A tenant has asked me to write a letter threatening eviction (even though he is current with payments) so that he can use it in order to obtain a hardship loan against his 401K in order to clear up some unexpected bills. He has a small 401K already so the hardship route is his only option. He is a good tenant, pays on-time for the most part and includes late fees if tardy. Has a steady job with an international company but the company has its own challenges and has reduced staff from 1700 to 400.
I would like to oblige but am concerned about my risks and legal consequences if this gets discovered.
Looking for input. Many thanks.
My error - it should read that he has a small 401k loan already so the hardship route is his only option.
It is called 'conspiracy to commit fraud' you will need a PM while you are in jail! 'Landlord in jail'? Internet will burn up!
@Russell Caraotta No way!!!!
It's called fraud...so while your tenant will have a chance to catch-up on those "unexpected bills" you can EXPECT a penalty of up to $1,000,000 (yep, 6 zeros) and a sentence up to 30 years. It's not that it's a "liar, liar pants on fire" sort of thing but it's fraud against a financial institution - not to mention that Mr. Wonderful Tenant could also sue you for false eviction should he become unhappy with you at some point.
If it were me, I would have thanked him for the wonderful opportunity to commit fraud on his behalf but that dang integrity just keeps getting in my way. I wouldn't renew his lease either...that whole sociopath next door thing.
Bank fraud = the Slammer.
Just reading the title, I knew my response would be that it is never a good idea to lie. Lying for financial gain is fraud. That being said, in this scenario, you are unlikely to get caught. The letter will just go in some file to satisfy a paperwork requirement. I had to provide a letter for a tenant one time, but in his case he was actually late on rent.
Here is one idea. Tell him you cannot write the letter until he is actually delinquent on rent. For example if rent is due no later than the 5th, then if he hasn't paid July rent by July 6th, you could provide a letter stating he is in default. This is the truth and telling him this is likely going to mean you don't get rent on time in July. You write the letter July 6th, he submits his paperwork and pays you on July 7th.
@Bjorn Ahlblad Thanks Bjorn; very helpful.
@Scott Mac Well said! Thanks.
Going to school can qualify for a hardship with most/many 401k providers. If your tenant wants it badly enough see if he can enroll back in college. Many employers reimburse tuition even.
@Russell Caraotta the fact that your are posting this on here seeking advice just confirms that you know you should not be doing this... otherwise you would just do it... no... you’re seeking validation to make this seem right.
1) Why are your Tenants problems your problems?
2) This is how management ‘hassles’ occur or 98% of the horror Tenant/Landlord stories here on BP occur - separate personal from from business; be professional and try to teat it like a business
3) This is fraud; you know it which is why you’re asking for validation; the Tenant knows it which is why he’s come to you with an ‘airtight’ plan
I’m sorry for sounding harsh but honestly are you really willing to place your self, your property and what all else you have in the cross hairs of liability, fraud and lord knows what else for this ‘customer’? Don’t even tell me you have a family and are placing this person’s issues and ‘shadiness’ above your family’s wellbeing.
@Russell He will use next months rent to pay the most pressing bill and then you can send the letter when he truly does not have rent money and is truly delinquent. He is planning ahead...sees the train wreck about to happen but cannot stop the train, so give him credit there, I guess.
I wouldn't do it, either. If he's that desperate to defraud someone, let him create a fraudulent letter.