Austin, TX · Member since 2019 · 95 posts · 59 votes
Good morning BiggerPockets,
Would love to get your input on how to deal with the following situation.
My tenant for the last 7 months whos lease will expire at end of May next year just called me and told me that one of her children was murdered and that she is not sure how she is going to be able to pay rent going forward as she needs to come up with money for a funeral. She has been a great tenant to date and always paid on time. I told her to take time and process everything with her child's death and to talk again in a couple of weeks.
She has been a great tenant to date and I do not have a reason not to believe her but there are a couple of red flags that makes me question it. She mentioned that it was her son that was killed but she only ever mentioned having 2 daughters and only the daughters are reflected in the lease agreement - that doesn't mean she does not have a son from a previous relationship that does not live with her. Second, I cannot find any news coverage about a similar incident in the surrounding area over the last few of days. I cannot image she would come up with such horrible lie to avoid paying rent or have a payment plan but something just feels off in my gut.
I am not sure exactly how to address the situation. Have you guys dealt with a situation where tenant is having hardship and cannot afford to pay rent and how did you guys deal with it?
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
It is pretty common nowadays for people to setup a GoFundMe for funeral expenses. Ask her for a link to the GoFundMe, which should contain the obituary and name. I would personally donate $100 to the GFM account. Tell the tenant they will need to pay rent on time each month to the business. If she doesn't have a GFM account for his funeral, she is missing an opportunity to raise thousands and needs to set one up. As others suggested, look for charities that will help with either rent, the funeral or both.
Just be firm that rent must be paid. Even if she has a big funeral bill, she may need to slow pay or no that bill and prioritize rent. She can get evicted from her rental property, but funeral plots are forever.
My first eviction, the judge asked my tenant why she had not paid rent. She said that she had to pay her car insurance. He said that was your choice, why would you prioritize car insurance? Maybe you can live in your car. At the time I thought it sounded harsh, but it was actually practical and good advice. If you have $1000 to your name and $5000 in bills, you have to make choices. Housing should always be #1.
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
I know how 95% of the landlords on BP would answer.. will be interested to hear their views, I know when I did foreclosure rescue I would often find people in trouble because they owed the funeral home 20 30 40k and were sent to collections etc..
But its highly emotional time for most and rationale thought may not play into the equation.
Rental Property Investor · Wichita, KS · Member since 2021 · 9 posts · 8 votes
5y
I'm pretty new to BP (and loving it btw!), but most every city will have a rental assistance program (or multiple!). Also curious as to how veteran BP members respond, but I would try to work with her while still holding her accountable. If not, she will just be behind even further a few weeks later. There are many social service agencies who receive grants to assist with rental assistance that she could be referred to (a few that come to mind include Catholic Charities, Salvation Army, Centers of Hope, etc).
Austin, TX · Member since 2019 · 95 posts · 59 votes
5y
@Bjorn Ahlblad Yeah, I think that is way too far to be lie. There are some red flags but for now, I am trusting her and trying to figure out how to best help her through the situation while also running a business.
Austin, TX · Member since 2019 · 95 posts · 59 votes
5y
@Shannon D Olsen thank you, that is a fantastic tip. I will do some research for services in the relevant area that may be able to help tenant with current situation!
Rental Property Investor · Chicago, IL · Member since 2018 · 3 posts · 2 votes
5y
I have a resident in a similar spot and it is a tough situation, but we are helping them get relief through the city. I believe most areas have some sort of COVID, hardship, or other types of rent assistance, as well as certain types of funeral cost assistance. You might get as much paperwork as you can completed with one of these programs on your end, and then provide her with the contacts and resources to complete the process. That way the ball is in her court and you already know the assistance is available and ready to help.
In my case there was news coverage on the event so I can't speak to much to that part. However, I have heard some very outlandish lies and find that my gut is often times correct (even if I don't realize until after the fact). Keep in contact without being overly invasive, and in the meantime explore the types of assistance programs in your area that might be able to help. Best of luck!
