My fairly new tenant CAN'T PAY rent

19 Replies

This has been an ongoing issue since the beginning and I'm learning the hard way to screen tenants properly. A family began to rent our newly built house in June and after about a month, the wife had been diagnosed with a serious medical condition. Getting rents on time was rough but we managed to get all the rents so far. 

I received a phone call today from them and let me know that the husband got laid off and there are more medical bills to pay.. and a lot of sad stories. And that they aren't able to pay the whole amount on the 1st. 

I did receive a total of 2 months worth of rent upfront (1 month security deposit + 1 month rent). I'm trying to understand their sad situation but at the same time, there are bills to pay. 

I'm reading our lease agreement and there isn't a specific area regarding breaking the lease. I want them to use the last month rent that they paid in the beginning and leave and find a new place at the end of November. 

Any sound advice from seasoned landlords would be greatly appreciated. 

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It would be best to have them move out. 

I'm guessing they weren't screened too well as you seem to indicate. Try and learn from this - what mistakes were made and what was overlooked, so you don't repeat them. If this tenant was a dud from the start, then fire the leasing agent (if you used one) and replace them. Many leasing agents are about the quick commission and don't care if the owners have a good tenant. I'm unclear - are they caught up, but won't pay 11/21 rent in full? Best bet for you and them is for them to find a more affordable arrangement. With that said, it's tough to rent out in December/Jan/Feb. 

It sounds to me like they're setting you up for a long term slow/no pay. 

Not saying you didn't (or did) miss red flags but you asked for advice from those that have been doing this a long time and sometimes a bad tenant who knows how to play the game gets in.  The longer you do it the less likely it is to happen but it does happen. Been about 5 years for us but a pro can get through the best screening.  I know some people will say it will never happen to them, I get it, you're amazing.  Sooner or later if you do this long enough with enough volume you are likely to experience it.  

In addition, life happens.  Meaning, they may have been ideal, your screening might have been great but life happened to them and assuming they are telling the truth about the medical condition (and this isn't part of their pro scam) then this sounds like a life happens event.  

Again, not to say your screening cant' be improved but it isn't always screening.  

Now that you are in this situation the only way out is to ask them to leave, offer them cash to leave and/or start the eviction process if you are allowed to do that locally w/COVID stuff going on. 

Remember that in most places, except for the first few months last year when this all began you are allowed to evict for possession.  Meaning, even if you can't evict locally for money, ask your lawyer (And use one!) to evict for possession if that is the only choice.

The other option is state COVID funds (or other charities).  Most states have funds set up for tenants with hardships at this time and they may qualify, they may not, depends on your state rules.  Local churches can help as well.

No matter what route you go start the eviction process immediately.  You can always stop it.  You can always change course, but you will never get the days that are passing by back.  So start it, that will also light a fire under the tenant to take action.  

In response to many of you whether I screened the tenants, the answer is “no.” I’m currently in CA while the property is in TX. And I relied on my sister-in-law (who also owns many rentals) screened them for me and even had a lease agreement that I didn’t really cover many things written up and sent it over. I used Brandon Turner’s landlord guidelines for my other property.

Nonetheless, it’s a rookie mistake and is one I’ll never try to repeat. I will get the eviction process going.

But my real practical question is, “how and when do I start the eviction process when I have the last month check that I got upfront?” Is it after the grace period? Which is the 6th according to our lease agreement. 



You may just consider hiring a professional property manager. They can handle the eviction, new lease etc.....When I was starting out I learned a lot from my property manager. A good one adds value. 

Originally posted by @Chan Park :

This has been an ongoing issue since the beginning and I'm learning the hard way to screen tenants properly. A family began to rent our newly built house in June and after about a month, the wife had been diagnosed with a serious medical condition. Getting rents on time was rough but we managed to get all the rents so far. 

I received a phone call today from them and let me know that the husband got laid off and there are more medical bills to pay.. and a lot of sad stories. And that they aren't able to pay the whole amount on the 1st. 

