Becoming an Interim Landlord During an Eviction

[Joe H.]

   Without getting into too much background detail, at the beginning of August, after a tumultuous couple of months, the PM of 6 years for our Birmingham property had decided to terminate our contract, effective August 31. We were led to believe that eviction proceedings on our tenant had already started, but come to find out that the eviction notice had been with the process server as recent as yesterday. We have a new PM lined up, however they won't take us on until the eviction is complete.

   Seeing as how it looks like we're going to be interim landlords until this eviction is resolved, what are our next steps to get ourselves set up as the official landlords of this property as of September 1? Just as an example, common sense tells me we should send a notification to the tenants that we're the new property manager (at least, temporarily), but the lease contract the tenant signed is between the tenant and the PM, and Alabama law, from the way I understand it, requires any documentation to be distributed by an attorney. In addition, this tenant is in the process of an eviction, so does that change the approach? We're trying to set up a call with the real estate attorney handling the eviction (which our current PM contracted for the eviction) to answer questions like this, but they likely won't respond until Monday, and I'm trying to get a head start on setting expectations and understanding responsibilities. We have three other PM-managed properties outside of Alabama, and we've maintained good relationships with the PM's of each. We've never been put in this position before. We'd ask the current PM, however any feedback they have provided, when they do actually communicate with us, has been misleading and only wasted more of our time.

   Any guidance or referral to someone who could help us will be greatly appreciated. Thank you.

[Denise Evans]

In Alabama:

First, if the lease says it is between the PM as landlord and the tenant as tenant, that is completely wrong. YOU are the landlord, and have always been so. This is a common problem. The lease should say something like, "XYZ Property Management Company, as agent for the Landlord, and Joe Smith, Tenant, agree as follows..."

You must send notice to the tenant that you are now managing. The prior PM company should have done that, because it is as much for their protection as it is for the tenant to know where to send the rent.  If the notice does not go out, then the prior PM is on the hook for "all landlord responsibilities," whatever that means. No court guidance on that language. Very sloppy and not well thought out. But, it is scary if you are a third party property manager.

Do you know when the lease was terminated for the default?  You have 60 days after lease termination to give an itemized accounting of sums withheld from the security deposit. If you miss the deadline, the tenant can sue you for double the security deposit amount and attorneys fees EVEN IF they were clearly in rent payment default and are being evicted.

Only an Alabama licensed attorney can appear in court to represent another person or entity, unless it is small claims court. Evictions are handled in District Court, not small claims. If you own the property in your own name, you can prosecute your own eviction lawsuit. It's all done online. if you are the 100% owner of a legal entity that owns the property, and have conduit tax treatment, that is still two different entities--you the person and your LLC or corporation, so an attorney is required for court filings and appearances.

Be aware that even with a turn-out order, Jefferson County sheriff's department is running 3-4 months behind in serving them, so sometimes cash for keys is the only economically sensible solution if you have a saavy deadbeat tenant.

Only an Alabama licensed attorney can prepare documents that transfer title, such as a deed.

Virtually nothing else REQUIRES an attorney, just specialized knowledge and experience. That being said, it is often safer to go with an attorney who might have a higher likelihood of that knowledge and experience than the typical real estate broker.

Please send a PM if you want to talk on the phone. You have a pretty wide-reaching set of issues.