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
It is pretty common nowadays for people to setup a GoFundMe for funeral expenses. Ask her for a link to the GoFundMe, which should contain the obituary and name. I would personally donate $100 to the GFM account. Tell the tenant they will need to pay rent on time each month to the business. If she doesn't have a GFM account for his funeral, she is missing an opportunity to raise thousands and needs to set one up. As others suggested, look for charities that will help with either rent, the funeral or both.
Just be firm that rent must be paid. Even if she has a big funeral bill, she may need to slow pay or no that bill and prioritize rent. She can get evicted from her rental property, but funeral plots are forever.
My first eviction, the judge asked my tenant why she had not paid rent. She said that she had to pay her car insurance. He said that was your choice, why would you prioritize car insurance? Maybe you can live in your car. At the time I thought it sounded harsh, but it was actually practical and good advice. If you have $1000 to your name and $5000 in bills, you have to make choices. Housing should always be #1.
Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
5y
Here's how we've dealt with these situations in the past.
1. We stopped managing our own properties so we never get these calls.
2. When we use to get these calls we were compassionate but always indicated that we have a lease/contract and would comply with the contract. If a tenant made an effort to pay something we may allow them to be late, but we would not make a habit of it. Since we don't manage our own properties it's up to the management company to stick to the lease.
3. Almost every city has a non-profit organization that provides assistance to victim's families. We've referred tenants to these organizations in the past
I've had a nephew killed so I can relate to what your tenant may be going through watching my sister and her family struggle with the loss.
Many years ago, I went to sort of huge real estate seminar at a convention center and I was speaking to two attorneys and randomly asked the exact same question the OP is asking and the attorneys rudely said to evict your tenant just like every other tenant with no regards to their excuse. You cannot afford to be charitable. It is not your fault your tenant did not save cash to prepare for emergency situations. When we rent to tenants we check their bank accounts and one major requirement is that tenants have enough income to cover their rent and tenants need to have no less than three months rent in their checking and savings accounts. it is not your fault if your tenants accounts are depleted to less than what they should have to be qualified to live in your rental units.
I know it sounds cruel and heartless to evict this tenant, but if and when you start to listen to every tenant's excuse regarding why they can't pay their rent then you put yourself in situations where you have to become a judge and a jury and you have to ponder over all these sob stories in regards to whether or not you are making the right moral decisions.
My shrink (and I am crazy and have been to many of them) told me many times not to play god with my money. Playing god with your money means that you (and I mean you, not me) have a specific set of rules you go by when it comes to your money, but when someone asks you for a favor that pertains to your money, or when someone tells you a sob story (like their son was murdered) then you 'play god and deviate from your set of rules.
The following is what I call my Chicken Poop statement that I tell tenants and I think this is very powerful and you you get to use this statement, immediately, as soon as your tenant gives you a clue that he (or she) is not going to pay the rent. I am guessing that I use this statement verbally and put it in writing by sending a tenant a letter after the tenant gives me a clue they are not paying their rent. I used this statement several times during the COVID-19 moratorium when tenants who were still working and earning good money thought they actually didn't have to pay their rent only because of the moratorium. This statement works for situations like when tenants have a disease and are going to pass away in a short period.
"Dear Mr. Doe"
I completely understand your situation, but we have to answer to our partners and our bank and it is impossible for us to deviate from the terms in your lease (or rental agreement if you are month-to-month) and when your payment is late we must provide you with a Three Day Notice To Pay or Quit and begin the eviction process as per the terms in your Lease Agreement.
Thank you very much.
Jack Jones Property Owner"
I am not a liar (or, maybe I am). I don't have any mortgage and I don't have any business partners, but my tenants don't know that. Your business partners don't have to have any written contractual agreements. Your business partners could be your parents, or friends who loaned you a wad of cash against your
property before or after you purchased the property and how you operate your business (because owning one rental is a business) is YOUR PERSONAL BUSINESS and none of your tenants' business.