I did receive a total of 2 months worth of rent upfront (1 month security deposit + 1 month rent). I'm trying to understand their sad situation but at the same time, there are bills to pay. 

I'm reading our lease agreement and there isn't a specific area regarding breaking the lease. I want them to use the last month rent that they paid in the beginning and leave and find a new place at the end of November. 

Any sound advice from seasoned landlords would be greatly appreciated. 

Welcome to the big boy club. The more rentals you have the more this will pop up. I’m dealing with this right now myself.😢

With covid there are resources they can turn to for help.  Point them in that direction and meanwhile tell them you understand if they need to find another place to live and you will let them out of the lease with 30 days' notice (ie you can rent it for Dec 1).

I know you want the tenant out, which makes sense, as I would start the eviction process. However, there is an emergency rent assistance application in Texas. This will help you and the tenants out!

Originally posted by @Chan Park :

In response to many of you whether I screened the tenants, the answer is “no.” I’m currently in CA while the property is in TX. And I relied on my sister-in-law (who also owns many rentals) screened them for me and even had a lease agreement that I didn’t really cover many things written up and sent it over. I used Brandon Turner’s landlord guidelines for my other property.

Nonetheless, it’s a rookie mistake and is one I’ll never try to repeat. I will get the eviction process going.

But my real practical question is, “how and when do I start the eviction process when I have the last month check that I got upfront?” Is it after the grace period? Which is the 6th according to our lease agreement. 



Always first look back to what your lease says, because that's your legal document. So your lease doesn't say anything about it. Your best bet is to negotiate an early termination with the tenant, let them use the last month's rent to cover November while they move out and then you can return their deposit (assuming no damages) so they'll have something to get them started on their next place. Barring that, you're going to have to go the eviction route, in which case a judge will ultimately determine how the deposit/last month's rent can be applied here. Because you're in Texas you should have pretty good luck getting those funds applied to rent owed and a reasonably fast eviction process.

So really your first step is to be sure the tenants understand they have to go, and they can either go the easy way where they have some money left over from the deposit, and no hard feelings, or they can go the hard way through an eviction. 

Hi Chan,

It's the 26th of the month.

At least you have a heads up on the lack of money.

If it were mine, I'd give them three choices.

[1] Come current with any back rent and pay in full on time and stay.

[2] Move out before the end of the month and have the lease canceled (due to unforeseen medical expenses). Relatives/friends, etc..

[3] Face Pay or quit notice and then eviction.

If you want to be helpful you can give them info about rental assistance from online sources like these Austin has:

https://www.google.com/search?q=rental+assistance+austin&rlz=1C1CHBD_enUS751US751&oq=rental+assistance+austin&aqs=chrome..69i57.4464j0j1&sourceid=chrome&ie=UTF-8

Then turn and list the unit for rent ASAP.

Just my 2 cents.

For all those landlords who are having trouble collecting rent you will want to look into the rent relief program for your state.  Billions of dollars have been given to states to help landlords get rent from those tenants who are struggling during this Covid era.  Texas Rent Relief Program will pay a number of months rent and utilities.  

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I agree with @Scott Mac and all the other responses. Real wealth of knowledge in here regarding this sad situation. 

"[3] Face Pay or quit notice and then eviction." - Make this clear this is the worse case scenario. The s*8t only rolls down hill for the tenant if you have to evict. It could affect them for years because a "life situation" happened. 

Originally posted by @Chan Park :

This has been an ongoing issue since the beginning and I'm learning the hard way to screen tenants properly. A family began to rent our newly built house in June and after about a month, the wife had been diagnosed with a serious medical condition. Getting rents on time was rough but we managed to get all the rents so far. 

I received a phone call today from them and let me know that the husband got laid off and there are more medical bills to pay.. and a lot of sad stories. And that they aren't able to pay the whole amount on the 1st. 

I did receive a total of 2 months worth of rent upfront (1 month security deposit + 1 month rent). I'm trying to understand their sad situation but at the same time, there are bills to pay. 

