Tenant behind on his rent

[John McKee]

I have a tenant that has ghosted me.  They are behind in their commercial rent by about $15K.  Do I kick them out legally and pursue the 15K or do I just kick them out and move on and not worry about the money.  Anyone ever pursue a bad tenant for funds owed?  This is a mom an pop flex tenant.  Love to hear your thoughts on this.

[Nathan Gesner]

Quote from @John McKee:

I have a tenant that has ghosted me.  They are behind in their commercial rent by about $15K.  Do I kick them out legally and pursue the 15K or do I just kick them out and move on and not worry about the money.  Anyone ever pursue a bad tenant for funds owed?  This is a mom an pop flex tenant.  Love to hear your thoughts on this.

When you don't have experience, I recommend you hire an attorney. They will help you evict the renter and get a judgment for what is owed. Once you have the judgment, you can turn it over to collections and see if they can collect anything for you. Don't hold your breath.

In the future, I recommend you consider using a property manager that can protect you from mistakes like this. It's much cheaper to pay a professional that keeps you out of trouble than it is to pay an attorney to fix the problem.

[Bruce Woodruff]

Go after the money. If you let them go unpunished, they will be emboldened and do it again...and hurt some other innocent landlord. 

Getting the judgement is the first step, then get it recorded. Even of they do not pay, this judgement will haunt them every time they try to buy anything that requires a credit check, even renting their next place. They may eventually pay you....nothing wrong with getting $15k, right? That's still a lot of money.....

[John McKee]

We have an attorney to evict and collect, but as they say it's hard to collect from a broke man.  Leaning towards kicking them out and finding a new tenant without collection.  I'm not concerned about teaching them a lesson.   It comes down to a business decision and not a moral one for me.  How much in legal fees do you want to pay to chase a dead beat?  

[Michael Smythe]

Evict and try to get a money judgment.

Then you can figure out if worth pursuing for collection.

[Adam Bartomeo]

Oh boy... We would not allow any tenant to just walk away from $15k. 

1 We would evict them

2 Use the eviction as leverage to collect

3 If we didn't collect then we would finish the eviction AND put them in collections

[Ronald Rohde]

I'd try to collect too, is it PG?

[V.G Jason]

You're missing the forest for the trees.

Sure, it'll cost you to go after them. But this same tenant may have done it to a previous landlord, and much like you ---didn't pursue them-- and that's why you were willing to sign them as a tenant. 

Now look at you.

Precedence is paramount, keep everyone checked. The world goes round. 

[John McKee]

This tenant was inherited from the seller so there is no way of knowing their intentions.  Anyone have any commercial tenant experience with collections and having success.  Love to hear your story, costs, hurdles, and timeline.  

[Ronald Rohde]

Quote from @John McKee:

This tenant was inherited from the seller so there is no way of knowing their intentions.  Anyone have any commercial tenant experience with collections and having success.  Love to hear your story, costs, hurdles, and timeline.  

 How much time do you have???

[Theresa Harris]

I'd kick them out and try to get some of the money.  At a minimum, try to get it on their credit report, though with a business, couldn't they just start a new business and it would have little impact.

[John McKee]

How do you get a returned phone call from the tenant?  Answer:  Put a for Lease sign in their window.....and yes it's in their lease that I can do that for failure to pay rent.

[Henry Clark]

1.  Check with your City/County Attorney if you can treat the unit as abandoned.  

2.  Review the lease, especially if it was prior to you.  See if they are treated as a tenant lease, storage or warehousing.  This will also help determine your actions. 

3. Pursue collections. Depends on how they signed the Lease, your recourse. LLC, personal, personal guarantee, jointly, etc. Impact their credit score for other items they may try to do in the future. They may want to come back and settle with you, to take it off their credit rating.

[Joel Owens]

If they are truly broke it's a waste of time. If they are not responding they might not know how to dig out of a perceived hole with the landlord.

If their business is no longer viable then maybe trying to get a payment for settlement in full.

When tenants mom and pop try to go out in retail centers the goal is to try to collect enough to cover attorney fees for an (offer in compromise).

If it was flex space they likely had little money. Most of these small business owners live hand to mouth and are not worth chasing. You could do a letter or something not much time and cost to see if they bite. If they have to be pursued constantly sucking away time and money then usually best to let them go.

To me time is money about 3,000 an hour. I rarely have any tenant defaults these days on commercial side as credit is super strong and I am picky on deals I buy. I like looking at the lake in my backyard too much to want to eat time chasing default business owners who owe money.

[Sonny Dhillon]

Quote from @John McKee:

This tenant was inherited from the seller so there is no way of knowing their intentions.  Anyone have any commercial tenant experience with collections and having success.  Love to hear your story, costs, hurdles, and timeline.  

 What type of area is your flex space in ? is it  c/d ? You probably want to get property management for your new tenant placement.  I always run them through credit check even if i inherit a tenant or have the seller evict them before i get the property , this happens often when sellers have bad tenants in the property. 

[Gino Barbaro]

@John McKee

What does your lease say? Is the rent personally guaranteed? I've had this happen several times, and the tenants didn't have the funds to catch up. The best thing to do is to hire an attorney, and file for eviction. Try to get a judgment against them, and more importantly, try to get them out ASAP so you can turn the unit.

Make sure to hir an attorney, and let them file. And take their advice, Every state has different laws pertaining to evictions.

[John McKee]

The tenant is now out!  Tenant is leaning toward a payment plan, but if he doesn't commit to a figure by the end of the week then the lawyer takes over.  I've had this situation before and it can work out well when you and the tenant agree to a payment plan, especially when the funds can come out of their account automatically.