I told him that I do not make decision. He tells me that everything traces by to my personal address. I said, sure it will because I am the face to the company and manage the property. He says he has right to know who the owner is. I told him Mr. President has right to keep his taxes private, so he has right to nothing. Do you all agree?

We are OK with that and understand their position. Again, he said, they will drop a notice on July 3rd.

***********************************************

My concerns based on Tenants history, habits and behavioral patterns: -

(Their issue is that they like to burn bridges)

They will leave us with a mess to clean. Last time, I spend much more money for clean up when they left the previous property. (They are messy and lazy)

They may leave us with unpaid water/sewer bills

Last time, their move planning was bad, and they overstayed at our previous property to by 7-10 days. They technically occupied both properties. I was told by the guy that I am stressing him out. (I feel bad for his lady who chose him)

They could possibly damage the property. Hope not. (They were charged for a damaged door on last property.) Now we have damage addendum signed at the time of lease execution. I’ve photos/videos of the property how it looked before it was rented to them. I also have a documented inspection reports, which list all issues that property has, so they not accidentally charged an item, when they leave.

Original lease states, tenants will allow showing during notice period. Off course, they did not comply to it last time. On top of that we have less chances to get new tenants because of the mess situation.

My Questions: -

(Please note most of the communications we have had with tenants are documented in writing and can be used as an evidence)

I would like to know if we did something incorrect and you suggest improving next time.

According to old lease terms lease has already automatically renewed for a year, however, they texted the give notice on July 1st. They have until July 3rd to pick any of the 3 options stated above and there is no other option for them. I think we are very fair to them; do you agree? How will PA courts look at it?

There is a past due balance from previous lease terms plus unpaid bills (not yet invoiced to them). We do not want to receive partial rents and experts know why. We use Cozy.co management system. I need to collect future rents and past dues. How should we safely collect rent on time without seeing them? I am looking for an option where I can refuse partial payments or full rent payments. Any suggestions?

We suspect that they have not maintained the renter’s insurance for entire or part of the lease. This is because they hid some sections from screenshots shared over texts during the dispute. That is breach of previous lease terms. What are the ways to find out?

Let us say we decide to take this to the court, do we or they any grounds? What reasons our “Notice to Quit” have?

Let us assume they leave us with expense to pay and which their 1-month security deposit will not cover, what is our recourse? Pursuing judgement is my last choice on people in their early 20’s, hey if you push the limit, I will. What information do I need on them to file judgement on them? Is copy of driver’s license/Govt ID enough in PA?

One tenant is collectable, has a job and enough money in the trust/or another account that is controlled by their grandparents. Tenant get a check from it, to pay monthly expenses. Can the judge tap into that account to pay for past due and damages, what information would be required?

Moreover, I am not sure if they would find a house to buy or not. We wish them good luck. I want to ensure that we are protected. If they want to stay for another year, we gave them an option. At the point we think otherwise because of the headache they are causing or may cause us.

I am planning to give them notice to vacate, should I or not? She already chose option 1 via text and they have until end of the day July 3rd to pick another option. Should notice to vacate via e-mail suffice? Do the courts require read receipts on e-mail notices? Can notice be sent via text?

How to do I ensure that we can resolve this without going to PA courts? What would you do if you were in my shoes?


Please Private Message me anything that is personal in nature or if you have questions that cannot be discussed here.

Thank you for reading and I appreciate your inputs. (This was my longest on BP)

Personally, if they chose #3 and gave you written notice via email that they will be out August 31, I would just let them move out and deal with cleanup after they leave. If they need "a little more time", then work on cleaning up the exterior so it will show nicely. I would also start an ad to rent it effective Mid-Sept, giving you two weeks to deal with the inside issues, if any. A lesson learned. Do everything you can to make it a smooth move-out. That is the job of a property manager/owner. I have been doing this for over 50 years and have had to bite my lip soooo many times, but I have learned that it is the easiest way. Once unit is cleaned and ready to re-rent, increase asking rent by $100/mo. (which actually means an extra $1,200 a year), which will cover any expenses from the move-out. Use security deposit to pay cleaning, repairs, etc. I would even help them find a home...but that is me. Would definitely not want to continue renting to them. I would prefer an empty unit to a bad tenant. Life is too short.

@Joyce Tavares The problem is, they back tracked after choosing option 3. Now, they want to stay over, after August 31st, for another month or 2. Just in case, if they can't get a house within 60 days. That leaves us with no planning. We are very accommodating in general when we proposed option 3 (maybe we made a mistake extending that courtesy.) We don't want to waste time/resources in dispute either. Thanks for your inputs

Switch to a month-to-month.   All my rentals are month to month and tenants stay longer than a year and some as long as 14 years! Then, if they don't pay or violate the rental agreement, you can give them notice easier.  With a lease you have to wait a year.  

@Joyce Tavares If I was is CA or NY, I would prefer month to month as well. I have managed properties in NY as well. Generally, it's not a norm in PA, near me, to do month to month lease. For shorter terms, a premium is charged.

I had a conversation with our insurance agent about "interested parties" a while back and my understanding was that all being an interested party does is get you notified if there is a change in coverage status. Get yourself a big umbrella policy and don't worry about it. Why do you care how much insurance they have?

