Unpaid Rent - Tenant Moved Out

Unpaid Rent - Tenant Moved Out

Houston, TX · Member since 2014 · 12 posts · 0 votes

Dear Experts,

I had a tenant who was two months behind and under the threat of having an eviction on his record agreed to voluntarily move out and pay the owed amount at a specified later date. I drafted a document using one of the templates online saying that tenant is moving out and landlord is regaining a full possession of the property. We've added a clause with an agreed amount that tenant owes to landlord as a delinquent rent and it is to be paid on or before a certain date. We both signed the document and tenant did move out as per our agreement. 

Now my question is about the money. I tried getting tenant's new address, but he wouldn't give it to me. He doesn't want to communicate and I get an overall feeling that he won't just magically show up with the money to pay as specified in our agreement. What are the ways for me to chase that money past due date? Does the document give me any new options of addressing the collection?

I've already rented the place to new tenants, but would still like to recover at least some of the money.

Really appreciate your advice!

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Curtis BidwellPro Member
Rental Property Investor · Olympia, WA · Member since 2014 · 781 posts · 744 votes
12y

Not positive of the exact form, but it might be IRS form 1099-C.  It's for forgiveness of debt.  If your not getting paid (which is highly unlikely that you will), then they are responsible for the "income" of the amount "forgiven"! 

You don't need their address, just their name and ss# which you have on your application.  Won't it be a surprise next year when they get their tax non-return ;)

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  • Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    Keep the deposit and move on.

    Joe Gore

  • Curtis BidwellPro Member
    Rental Property Investor · Olympia, WA · Member since 2014 · 781 posts · 744 votes
    12y

    Not positive of the exact form, but it might be IRS form 1099-C.  It's for forgiveness of debt.  If your not getting paid (which is highly unlikely that you will), then they are responsible for the "income" of the amount "forgiven"! 

    You don't need their address, just their name and ss# which you have on your application.  Won't it be a surprise next year when they get their tax non-return ;)

  • Rental Property Investor · Brookline, MA · Member since 2013 · 1k+ posts · 777 votes
    12y

    @Michael L. 

    To @Account Closed 's point, hopefully you have a security deposit to cover some of the damages.

    It appears to be 1099-C. This is the actual ramifications of receiving a 1099-C, Pub 4681.  I'm not sure which type of Creditor a landlord would fall under.  Good find @Curtis Bidwell 

    You could also take the tenant to small claims court.  This process varies state to state, county to county.  The burden of proof is on you, so make sure you hire a lawyer to review your case before taking it in front of a judge.

  • Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    12y
    Originally posted by @Curtis Bidwell:

    Not positive of the exact form, but it might be IRS form 1099-C.  It's for forgiveness of debt.  If your not getting paid (which is highly unlikely that you will), then they are responsible for the "income" of the amount "forgiven"! 

    You don't need their address, just their name and ss# which you have on your application.  Won't it be a surprise next year when they get their tax non-return ;)

     Brilliant!

  • Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    12y
    Originally posted by @Michael L.:

    I tried getting tenant's new address, but he wouldn't give it to me.

    Send a letter to him and write ADDRESS SERVICE REQUESTED below your return address. Post it with the U.S. postal service. If your former tenant put in a forwarding address for his mail, he will get the letter and you will also receive notification from the post office as to his current mailing address. From that you may be able to discern his whereabouts.

    Of course, he is avoiding you and will avoid paying you. When we were starting out we had high hopes of receiving money from past tenants who still owed us money. Rarely does such happen. Some strategies: demand letter, small claims court, collections, garnishment, and now the "gift" that the IRS will hear about!

  • Nicole A.Pro Member
    Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
    12y

    Yeah, he's avoiding you. Part of your written agreement should have included his new address.

    You could try the tax thing suggested. You could try small claims. You could try a lawyer/debt collector that finds him and bugs him for payment. They'd get a cut of any payments.