I'm reading our lease agreement and there isn't a specific area regarding breaking the lease. I want them to use the last month rent that they paid in the beginning and leave and find a new place at the end of November. 

Any sound advice from seasoned landlords would be greatly appreciated. 

I'm assuming the 2 months they paid upfront were first month rent and security deposit?  The security deposit is NOT rent.  Even though you will keep it as such, it should not be treated as rent.  So eviction letter should be sent when they miss Nov rent, not Dec.

is there a rental assistance program in your area that they can apply for? This has saved two of my tenants in the past year. It's somewhat likely that they will continue to not pay after the assistance is over, but at least you can get by a few months without worrying about rent.

@Chan Park we as individuals do not have the means nore are we expected to be a sole social program. A significant portion of our taxes go to these programs. Start the eviction process and let them find programs or family members to help them get through this. No one thinks you are superman and thinks you can save the world. This is a lesson on why we pay taxes to help with people down on their luck. It may feel heartless but if you are a good property owner you will be able to provide exponentially more clean and safe housing by making this choice. Look into the covid rent relief money in your state too.

@Chan Park

I think your best bet is to have a call with a lawyer that handles evictions to come up with a game plan. Rules vary a lot from state to state and even by smaller segments. You might try and connect with people in this community to get referrals of the bulk eviction attorneys.... this is the difference between a 1k eviction and a 3/4k eviction...can you imagine how I know this? 

I hear some advice about getting a property manager. I wouldn't jump on that yet. I have worked with a few and experienced rookie mistakes worse that what your describing at one of my homes by a company managing 600 properties. For a few hundred dollars (and a few passed tests) anyone can call themselves a property manager. The honest truth is that the great majority of them are not good. 

I'd encourage you to review what sort of qualification requirements you want to require. I look a lot at applications like I'd be underwriting residents to buy a home. Additionally, self employed people get a lot more scrutiny as their information is difficult to verify and ability to collect on defaults is low. 

If you go to a lot of large landlord or apartment complex websites, they will often list their requirements to qualify. If you can find a great leasing agent, it too can be one of the best things you can do. Like I said in my previous post, many leasing agents (not all of course) are total who res trying to get a fast leasing commission. In doing so, they set up the owners for a quick failure and massive turn expenses. Good ones can be a game changer tho. 

As far as getting them out - I assume they are behind, but am not clear. 

1. Try and talk them out, by indicating the costs and consequences of an eviction and how you can help them avoid it. 

2. Hybrid / Cash for keys - pay them to leave. Start by offering to cover the cost of a moving truck for the day they will move out. Again, you don't put your own credit card down or guarantee the truck, you can go to the rental place and lay down cash so they may rent it. Sometimes that's enough. If not and you have to pay them to go, they get no money until the home is totally empty and you walk thru it to make sure they haven't blown it up.

3. Eviction

4. Grant programs. The government touts the amount of money available, yet has dispensed, from what I have seen less than 5-10% of it, which is about as ridiculous as the government itself. Additionally, the programs to get free money come with strings attached which I would never commit too. This, in my opinion, is largely a false hope. 

I think you realize the handwriting is on the wall on this one.  Your tenants have been slowly going downhill regarding their ability to pay rent on time.  Suddenly it's become a fast fall.

I'd suggest letting your tenants know that they can use the last month rent that they provided and be out when that is used up.  If they have not paid rent for October this is where it will be used.   Then come November if rent is not paid the eviction process for this state should begin.

Doing "nothing" because of these sad stories means you will have tenants living in the place for free with no real reason to move (and no rent from them!).   Evicting means you will likely be called a number of names including uncaring, unfeeling, greedy...blah, blah, blah.  Such is life.   It is important to decide if you wise to be a landlord or a social worker.

And yes; there are programs to help those in need of financial assistance in each state.   It is up to the tenant, not the landlord to begin the process of receiving this help.