Our Lease Agreements have a page dedicated to explaining our eviction process. The Lease Agreement states that the minute a tenant's rent is late they get a Three Day Notice To Pay Or Quit (in states other than California tenants get a 5-day, 7-day, or more days) and after the 3-day period expires we immediately file for an eviction with our attorney. After we file for an eviction the tenant can remain in the apartment; 1) pay their rent, 2) pay the late charge, 3) pay a $250 Eviction Fee and 4) pay any additional attorney and court costs that exceed the $250 Eviction fee and they can remain in their rental unit.
When a tenant is late on their rent the real estate laws in California state that we cannot give a tenant the Three Day Notice To Pay Or Quit until the day after the tenant's rent is late and we cannot give the tenant a letter telling the tenant how much he (or she) owes including costs beyond the month's rent that is due until one day after we give the tenant the notice to pay or quit.
Evict the tenant, or play god with your own set of rules and with your money.
Copy of notice in our lease is attached. Even though this may not be written in your lease agreement this is the set of rules you burn into your brain and you don't deviate from your own rules.
We had a property management company handling our Las Vegas single family homes and we has several serious problems with having a property management company and that is one of the many reasons I gifted several of the properties to my children and sold all my homes with the exception of two.
We wanted to sell all our homes. So, the property management company sent all our tenants letters notifying them that their tenancy would be terminated at the end of their lease. We had one great-paying hard-working Hispanic family that called and requested a few more months to find a a place to live. My management company said, "NO" and the tenant called me on the phone and I told the tenant they could have 3 more months. Then, the tenant called, asked for 3 more months and I said "YES" and was not playing god because I don't have any specific set of rules regarding terminating tenants because I want to sell the home they are living in as long as the tenants don't violate the terms of payment in their Lease Agreement.
My property management company got impatient with the tenant and wanted the tenant out quick because the property management company was also the broker selling all my properties (god forbid should I have to deal with a company like that again) and the property management company wanted to get their booty that consist of their $7,000+ sales commission in their hot hands as soon as they could.
So, the property management company calls the tenant on the phone and tells the wife they want her our in 30 days or the property management company intends to send the matter to an attorney. The tenant tells the property management company that her husband is in the hospital with COVID on a respirator and the property management tells her that they are fed up with their excuses and will send the matter to their attorney.
The tenant calls me on the phone asks for an extension. I tell the tenant she can stay as long as she needs to stay. The property management company owner calls me on the phone reading me the The Riot Act and tells me to never go over their head. I was so mad I almost told the management company owner to go f...., but I bit my tongue and told the owner I was not going to evict a tenant who has a husband in the hospital as long as the tenant still paid the rent.
About three weeks later, I called the tenant to ask how her husband was doing and she told me her husband passed away the night before. I told the tenant to take care of herself as much as possible and told her she could stay in the home as long as she needed. About 10 days later, the tenant called and told me she was moving at the end of the month.
My point to this story is; we have to use common sense and have compassion for our tenants when some issues arise, but when it comes to the money, if this tenant failed to pay the rent I would have started the eviction process in accordance with the terms in our Lease Agreement.
One strange thing about life is; almost every time someone wanted to borrow money from me and I said "NO" they got the money from someone else. What a relief!
Many times, when a tenant had an illness and could not pay the rent they got the money from someone else including many times when the church they were affiliated with paid their rent.
As a landlord, you cannot play god with your tenant by deviating from your own set of rules and unless you are god you won't ever know whether or not your tenants have the money they say they don't have and if you play god with your tenants then your tenants will never seek their rent payments form friends, relatives, their boss, or their church.
Your tenant will tell their self, "my landlord understands my situation and doesn't care if I pay my rent".
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
5y
This has some red flags, but none of that matters. You don't need to verify his murder or any of his story. Sympathize with her but don't go any further.
When things like this happen, I give Tenants a compiled list of resources they can seek assistance and that's it. If they are late, I offer to waive late fees. I may even skip the eviction process that first month. By the end of the first month, I'm notifying them in writing that they need to figure things out and catch up or I'll have to follow the lease.
This has some red flags, but none of that matters. You don't need to verify his murder or any of his story. Sympathize with her but don't go any further.
When things like this happen, I give Tenants a compiled list of resources they can seek assistance and that's it. If they are late, I offer to waive late fees. I may even skip the eviction process that first month. By the end of the first month, I'm notifying them in writing that they need to figure things out and catch up or I'll have to follow the lease.
