Suing for non payment of rent as an LLC

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Suing for non payment of rent as an LLC

Bill Ames
Member since 2019 · 20 posts · 3 votes

Hello all. I currently have a tenant that moved in last Feb and from the beginning decided that they weren't going to pay rent and has avoided communicating with us. This was before COVID fully turned into the mess it is now. We received partial payment after the first stimulus check was given out and haven't seen a dime since. My property management company has taken then to court several times for non payment and has even received a no right of redemption ruling. When we attempted last time to get the eviction orders the tenant showed up to court and showed that at some point she had COVID and was only working part time. Long story short the judge did not grant us the right to evict.

Now for the real question... This property is in an LLC. I have received conflicting information on the ability for me to sue when the time comes. I have been told that because the property is in an LLC I must have council to sue for the non payment. When I approached my local court systems self help system to get clarification they could not talk to me because I have an LLC. This would take place in a Maryland district court.


Any help or clarification is appreciated

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Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
5y

This is covered in Maryland District Court Rule 3-131... an entity has to be represented by counsel.

...

(a) By an Attorney or in Proper Person. Except as otherwise provided by rule or statute: (1) an individual may enter an appearance by an attorney or in proper person and (2) a person other than an individual may enter an appearance only by an attorney.

...

There are some exceptions... such as law school students assisting those in need, etc. but none of them allow an entity to be represented by a principal, unless the principal is a licensed attorney. To do so would be the unauthorized practice of law.

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    5y

    This is covered in Maryland District Court Rule 3-131... an entity has to be represented by counsel.

    ...

    (a) By an Attorney or in Proper Person. Except as otherwise provided by rule or statute: (1) an individual may enter an appearance by an attorney or in proper person and (2) a person other than an individual may enter an appearance only by an attorney.

    ...

    There are some exceptions... such as law school students assisting those in need, etc. but none of them allow an entity to be represented by a principal, unless the principal is a licensed attorney. To do so would be the unauthorized practice of law.

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  • Bill Ames
    OP
    Member since 2019 · 20 posts · 3 votes
    5y

    Thanks Tom.
    This was something I was not aware of when I decided to put my property in an LLC but will be sure to mention it to anyone asks about potential pros and cons.

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  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    5y

    Does Maryland have Small Claims Court? 

    In Michigan, the owner or agent of the LLC can file a small claims case, as long as they are NOT an attorney.

    [email protected]248-209-6824
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  • Bill Ames
    OP
    Member since 2019 · 20 posts · 3 votes
    5y

    Hi Drew, yes we have a small claims court as well for civil matters under $5,000. After some searching I'm not seeing any exclusions that prevent an LLC from suing or requiring a lawyer in small claims court. I'm going to speak with a lawyer to get a better idea of fees to determine which way I want to go with this one. Unfortunately until the tenant leaves the "past due" balance keeps going up.

    Have you or anyone you know had success actually receiving the payment after a judgment in rendered? I have heard some horror stories of defendants switching jobs and residences making it hard to actually collect.

    This is new to me so I'm trying to look at everything as a learning experience. 

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    5y

    @Bill Ames Landlord tenant matters are under the jurisdiction of the District Court -- subject to the rule I cited. I assume you want to pursue possession of the property for failure to pay rent as well as a money judgment. Good luck.

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  • Bill Ames
    OP
    Member since 2019 · 20 posts · 3 votes
    5y

    Thanks, good point. I guess I'm thinking of this as two different processes. First being the eviction which is handled and headed by my property management company. Once she is evicted then I would be suing for non payment. 

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  • Jonathan Tavarez
    Flipper/Rehabber · Laurel, MD · Member since 2016 · 139 posts · 109 votes
    5y

    Ouch... not paying from the beginning of the contract that's crazy!

    I wanted to make a comment not from the legal stand point but from the tenant placing side of things, not sure if the property management put the tenant in place but this is one of the reasons I let the management company handle the tenant but I prefer to work the placement side myself because I believe I can do a better job than them (they just want to get pay as it should be because that's their business).  Best of luck, I hope you can get your property and money back.

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  • Bill Ames
    OP
    Member since 2019 · 20 posts · 3 votes
    5y

    Yeah crazy. The PM company was the one who placed the tenants. I feel like they did do their due diligence and kept us in the loop throughout the process. Ultimately I approved it. The tenant looked good on paper, had the income and didn't have anything negative show up in their background. I think this was just one of those unfortunate situations combined with bad timing due to COVID.

    Part of the purpose in suing for the back rent is so there is a record and that they can't do this to another landlord. Who knows, maybe they did this to someone in the past but they didn't pursue it. 

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Bill Ames:

    Thanks, good point. I guess I'm thinking of this as two different processes. First being the eviction which is handled and headed by my property management company. Once she is evicted then I would be suing for non payment. 

    Both of those remedies are pursued in the same action. The District Court form is a check the box form.

    https://www.courts.state.md.us...

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  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    5y

    We're taking existing tenants to small claims court to get a money judgment for past due rent, because of the eviction moratorium. To do so, Michigan statute requires them to be personally served - wll they are living at the rental, so easy to find!

    Once we get the money judgment, it's another matter to find assets to garnish.

    Once the eviction moratorium is lifted, we can still take them to Landlord-Tenant court.

    [email protected]248-209-6824
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  • Bill Ames
    OP
    Member since 2019 · 20 posts · 3 votes
    5y

    Thanks Tom.

    I like that plan Drew. Also shows you are serious and will show the tenant you are not playing around. Hope it works out for you. 

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