Dealing with a resident not paying rent is nothing short of a nightmare.
After all, it is very stressful when you’ve done all you can do to live up to an agreement you made, and the other person seems bent on not living up to the contract.
If you are a landlord long enough, unfortunately, something bound to happen is dealing with a resident not complying with your lease.
This article will look into the top ways residents don’t comply with the lease, including failure to pay rent. We’ll give you some ideas about what to do before eviction and when to pull the trigger on evicting.
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The reasons residents don’t pay rent range from circumstantial reasons all the way down to malicious reasons. When you are in the middle of someone not paying, it all feels malicious.
The most common circumstantial reason is if a resident loses a job or has an unforeseen expense. Some examples of unexpected expenses we’ve experienced are a death in the family, car breaking down, and health expenses.
There is also a category of “should have foreseen expenses” because some residents don’t plan very well for particular seasons of the year where they spend more money. Some prime examples of this include Christmas and when kids go back to school. Either way, whether they plan on it or not, they don’t have the money to pay you on time, which becomes your problem.
Some malicious residents spend their life going around taking advantage of people. They typically prey on the new landlord and are well versed in how to live in a home for long periods rent-free through lies and an incredible knowledge of the landlord-tenant laws.
But, they are usually in the small minority. This article will not cover how to handle them and will look more into addressing the circumstantial issues.
So, a lot of handling a bounced check has to do with what is written in your lease. If your resident signed the lease that told you or said how much money you can charge them for that, you could obviously charge them.
The first thing you should do is notify them and let them know about the bounced check. Notify them of the charge, if there is one. You should also make sure to tell them that you are willing to forgive this one time but don’t get into a habit of continually forgiving these types of things because then they’ll make it a habit.
The biggest problem comes when you’re self-managing a property. Inevitably, you run into some trouble when the resident stops paying rent.
It’s essential to know the state-specific landlord-tenant law. Typically, states have written laws that deal specifically with a resident not paying rent. After all, the biggest reason for a lease break is that somebody doesn’t pay the rent.
So, the first thing you should do is understand your state and what the law says about it. There’s typically a time you have to give them before starting the eviction process. But, make sure that it jives with state-specific landlord-tenant law and your lease.
You always want to make sure to double-check your lease documents before going down any paths that might lead to legal action.
Whether it’s the first time, you should always send a formal late rent notice. There are typically notice provisions within state laws, so be sure to check into that first.
In other words, you have to give notice to the resident and tell them that they’re not paying the rent, as funny as it sounds. But that’s the way most states handle it.
If your resident does not immediately respond to your late notice, it’s time to follow up with them. Confirm that your notice was received and find out if they intend to pay the due rent.
The next elevation is to take legal action, which means you need to hire an attorney who’s familiar with the state-specific landlord-tenant law. Don’t just go to your local family attorney. Typically they don’t know what they’re talking about.
Go to an attorney who’s used to doing evictions. Attorneys that do evictions do a ton of them. They have a process that they go through. They know all the laws. They know the judges. You’re going to want to hire an attorney familiar with landlord-tenant law, familiar with these evictions.
Another idea to help you along with the process is to hire a property manager to take over at this point. Typically, property managers are familiar with these types of processes. They’ve taken over many of these situations from homeowners who have put poor residents in there who aren’t paying the rent. So, this is not a unique situation for them.
Property managers already have the attorneys on speed dial that can speed up this process. Why learn something new when you can hand it over to a professional, and they can handle it from there?
While landlord insurance won’t usually cover unpaid rent, you can seek rent guarantee insurance as an alternative. This insurance can cover rent for up to six months in one year and can help you fund the eviction process by covering your lost rent in the meantime.
So, what are some other reasons you would evict your resident? Let’s look at those before we begin to address how to handle them.
While a distant second place, destroying your property is solidly in second place for the most common reason to evict a resident. Sometimes, it even happens in conjunction with your resident not paying rent.
This particular type of resident comes in and, within a month, has already wreaked havoc on your home. After you have spent so much money on the house getting it ready, to walk in and see what these residents have done to your home is sickening and (unless you are a saint) makes you want to physically hurt them – which we don’t condone.