It sounds like you wait one or two months before you start even the collection process. By the time you start the eviction process your tenant is already into your pocket for several thousand dollars and now the average investor is afraid to start the eviction because the landlord allowed the tenant to get the upper hand and owes so much money the landlord is stuck making a decision e.g. "now if I start to evict the tenant I am sure not to get the two or three months the tenant owes me. As stated, I don't want to give the tenant that chance to dig into my pocket and from the time we start to evict a tenant it takes 7 weeks to get a sheriff to lock the tenant out. If the tenant appeals their eviction case with the court it takes about 12 to 14 weeks to get them out. When you add this to your waiting for two to three months that is a huge loss.
I like to run my construction services business and my real estate business like the owner of the business is in New York and I am only the manager of his real estate in California and then I want to act like I have to explain to my boss in New York the reason I let a tenant owe me more than a few months or rent before I got him (or her) out of the rental unit. I don't want to have to say that I let the tenant slide for a few months because I wanted to give the tenant a chance to pay the rent when I was already well-aware that the tenant could not pay the rent due to a hardship. Tenants don't give a crap about their landlords and when 'push comes to shove' the tenant will fight to avoid paying their rent as well as fight to catch up with their rent because most tenants think landlords are rich bastar... and only want their rent money so they can get richer. There is no loving each other when it comes to being the collector, or being the tenant paying the rent.
This has some red flags, but none of that matters. You don't need to verify his murder or any of his story. Sympathize with her but don't go any further.
When things like this happen, I give Tenants a compiled list of resources they can seek assistance and that's it. If they are late, I offer to waive late fees. I may even skip the eviction process that first month. By the end of the first month, I'm notifying them in writing that they need to figure things out and catch up or I'll have to follow the lease.
It sounds like you wait one or two months before you start even the collection process. By the time you start the eviction process your tenant is already into your pocket for several thousand dollars and now the average investor is afraid to start the eviction because the landlord allowed the tenant to get the upper hand and owes so much money the landlord is stuck making a decision e.g. "now if I start to evict the tenant I am sure not to get the two or three months the tenant owes me. As stated, I don't want to give the tenant that chance to dig into my pocket and from the time we start to evict a tenant it takes 7 weeks to get a sheriff to lock the tenant out. If the tenant appeals their eviction case with the court it takes about 12 to 14 weeks to get them out. When you add this to your waiting for two to three months that is a huge loss.
I like to run my construction services business and my real estate business like the owner of the business is in New York and I am only the manager of his real estate in California and then I want to act like I have to explain to my boss in New York the reason I let a tenant owe me more than a few months or rent before I got him (or her) out of the rental unit. I don't want to have to say that I let the tenant slide for a few months because I wanted to give the tenant a chance to pay the rent when I was already well-aware that the tenant could not pay the rent due to a hardship. Tenants don't give a crap about their landlords and when 'push comes to shove' the tenant will fight to avoid paying their rent as well as fight to catch up with their rent because most tenants think landlords are rich bastar... and only want their rent money so they can get richer. There is no loving each other when it comes to being the collector, or being the tenant paying the rent.
No. I have very solid policies and procedures in place. I'm just explaining how he can show a little sympathy without giving away the farm. If the tenant has been good in the past, I'm recommending he give her a month to figure things out by waiving the late fee or holding off on eviction. After 30 days, it's game on.
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
5y
All great advice above!
It is a challenge to run a business, yet be empathetic when "life happens".
We use a term, "empathetic boundaries" to train our staff on how to handle situations like this. It's no different than a bereavement situation at work. At some point, many companies, including union organized ones, require proof of a death for the paid time off. So, we'd have no problem politely, yet firmly, asking the tenant for proof of their son's death.
We'd also politely tell them we'll start the eviction process when they fall behind on their rent, but are open to consider an acceptable payment plan proposal from them to avoid an actual eviction. What we're after is keeping the upper hand in the situation, so they have deadlines and can't just bury their head in the sand and ignore their rent obligation.
