All Forum Posts by: Nathan Gesner

And Jeff is correct about the last month's rent being considered part of the security deposit. Here's how it is explained:

Sometimes the lease requires that both the first and last months’ rent be paid before a tenant moves in. If this is the case, the last month’s rent would be considered a security deposit. Sometimes, too, additional fees or deposits are charged to hold the rental property, for credit checks, for pets, for cleaning, for keys, for mailboxes, for storage, and for many other reasons. While these fees or deposits may not be called “security deposits” in the lease, if they are otherwise refundable, they are still considered by law to be part of the security deposit and subject to the strict rules that Michigan has adopted— including the limit on the total amount that a landlord may collect.

This is a ridiculous requirement, but it is the law. I'm glad I am not in such a restrictive state!

Any funds collected from the tenant but NOT applied to charges are technically property of the Tenant. The security deposit is one example but rent paid in advance should be treated the same. I had a tenant that paid a full year of rent every October. I couldn't spend the money because there is always risk of something happening before the funds are applied to a charge (i.e. death, early lease termination, etc.) I escrowed the funds and applied them as charges came due.

This is why it is important for a buyer to review any agreements and accounts to ensure the appropriate funds transfer at closing.

So you enjoy what this country offers but don't feel the need to contribute to it by paying taxes? That's called theft where I come from. 

You want some advice? Pay your taxes like everyone else does and stop trying to gain fortune through illegal means.

I would reiterate what is said above. My recommendation is to always be a Property Manager first, preferably working for a reputable company where you can learn the ropes and save yourself a lot of time/trouble. Once you have the hang of it, you can consider stepping out on your own. As a professional manager, the buyers/sellers will naturally come to you. Landlords want to expand portfolios or maybe sell their single family and use the equity to buy a four-plex. Tenants will occasionally move from tenant to buyer. And all of these result in referrals.

But you have to be good at your job. It is better to focus on PM where you will see a steady paycheck and build some serious skills. The sales work will eventually come without much effort and will be a nice supplement to your steady PM income.

Do you have a written agreement with the property manager? You can (and should) fire that for failure to perform if they're negligent or violating your standards. It almost sounds like you just picked this manager out if the air which is worse than allowing tenants without screening them!

Get on the phone and demand that an inspection be completed by the PM within 48 hours and that they send you a written report and pictures. I would also demand to see the actual application used to approve them and what checks were conducted in the screening process.

Depending on what is found, you can fix it. If the applicants lied, you can evict. If the PM lied, you can fire him and evict the tenant because the PM violated your instructions. There are steps and costs involved, but it can be done.

If the PM was unaware and the tenants lied or are violating the lease, you can evict or try to force them into compliance. Compliance is the least expensive route, assuming they pay and take care of the home. But let's be honest: these appear to be adult children with kids of their own that can't live without mommy propping them up! In todays society, multi-generational living situations tend to be out of desperation.

If you fire the PM, please do yourself a favor and research before hiring another one. A good PM will increase your income and reduce your headaches! Start by looking through this forum for a checklist if things to look for in a good PM. Then go to NARPM.org and search for managers in that area or look online. Find 2-3 managers and interview them, review their agreement and other documents, ask them how they handle specific problems like what you currently have, and talk to some of their references (Landlords and tenants). Consider fees (watch for hidden ones) but do not base it solely on fees because you can often make more by paying more!

I hope this helps. Be sure to keep us updated.

 I bought an existing property management company in 2010. One month after purchasing the company, I started inspecting properties because the previous property manager only inspected during turnovers. One of the first properties to inspect was a house located 30 minutes away that had not been inspected since the tenants moved in 11 years earlier. The previous Manager said they always paid their rent and it should be fine. I reviewed their folder and discovered they had bounced checks at least a dozen times in that 11 year period, so I wasn't optimistic.

When I called the tenant to schedule an inspection, it took many phone calls over a two-week period before they responded. Interestingly, they told me they had just bought a home and would be moving out the next week. This immediately raised red flags but I found no point in pushing it if they were going to be out one week later. It actually took them two weeks to get out. They called and told me the keys were on the counter, that the house was clean, and it was ready for the next tenant to move in.

Click on the link below to see my YouTube video of what I found. Needless to say, I have never gone more than one year between inspections and just because a tenant pays rent does not mean they are taking care if the property!

Worst Tenants

There is precedent for releasing tenants due to domestic violence, stalking, it other unsafe situations. However, she needs to provide some proof like a police report showing there is a legitimate concern. If she provides it, cut her loose. She is still responsible for cleaning and repairs which can be deducted from the deolposit but I would not withhold from rent. If she is unable to provide any evidencr, treat it like you would any lese violation.

I don't know all the facts, but I do know Tenants make up all kinds of stories to get out of a lease. Be a business, not a social worker!

Does the tenant remain responsible for rent until a new tenant is found? If so, ask them to help you find a new tenant by letting you market and show the rental to prospective renters. You may find someone to move.in shortly after it is vacant which saves the owner's income stream and the departing Tenants deposit.

Brandon, I don't have time to research it for you right now, but here's where you can get a start: NOLO or Tennessee Legal

I disagree with some of what Mike posted. For example, the law requires the tenant to adhere to their contractual obligations until they are released. So they must pay rent when it is due. You shouldn't allow them to skip rent and then apply the deposit because you may need the deposit for other charges.

Your best bet is to do some research or (even better) talk with an attorney. A couple hundred dollars can save you thousands!

Not an attorney, but here's my advice.

The tenant is leaving, period. They didn't "just find out" they were buying a house. They obviously planned to buy a house for a long time and have been actively attempting to purchase a specific house for the last 45 days or more. If they were honest, they would have kept you in the loop and tried to work somethingout. Because they didn't, I see no reason why you should play nice to try and help them out.

The law generally requires you to make a "diligent effort" to find a new tenant. This means you have to put in the same effort as you did to find this one. Legally, you can probably hold the current tenant responsible for rent, utilities, and responsibility for the home until a new tenant is placed. But don't be mean about it. Do your best to place someone else quickly and then hold the old tenant responsible for the costs incurred.

I would write them a letter that explains the following:

• The law requires tenant to provide XX days notice of intent to vacate. They only provided you with 2 days which doesn't allow you the time needed to find a replacement tenant. Therefore, according to the lease agreement and local laws, the tenant remains responsible for rent, utilities, and care of the home until a new tenant is found. If the pipes freeze because the heat was shut off or turned down too low, the old tenant is responsible, not you.
• Remind them the security deposit cannot be applied towards any expenses until the lease is terminated (unless your laws state otherwise). They must continue to pay rent and utilities until a replacement tenant takes over, period. Once a new tenant is found, you will conduct the final inspection and disburse their deposit in accordance with the lease agreement.
• Sign the letter and make a copy for their file. Send the original Certified Mail so you have proof of delivery.

At the same time, start advertising the property and looking for a new tenant. Be fair on your part, but be firm with the tenant that tried to throw you under the bus so they could buy a home.