Tenants selling or using drugs are also a reason to evict. One of the incredible facts about some local legislation surrounding the resident-landlord relationship is that this “breach” of the lease is not always curable. Meaning, unlike not paying rent or tearing up your house, these residents can’t “fix” the problem and stay in the place. You are immediately allowed to evict them. Period.
A violation of the home’s occupants is also a lease violation where it may make sense to evict a resident. We’ve had this happen before where a person on the Sex Offender Registry rented a house through his girlfriend. When the notice went out to the neighbors about his new address, we heard about it and immediately moved to evict.
As annoying as some neighbors can be, the last thing you want is for your resident to be the annoying neighbor. Late night parties that consistently keep the neighborhood awake will make them and you the most hated people in the city.
Usually, you find out about this from the city or the HOA. The resident refuses to get off their rear end and cut the yard on a Saturday or Sunday. This type of laziness usually also works its way into the home’s interior. The way the yard looks on the outside is what your home looks like on the inside.
We think it’s worth noting that if you, the landlord, aren’t taking care of the house, prospective residents perceive that you won’t take care of it when they’re living there either.
So, you find yourself in the unenviable position of one of the above categories. Here is what we suggest doing about it.
Your first step is to communicate to the resident that they are in violation of the agreement. If you want to work fast, you can put a 7-day notice on the door. We always like to assume they are trying to do the best they can do and that the violation may be an oversight.
We like to communicate with them in writing first. For instance, if we receive a notice from an HOA about the yard, we may send a copy of the violation to the resident via email and nicely remind them in the email that they need to do the whole neighborhood a favor and keep the yard looking good.
We highly suggest that the communication come in writing. If you decide to give them a call, make sure the call is professional, remove the emotion, and follow up with an email or letter outlining what you discussed and the resolution.
The first sign that things aren’t going to go well is that the resident is not communicating with you. If you email, mail, or call and you aren’t getting any response, this is a huge red flag. When the resident communicates with you, they should provide you with the following:
Out of human nature, you give second and third chances. There should be no second chances. You have already allowed them a second chance. They broke the lease. You gave them a way out. The way out has changed, and you can’t give them another try.
Now you know you want them out, and you need to do your best to avoid losing tons of money in the process; remember that an eviction is a lengthy and costly process. The best way we’ve found to do this is to give them a date they need to be out by and promise them something in return for being out by that date.
It can be hard to do this after they’ve dragged you through the mud, but we promise that it is in your best interest for them to leave amicably. We’ve seen people promise to forgive all the back rent if they are gone, promise not to pursue them in collections, and even give them “cash for keys.” Whatever you decide, it will be cheaper than a 90-day eviction, plus attorney’s fees and court costs. So what you should know about resident eviction.
Pulling the trigger on an eviction is a sad day. Recognizing that this is the only way to get the resident out is a realization that you will have to come if you are in this business long enough and rent enough houses. A few quick suggestions about evictions:
There is a process to evict residents, and we highly suggest you follow it. Getting to the end and having a judge throw it out on a technicality would be a bad thing. If this happens, it would require you to start over again.
The majority of residents that start the eviction process leave during the middle of it. Frequent drive-bys will make sure you can get in the house as quickly as possible, bringing it back on the rental market, and making you money again.
Dealing with a resident not paying rent is the worst part of owning a rental property. We do everything we can on the front end to make sure this type of thing isn’t going to happen, but it does.
The last bit of advice is to remember that whether you own one house or 100, you are in business and have to treat it like a business. The best thing to do is remove the emotion from the situation; some residents are great at inserting emotion.
Ultimately, it’s about doing what is in the best interest of you financially.
If you are having a hard time chasing down monthly rent from residents, and tired of being a full-time landlord— Contact us today about your property management needs.
Matthew is the CEO of Evernest. He is a student of the book Good to Great and is passionate about building the best property management company on the planet (and maybe even the universe if Elon Musk will hurry up). You can usually find Matthew at the baseball field with his son, at a dance recital with his daughter, or at his favorite restaurant with his wife, when he’s not in the office. And if you can’t find him in any of those places, it probably means he’s traveling.
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