  • Real Estate Lender and Broker · Dallas, TX · Member since 2013 · 966 posts · 500 votes
    12y

    Michael,

    I would hire a good collection company.  They would find him and harass him into paying.  They will take a cut of the proceeds, but you don't want to spend too much negative energy in this situation.

    Mark

  • Investor · Baltimore, MD · Member since 2013 · 205 posts · 44 votes
    12y

    Hard to find good collection company. I had one that had an A+ BBB rating. Basically wasted $500.

  • Investor · Baltimore, MD · Member since 2013 · 205 posts · 44 votes
    12y

    To all since this questions get asked over and over on here and there never seems to be any concrete solutions offered. This is what I have found out from a local landlord and a private processor.

    1. Go to NAPPS(National Assoc. of Private Processors) get a private processor.

    2. Pay private processor to do a skip trace. Which they will find the new address of the  former tenant.

    3. File a small claims complaint with a summons at the district court.

    4. Pay the private processor to serve the former tenant.

    5. Appear or get an attorney for court

    6. Get judgement recorded and sereve judgement to former tenants payroll dept. and banks for garnisment.

    Total price not including Attorney fee: Approx. $200

    Alot of veterans either not on here or not answering this question. Too big of a site for no concrete solutions.

  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    12y

    @Robert Carl 

    You will not be able to garnish wages in Texas

  • Investor · Baltimore, MD · Member since 2013 · 205 posts · 44 votes
    12y

    @Greg H. 

    This is only one solution and the one I know of for where I am. Somebody else should have a solid solution since there are so many investors on here. There are plenty of large rental companies in Texas that collect.

  • Curtis BidwellPro Member
    Rental Property Investor · Olympia, WA · Member since 2014 · 781 posts · 744 votes
    12y

    @Robert Carl This is practical advice, assuming your lost tenant has a new address -in his name-  a skip tracer can only find someone willing to be found.  Usually these people move forward on a girlfriends name, kids names, etc....  They don't have w-2 jobs.  They are not on record.  You may have to wait it out for a year or two until there name shows up on something.

  • Investor · Baltimore, MD · Member since 2013 · 205 posts · 44 votes
    12y

    @Curtis Bidwell 

    That may happen. Im just offering one solution. Would help if some more people would offer some concrete steps or solutions. The best and right things a landlord can do on their side and not what the former tenant may do.

  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    12y

    Provided that you can locate and serve the tenant, you can take them to small claims court and get a judgment against them.  The cost is +- $120 in Court costs plus any costs in trying to locate them

    Getting a judgment is the easy part.  In Texas, the chances of actually collecting the judgment are very slim unless they own non-homestead property and you know what county the property is in.  I have collected 1 judgment in 20+ years of being a landlord and property manager.  You will need to evaluate the additional costs and time and if it is worth it to you to pursue

    Texas is a very simple state to evict,  very difficult to collect

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Greg H. 

      there is a reason judgments sell for 5 cents on the dollar  Greg hit the nail on the head.

    I used to go to all that trouble... but then they file BK and you get a letter from the trustee instructing you to give all the money you collected back to the BK court..So your actually out the money you collected and the fee's you paid to collect.

    I have a good friend that owns a company that buys judgments nationwide for 1 to 5 cents on the dollar.. the ONLY way they collect is they let them season  IE to right at 9.5 years  most judgments are good for 10 years.. then they do the skip trace and garnishments the debtor had usually completely forgotten about the judgment and has new bank accounts ext.. these guys are really good at what they do but it is an expertise that the average landlord just is wasting time try to perfect a judgment.