Suggest the GoFundMe idea, the local nonprofits, etc for funds to cover the funeral and/or rent.
Just make sure to keep the upper hand and be willing to slowly & empathetically increase the pressure on them to pay.
Augusta, GA · Member since 2014 · 1k+ posts · 1k+ votes
5y
Red flag for me..."she is not sure how she is going to pay rent going forward".....is she talking about next months rent or rent down the line? In other words, are we talking about no rent for, say, 3 to 6 months from now? Funerals can be quite expensive.
That talk in a few weeks should address this issue.
Just as an aside. Your tenant may want to see if there is a local Victims Assistance program near your area. I once did volunteer work for mine (it was handled through our District Attorney's office). I worked with sexual assault cases; others worked homicide cases. There were funds available to help families dealing with issues such as damage to property (i.e., a kicked in door during a home invasion), therapy, and yes, some funeral expenses for victims families dealing with a sudden loss via homicide.
Second aside. Have a landlord friend whose tenant always seemed to have trouble paying the rent on time for various reasons. They were getting pretty tired of the excuses (although some were quite inventive). One month they called and said the rent problem was because a brother had been murdered and they had to help pay the funeral expenses. It was a local event. My friend expressed their sympathy and asked when the funeral was so they could attend. The tenant said they would get back with them with this info. No call back and the rent was paid on time for that month.
I always figured that when I leave this world I will make sure every business and every person is paid every penny they have coming. There are many rich people in this world and tenants who don't give a crap whether or not everyone is paid when they leave this world or when they have a crisis and many tenants who have a crisis have the money to pay their rent, but use the crisis as an excuse to avoid paying their rent. I am not a heartless person and I also want to avoid having to determine whether or not tenants actually have the money to pay their rent, or have to determine whether of not they can get the money from a friend, or relative, or whether or not they have di dig into some sort of retirement fund. We stick with what our policies state and stick with the plan the first day their rent is late and we sleep much better at night knowing that we are sticking with the plan vs. playing god with the tenant and deviating from our own policies.
Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes
5y
@Christian Rojmar Last year I had a couple of tenants lose jobs to the covid and said they couldn't make renthat they couldn't make rent I wrote up a rent rent deferral contract just make it up it's fine and I had them sign what rent they can pay everyone can pay at least 50 bucks no one can pay 0.. Then have them sign a rent a deferal contract that you say you can only allow it to go for at most 3 months And then she's gotta come up to full rent and start making payments on the rears.
You have to come up with a program where they agree they owe rent and they agree to how much they can rent pay rent today and at all non paid rent needs to be repaid through arearss payments in the future.
Real Estate Agent · Minot, ND · Member since 2021 · 131 posts · 223 votes
5y
Good advice here. I'd also consult with an attorney. Make sure you don't choose a course of action that will make it difficult to enforce the lease if the relationship with your tenant begins to fall apart.
Austin, TX · Member since 2019 · 95 posts · 59 votes
5y
@Crystal Smith @Account Closed Thank you for all the incredible advices, you all rock and this is why there is no better site than BiggerPockets!
I was concerned that I had to be either an a**** and tell her to pay rent on time or be evicted or be empathic and help her out without having control of the situation. But all the great advice gives me a chance to do both. I spent a few hours pulling together a bunch of sources for the tenant and family to contact that may be able to help with funeral, rent, etc. due to hardship. Will contact tenant regarding a GoFundMe page in the next few days and then have a discussion explaining the business side of things and make sure she understand the situation and what is expected of her.
Residential Real Estate Broker · College Station, TX · Member since 2013 · 1k+ posts · 969 votes
5y
Saw a blub on news today about a woman in Colorado that raised over $220K within 2 days on GFM about not having money to pay rent after losing her job to covid.
I certainly wasn't aware you could raise that kind of money that quicky. Must have been really well written story.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
5y
@Christian Rojmar Tell your tenant, " I am so sorry to hear of your loss. I just can't imaging how awful that must be but unfortunately, we are a very small business and providing you with free housing is just not something that we will be able to do for you.
