Non payment due to medical hardship

[Sandra Holt]

My tenants just called asking if they could meet with me regarding payment of their rent. They have been in the property for three months and twice their checks bounced. The husband has recently had some serious medical issues and because of that he is not able to work. The medical issues occurred right after they signed the lease. I understand their hardship but this is a business for me so any advice on how to handle what I should do regarding their non-payment based on a medical hardship is appreciated. Thank you!

[Amanda Davis]

.I would approach them about an agreed move out date and have them sign an amendment terminating the lease. This would allow to avoid an eviction on their record and you the costs
If an eviction process.

Also, there may be some agencies that will help them pay their rent. If they call the United Way they probably can give them a list of agencies that offer rent assistance. If they are a veteran, have them contact the VA. They might pay you the rent while they get on their feet

Good Luck!

[Greg Carrier]

If they did not let you know before they bounced two checks to you, you can't trust them.  I would evict for not payment unless they meet you with a good check.  There are lots of people out there with troubles and I work with them if they are honest with me.  I have no time to deal with those who are not.

Good luck!

[Sandra Holt]

Thanks @Amanda Davis for the advice.  I just met with the tenants and we've agreed for the rent to be lower by $300 for November and December and for them to pay $100 more in rent for January through June to pay back the $600.  I'm also asking them to sign an addendum to the lease (thanks for that advice Amanda) stating that if they cannot pay the rent within 5 days of the due date then they agree to move out by the end of the month.  It is a better solution than going through eviction proceedings and besides this family really is trying to get back on their feet.

Thanks again for the advice.

[Nicole A.]

You probably shouldn't even accept checks from them anymore. Electronic payment or money orders only.

Why do they need to meet you in person? Just to talk? Unless they're giving you cash (and even then, they can pay another way), I wouldn't spend your time driving out to meet them in person. I also had a tenant fall behind and asked if we could meet in person to talk. There's nothing we can't just talk about over the phone. Not to be mean, but it's a waste of time. They might just want you in person to hopefully more easily play on your emotions.

Offer for them to move out immediately (within a week, tops). Have the agreement in writing and signed with the date to move out. Perhaps at the same time, go ahead and just start the eviction paperwork so that if they don't take the offer or they don't move out, you've at least got the process started.

[Nicole A.]

I see your latest post. Did you also put in writing the reduced Nov and Dec rent?

Also, just so you know, just because they agree to move out if they can't pay doesn't mean they will. Just be ready to make use of the eviction process to show them you're serious.

[Doug N.]

Sandra- 

Sorry to hear of your situation. 

There are some important tells here, starting with the bounced checks and continuing with the missed rent and medical story, and ending with a 35-50% (I'm guessing) rent reduction. 

It sounds like you are a nice person, and it sounds like they know this - quite well. 

It also sounds like they received their rent reduction, yet you did not (yet) receive your signed stipulation of move-out, etc. Why is this? Were they not able to sign it when you met? I am predicting another meet will not take place - for various important reasons.

They *are* trying to get back on their feet, and they are using your good graces to do so. 

When I hear an excuse, I always try to think of the reason. Here, I wonder how a serious medical issue (one that precludes any work by the husband)  suddenly appeared right after signing the lease. It may be useful to re-frame this issue as what is is: a non-payment based on a story, not based on any medical hardship. (And yes, an issue like this is possible... but hardly probable). This theory gains traction when viewed in full context - bounced checks, etc. 

I am pro-humanity, and even more pro-self (and fellow BPers!). I believe stories when they are presented earnestly and openly, sometimes with documentation -  or at least a coherent context. 

Here's a simple test: ask them for the lab paperwork on this condition. Anything less than a folder full of papers will tell you everything. And... the fact that you have to test them at all can tell you what you needed to know in the first place. 

Best of luck, and please do let us know what happens!

[JD Martin]

I hope it works out but my gut says in 2 months you will have an empty house and no money, and they will "slip out" in the middle of the night. I have worked with the public for many, many years, and I have heard so many versions of this sob story I could probably use it myself if I ever needed to..What does medical hardship have to do with bounced checks? Either you wrote a bad check, or after you wrote the check and knew you wrote the check, you spent the money that was supposed to cover that check. Who stiffs the landlord before the hospital or doctor? 

[Nicole A.]

Very good points by both JD and Doug. I have also had tenants give medical emergencies as excuses for late rent. Then they promise to have it paid by a certain day. Of course, nothing comes. My mom passed away about a year ago, yet I still made all of my mortgage and other bill payments on time.

Don't be too nice. Don't give too much extended time or favors. You are just as much a business as their electric bill, cable, etc. I bet they don't get such nice extensions and favors from those!

[Jennifer T.]

Originally posted by @Sandra Holt:

Thanks @Amanda Davis for the advice.  I just met with the tenants and we've agreed for the rent to be lower by $300 for November and December and for them to pay $100 more in rent for January through June to pay back the $600.  I'm also asking them to sign an addendum to the lease (thanks for that advice Amanda) stating that if they cannot pay the rent within 5 days of the due date then they agree to move out by the end of the month.  It is a better solution than going through eviction proceedings and besides this family really is trying to get back on their feet.

Thanks again for the advice.

Just out of curiosity, what is going to be different next year that isn't true now?  Is his supposed disability short term and he will be back to work next year?  Is she taking on more work to make up the shortfall in their income?

Hopefully you have asked and know the answers to these questions.  Otherwise, they are just going to be digging themselves deeper in the hole with you.  And end up moving out anyway because they still don't have the full rent plus $100 in Jan., except they were able to put off their move out date by two months by getting you to agree to a lowered rent for two months that will supposedly be paid back later.