  • Curtis BidwellPro Member
    Rental Property Investor · Olympia, WA · Member since 2014 · 781 posts · 744 votes
    12y

    @Robert Carl I know we'd all like to think that every dollar owed will eventually get paid.  After all, the tenant stole from us when they walked out without paying.  There are not three easy steps to collections.  Every circumstance is different.  Sometimes you can get a judgement and sometimes you can even collect on that judgement.  I just got a $500 check  this week paying off a judgement that we got 8 years ago!  It was a $3500 judgment that was worth pursuing and we knew his new landlord!  Persistence paid off even though we had to babysit this thing for 8 years.  I would send updates and demand letters 3-4 times. Year.  I have others who owe us and we'll never collect so I send a 100-c and forget it.  Move on, there are more tenants waiting for your glorious unit! :)

  • Investor · Baltimore, MD · Member since 2013 · 205 posts · 44 votes
    12y

    Can more people offer more information than bad stories, what if's and writing things off. There are major companies in the same buisness of reningt real estate. Lets try to come up with advice and solutions as they do instead of what if's and stories of how it went wrong. Let's come up with ways for situations to go RIGHT.

  • Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    12y

    @Robert Carl Are you listening? There is spot on advice here from many seasoned investors. Thinking outside of the box sometimes pays off, but don't minimize what experience has shown. What you see here is something the business world banks on, ROI (return on investment). Some things are not worth the time and cost to pursue.

  • Investor · Baltimore, MD · Member since 2013 · 205 posts · 44 votes
    12y

    @Marcia Maynard 

    Everybody knows that you take a chance in trying to collect. The question is what can you do to collect. Not bothering is really hard thinking.

    Also putting something on their finacial history helps the next landlord when screening.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Robert Carl 

      Robert what was described is the remedies to a bad tenant situation.. Out side of the box would be to send Guido over to the offenders new abode and bang some heads and shake them down is that the outside of the box type of constructive advice your looking for?

  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    12y

    @Robert Carl 

    He has received some solid advice from people who are familiar with Texas Law.  He could very well spend thousands of dollars in legal fees, spend numerous hours of personal time working on it or bust the guys kneecaps and he will still end up in the same place No money.........although the knee caps might get him a free orange jumpsuit and 3 meals a day

  • Residential Real Estate Broker · Chicago Suburbs, IL · Member since 2013 · 1k+ posts · 594 votes
    12y

    I recently learned that a collection can be placed against someone without going to court first, with just a flat $40-$50 flat fee, through National Tenant Network. I plan to use that going forward. They send 5 letters asking for payment, if it’s not received they put the collection on all 3 credit reports. I asked the NTN guy who was at my house,”We don’t need a court judgment first??!?” and he said no. I read all the paperwork and it coincided with what he said. Surprisingly the landlord-tenant attorney we last talked to never mentioned such a thing…

    As far as figuring out where the tenant is now, try Facebook. We recently had a tenant skip out early, with no notification, and without paying the final month rent and the damage exceeded the security deposit. I was able to find the tenant that left's new address by piecing together a public facebook post that coincided with an MLS listing getting rented in the same town at that exact time.

    @Marcia Maynard  I had no idea you could get the tenants next address that way, although we know from the postman that this tenant didn’t set up mail forwarding when she moved out the place like she did when she moved in.

    @Curtis Bidwell I had no idea about that tax form. My plan is to have the claim show up on their credit report, and then if they don’t pay it after a certain number of years in order to rent a new place or buy a car, file that tax form.

  • Houston, TX · Member since 2014 · 12 posts · 0 votes
    12y

    Thank you all for great advice and stories. The sum in question is around $2K. To me it's right on the fence between chasing and forgetting about it. From what I gathered here, it's most likely a dead end venture. I'm certainly not willing to spend too much time and energy on this.

    What exactly puts a delinquent account into one's credit report? Is it triggered by a judgement? I might just do that to make sure he has it in there for everybody to see until the time he pays me.

  • Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    Turn it over to a collection agent to collect for you, and they will report it to all four credit bureaus.

    Joe Gore

  • Residential Real Estate Broker · Chicago Suburbs, IL · Member since 2013 · 1k+ posts · 594 votes
    12y

    @Michael L. 

    per my above post, according to NTN and the documentation they provided, all I need to do is tell them the collection amount. I am required to have all of the documented info, receipts, invoices etc. in case they request it; from what I recall I don't think they need it upfront. You sign something saying that you have a real legit claim.

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