Hi everybody ! I’m a new RE investor and would appreciate any thoughts or ideas what to do…!
I have a Wealthy tenant…(I mean really Wealthy and he is a big RE investor-he knows the game)
He rented my house for a year, everything was good until last 2 months…he paid first,last and security deposit at the beginning then at end of the lease agreement he said that doesn’t want to pay a month of rent and want me to take security deposit instead and wants to create a security deposit escrow !
I’ve tried to contact him many times..no answer no response…then he sent me a later-
“I reached out to and retained Bob with Bob PLLC as legal counsel to provide guidance on my security deposit escrow proposal.
He said that you must stop communicating with me and my wife and that all correspondence must go through him!”
What should I do…?
He has one month left on a lease…and his rent is past due one month…
Can you spell "E..V..I..C..T..I..O..N"?
As they have lawyered up, so should you. Hire a lawyer and don't contact him anymore per his request. Have your lawyer do all the communication from here on out.
Even "really wealthy" real estate investors have cash flow problems :) You don't have any need to do this. Send a note to "Bob" with a cc to the tenant (or the other way around is absolutely better--you aren't in litigation you don't have to do what he says about contacting the lawyer) saying "thanks for your note of X day. We will not be considering your proposal. Please pay May rent plus 50 late fee immediately as per your lease on X, a copy of which is included here. Also as per lease, we will will conduct a walkthrough on June blah.
Follow your states procedure for "pay or quit" and maybe include the photo of the notice on the door. Any lawyer worth his salt will simply tell him "pay the man, jackass"
He may simply be saying" I'd like to use the security deposit as rent" and you may be ok that, but that shouldn't have been tossed to an attorney without making that clear, and if he is, make the attorney do all the work on his dime and time. In the meantime, protect yourself. Do make sure you have followed your states security deposit rules in case he want's a p##Ting contest
Dont threaten, don't say anything and prepare to report him to the credit bureaus. Only problem with really rich guys is they sometimes don't care about their credit. His name isn't Donald is it? I think I've seen this MO...
With this guy I'd also go after a judgement against him. That could prevent him from selling any properties without paying off your judgement.
He sent you a proposal which is just that a proposal which you have declined. I would follow up with the standard pay or quit and file the eviction, he has no legal justification not to pay that you are aware of and he feels you will cave. If he is truly a big investor he most likely uses leverage and an eviction or judgement is going to hurt business and he won't risk it he's just trying to see if he can boss you around. This may also be a good time to send your non renewal if you haven't already as I assume you don't want to keep him. Also keep in mind that some people that appear to be the richest are actually the brokest and are just living a lie to keep appearances.
You can respond that you have no interest in his proposal, follow the lease. Then follow the process when one does not pay.
Personally, I would call the attorney, see if he really is one by the office phone response. Waste a lot of time on your tenant's dime. Let the attorney explain on the phone what the proposal is, drag it as much as you can, but do not say you will read anything or for him to send you anything. Tell him at the end of the call that you are not interested in changing your process until AFTER a final agreement would be signed. Since nothing is signed now, his client must follow the existing lease. And since his client only has a month left on his lease, there is no way you have the time or desire to execute a new amendment to his lease.
So, his client will be under the existing lease, you will post his rental, and file in court as soon as you can in your location. Get it on his record, and then lien his properties, every one, until you are paid.
It will cost him more to clear the leans and his attorney costs. Two can play the waste time and cheat the landlord out of rent game!
Get a lawyer, start the eviction process. Being a wealth a** hat doesn’t excuse someone from their rent obligations.
I would probably consider send his lawyer "my response" which would be a LONG letter with many, many citations and references for the lawyer to research. Then I would have a LONG conversation with the lawyer on the phone about the issue, while agreeing to nothing. Then after I have wasted his time, and tenants money, I would follow my states eviction process.
Once I snap out of my fantasy, I would ignore his proposal and follow my states eviction process.
You can most definitely talk direct to his attorney, even if he did hire him formally, you're a party to the lawsuit. Would be funny to run up some attorney time @$300/hr and the tenant is responsible. Just assume everything is being recorded by the attorney(it won't be) and act accordingly on the phone.
@Alexei Semenov hire a lawyer. This isn’t a flip response. You need counsel.
I'm assuming the security deposit is equal to the rent. So if he leaves the place in good condition, you're technically out nothing.
Since the tenant gains nothing other than time, no way the guy hired a lawyer. It's probably a friend who is a lawyer. I wouldn't waste the money on hiring a lawyer. I'd just confirm denial of the "request" and assess late fees and send notice of this to the lawyer. The tenant will likely be gone before you can do anything with an eviction. You can always put something in the letter to the attorney like, Please confirm you are the Agent of Service for Mr. Deadbeat and your physical address for service. Basically letting the attorney know that you will be filing a lawsuit against the tenant for breach of contract. At this point any decent lawyer would probably tell their friend/client to stop screwing around and follow the contract.
For the future (confirm legal in your area):
- Always make sure the security deposit is larger than one months rent. This way if the tenant tries the "use the security deposit as last months rent" routine, you can say no and assess late fees that you can collect from the security deposit.
- Always have a daily late fee. Most people wouldn't care if you hit them with a $50 late fee (especially if they aren't planning on paying it since the last months rent = security deposit). However, hitting them with a $50 late fee on the 3rd of the month and $20 each additional day will get people to think twice, especially since you're going to take it out of their larger than one months rent security deposit.
easiest answer, eviction.
Thank you all for quick response and good posts …there are a lot of things to think about!
@Alexei Semenov I suggest really taking a hard look at all of your communications(including text). If tenant is clearly in the wrong and you didn’t for example promise something along the way like a lease extension ….I would get more information from his lawyer myself before hiring one.
People use this “have your lawyer reach out” tact as a time/money suck. It may be his cousin who is representing him for free and then you hire a lawyer and pay thousands to do basic research. They charge for all calls and communication with tenant rep as well as you, so you can get to a multi thousand dollar bill before you know it.
If you did however get yourself in a text bind somehow…..get a lawyer. I’ve seen texts come up in court and kindness can be legally interpreted as agreement over texts which will be admitted as record if you go to court.