How to collect back rent? Worth to sue tenant ?

9 Replies

Hi guys, I have a rental property in Austin, TX. I am in a situation where an old tenant broke the lease and owes me about 5K after deducting security deposits (2 months rent till replacement is found, early termination fee, some damage fee). My PM told me they will report to collections but said if I were to pursue a legal action they can support in providing any docs to attorney .

I did some online search and found that even if judgement came in my favor it would be hard to extract any money as I am responsible for money collection and not the court. From what I know tenant has a high paying job (WHEN we screened for employment verification ). He did not lose his job (no COVID related issues) and PM probably might have his bank account # (not sure)

Can someone pls advise what I could do here? If it was 1-2K I would have just reported to collections but 5K is pretty significant. Its a year worth of property taxes -:) 

Originally posted by @Sam Shirazi :

Hi guys, I have a rental property in Austin, TX. I am in a situation where an old tenant broke the lease and owes me about 5K after deducting security deposits (2 months rent till replacement is found, early termination fee, some damage fee). My PM told me they will report to collections but said if I were to pursue a legal action they can support in providing any docs to attorney .

I did some online search and found that even if judgement came in my favor it would be hard to extract any money as I am responsible for money collection and not the court. From what I know tenant has a high paying job (WHEN we screened for employment verification ). He did not lose his job (no COVID related issues) and PM probably might have his bank account # (not sure)

Can someone pls advise what I could do here? If it was 1-2K I would have just reported to collections but 5K is pretty significant. Its a year worth of property taxes -:) 

If he did to you he will do it to others until he gets called on it. I'd sue in small claims court and once you have the proper paperwork garnish his wages where he works.

I'd have a lawyer send a letter of notice. It costs almost nothing. In the letter state your intent to recover the funds outside of a court proceeding, but state you will proceed in court if a settlement is not reached. I'm Canadian, not American so I'm not sure that process is exactly the same, but that's how I would handle it. Your court costs will probably be more than half the amount he owes you, so anything over 50% of the lease would probably be your best outcome.

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Texas answer:

You have an almost zero chance of collecting any judgment in Texas from a tenant. Texas does not allow garnishment of wages and the list of exempt property is lengthy. The former tenant can literally go buy a million dollar home tomorrow with cash and there is nothing you can do about it

Saying that, in Texas you do have the ability to get tenants out quickly as our eviction process is simple and quick 

@Sam Shirazi

Going the bank account route has its difficulties as well as attorney fees to maybe collect. Far more Often than not You will be throwing good money after bad   I have collected exactly one judgement in 30+ years and that was a guy in the Army that had to go through me to clear post

Your best defense is to screen for tenants with a great rental history and don’t let tenants get far behind before filing an eviction 

You'll never get it. I have judgements that I know I'll never see a penny. Suing the tenant does nothing, unless they win the lottery lol. Good luck!

Originally posted by @Sam Shirazi :

@Greg H.we did that, but there is always a 45-60 day window in these situations before next tenant comes in, like it is hard to make sure tenant's outstanding balance does not exceed security deposit .

I would work on that down time.  Literally, I have never had a vacancy of more than 30 days in more than 30 years. Vacancy kills profits and I am a big fan of making money 

I know it's not much consolidation, but no lender will let them buy a house without paying off the judgment first. So if that is ever in their future, especially if they earn a solid income, then I could see you collecting at some point in the future.