I don't really see how the issues with heat are pertinent at this point.

In Ohio, a tenant has the right to know the mailing address of the owner or the owner's agent if the owner is represented by a licensed real estate broker. PA law may differ on that point.

Holding over after August would put you into a less favorable time to rent so I would tell them "no" on staying for another month or two because of that. They gave you notice so tell them they have to be out and let that be that. If they don't leave, notice them and then file for eviction.

@Jill F. I appreciate your comments. We have great insurance policy. Our insurance agent "recommended" that tenants should have one. I agree will less favorable time after August. I get notified by mail about the change in coverage. We're in 2020, don't the insurance carriers have e-mails?

Also, i suggest you read your local tenant/landlord laws. Usually you cant ding a tenant for full replacement value for damaged items unless they are brand new - in general you can only charge repair if the item is still in its useful life span.

Also if they have a kid they will have the upper hand in court - and if they dont have heat or ac (if it is a hot area) they might have leverage there


if this were me, i would accept their notice to vacate. 

I think making such a fuss about tenant insurance is silly. Your insurance agent will always recommend more insurance..DUH!. The tenants dealt with your inability to provide proper heating/cooling. City, permits etc are all not their problem. Thats why they are tenants! The landlord has to deal with that and provide basic habitability to the tenants. So you had cooperative tenants who paid on time but you now want to push them out in the middle of a pandemic where getting other tenants with stable income is a challenge? If you were my PM you wouldnt be for much longer!

@Steve K. I’m not pointing fingers or anything like that but why would you rent to a couple with 1 member not being employed since 2017? Also, why would you rent it them a 2nd time is they left a previous property a mess when leaving?


@Mary Mitchell We have accepted their notice. However, as I mentioned, they want to stay over longer. Since the guy called a threatened us few times. We don't want them there anymore. 

@Michael Noto I know, you be the judge.

@Anish Tolia We offered them many fair options, including no rent increase this year. They want to buy a house, that is a great step, but didn't start planning for it.

They opted to give notice, that should have come 2 months ago. Considering that we're in middle of a pandemic, we extended the lease for 2 months. I appreciate your opinion.

@Jessie Nunley Expecting that they will not cause issues again.

@Steve K. i think you are complicating a pretty simple thing. They want out of their lease.  You cant stop them from moving and you should not of tried.  Your lease will stipulate what lease break terms are. Now, due to your inability to get them basic habitability items and being overzealous with your management style you have created a situation that didnt need to escalate...

what can you do? Realize that in the current environment your best play is to accept the tenants notice and their request to extend it two months. Why? Becuase you have zero leg to stand on if they decide to go to the local tenants union.  And you cant really evict in any case.  Look on the bright side - you are getting rent!!  


     In the future suggest you put some emotional distance between you and your tenants... let them live their lives.  

You also will need to get a better idea of what renters insurance is for.  For most tenants 50-100k coverage will suffice.  Renters insurance protects your tenants - what could they possibly need 300k coverage for??


good luck :)

 

If the lease automatically renews for another year (which I am stealing for future leases,) than you accepting their 30 day notice is a courtesy you are a decent guy for.  I am assuming it gets harder the closer you get into winter and from mid October to the end of February it is difficult to find renters and the price goes down.  Due tho this if they need to extend past their notice I would allow it however explain that this will have a monetary impact to me that I need to be compensated for.  Due to this after termination of the lease the rent goes up for the month to month at an amount you feel comfortable with but I would suggest around 500/month.  If they choose not to pay and the house hasn't closed then they will need to prepare for other arrangements.  Be reasonable and if they are off by a couple days not as big of a deal but if they don't pay the increased amount remind them on how hard it will be to qualify for a loan with an eviction making its way through the courts.  

Wow this is a long post. A lot of the issues here are you making huge mistakes in management. 

Your lease renewal system is horrible.

Your insurance requirements make no sense. 
You didn’t have working heat for 5 months... wow 

Not accepting partial payments in PA makes no sense. 
They left you a mess in the first property and you wanted them in a newly renovated place? 

You need to get serious about this business if you want to be successful. You are making tons of mistakes here. 

Originally posted by :


We have accepted their notice. However, as I mentioned, they want to stay over longer. Since the guy called a threatened us few times. We don't want them there anymore. 


 They gave notice, you accepted it...tell them you are sticking to the date.  They are the ones that picked it.  If he threatens you tell him, you will call the police.

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@Steve K.

These tenants paid their rent on time, lived without heat for many months, and purchased their own renter insurance. They would be considered good tenant.

I would’ve been very nice to them, allowing them month to month lease, until they find a new house.

I will also tell them the truth if I am the owner of the property, since that is actually public record.

They really did not do anything to harm you or your financial interest. Why are you so mad with them?

Originally posted by @Mary Mitchell :

@Theresa Harris while I agree in principal, given the current environment and the lack of habitability i would not want to stir the ants nest so would accept their extension.

 True, but they gave notice during the current situation.  I'd be more flexible had they given notice and then all of this started.

You need to chill if they are still paying rent.  Put them on a month-to-month and hope they find a home and move out.  We are in a pandemic and a lot of landlords are not even getting paid.  Also, evictions are expensive and take months.  They can also reply to the eviction and get additional months.  Feel lucky they are paying rent.