I'm not saying it won't work out, just pointing out how it can easily turn ugly for you.  And also making sure you know their full situation.  Because if he is still going to be unemployed in Jan., they still won't be able to pay.

It's okay to be sympathetic.  It's okay to be helpful and work with them on a move-out plan if they can no longer afford your apartment.  But, at the end of the day, you need to remember you are running a business.  Not a charity.  And the bottom line is...no matter how great a people they are, no matter how sympathetic their situation...if they can't afford the rent, they need to go.

[Sandra Holt]

Thanks so much for the thoughtful responses.  Here are more facts of the story:

The mother of the husband looked at the house since she lived in the neighborhood already and told me that both prospective tenants are nurses.  Two weeks before tenants move in, mother calls me and tells me that she is flying to be with her son who is in the hospital with meningitis.  The tenants move in but a few days after their move in date.  I speak with the husband and he is in terrible shape.  He couldn't walk and could barely speak.  He's much better now but because of the meningitis, during his recovery he couldn't work at all and his wife couldn't either because she had to stay home and take care of him.  Wife has a full time job staring in November as a nurse and Husband will be cleared to work full time in January and he currently has a part time commission type job. 

Tenants say that they will be fine by January because Wife's new job covers all their fixed expenses; they just need a few paychecks under their belt to get back to normal.

I am not a sap but I know that Husband was very sick since I saw it with my own eyes. 

I think that by asking them to sign an addendum stating that they will move out if they are more than 5 days past their rent due date should show them that although I'm sympathetic, I'm not a pushover. 

[Joel Owens]

Been through it all before on a much larger scale. 90% plus this never works out. You are kicking the can down the road in hopes of a recovery. I call it snowballing and it's a critical item I recommend no landlord does. If you work with someone the payment should be in before the end of the month in full so none carries over to the next month (snowballing). 

Think of all the people that file bankruptcy. Over 90% never finishes the workout plan and the plan gets dismissed. If they can't pay 1,000 a month for a mortgage then paying 250 on top of that to try to catch up  isn't happening.

Get ready for an eviction coming your way. It's October now. If you mess around for a few months and evict around the holidays get ready for long vacancy before you re-lease again.   

No legal advice given.

[Russell Brazil]

@Sandra Holt If they are bouncing checks, you need to only accept electronic payments or money orders from them. If they are bouncing checks.....they are not the kind of people who are going to pay that extra rent.  You should never agree to accept reduced rent to be made up later.  Ive accepted partial rent, and allowed people to pay the rest late (which isnt the best idea).  They are going to at best pay you the reduced rent, and you will never have that amount made up.

Where is the property located? I ask because if it is relatively near to you, an RN is not going to have trouble paying the rent.

If the property is local to you, I recommend familiarizing yourself with marylandevictionsonline.com. That is who I use to handle my evictions.  The cost more than they should, but I hate dealing with evictions and going to court etc.

[Sandra Holt]

@Joel Owens, I thought about what you wrote and because I have $2,000 as a security deposit, if they don't make up the $600 snowballed amount, then I'll evict and take the $600 from their security deposit.  Am I missing something?

[Sandra Holt]

@Russell Brazil, I am only accepting cash or certified funds and they've agreed to that.  

Thanks for giving me the website to the evictions company.  I'll definitely check them out.  

[Ndy Onyido]

@Sandra Holt.

Treat this as business and not charity. I believe there is a difference between business and charity: As a nice person, you can even choose to subsidise their rent for their next rent-SOMEWHERE ELSE, but they have to go!. Charity will not pay my next mortgage on the property.....
My one cent.....

[Jon Holdman]

Here's the thing to consider in these situations.  Will these people be able to go to the grocery store and get a discount because of these issues?  Gas station?  Etc.?  You, as the landlord, are no different than any other product or service these folks consume.  You need to treat the situation the same.  Its not your responsibility to become the charity that tries to help them with their situation, even if the situation is real.  I'm with others.  Its very likely you're just delaying the problem.  NEVER assume you'll be able to use their security deposit to make up back rent, because there may still be damages when they leave.  I suspect the best outcome is that they disappear.  The more likely outcome is they will eventually have to be evicted or encouraged to leave with an offer of their full deposit and maybe more cash.  Worst case is they really are professional tenants and know how to milk the system and get a few free months out of you.  Any more hiccups and you should start the process of getting them out.

More generally, you MUST avoid the tenants problems becoming your problems.  You're selling housing.   You expect your customers to pay for what you're selling.  If they can't, they need to do something different.  Tenant drama is not your drama.  Don't let their problems become your problems.  If you cannot say "I'm sorry, but the FULL rent is still due as scheduled", the consider getting a PM.

[Doug N.]

@Joel Owens and @Ndy Onyido as far as I know, RNs make ~$35 per hour. Do you hear any false notes here? At 4k a month after taxes for a single earner, how are they so far in the hole just a 3 months after signing the lease?

Also of note is the fact that both of them were unemployed at the time of signing - which you knew about, right? And the mom who has money for flights can not get $600 together to avoid an eviction. 

Ok, now I am getting a headache just thinking about this tangled web of sorrow and deceit. 

I do wish you the best of luck, and perhaps these experiences will serve you well in the future. 

[Sandra Holt]

Well, I feel like a heartless ***, but I told my tenants "no deal" and that they owe the full amount of rent.  

Thanks to all who gave me opinions on this issue (even if the advice was hard to hear :).

[Nicole A.]

It's tough to be the "bad guy", @Sandra Holt, but in the end, they still have responsibilities. You can still be friendly and offer your condolences, but just stick to your lease standards.

[Rich Schmidt]

I look forward to hearing how this turns out @Sandra Holt. I hope they're able (perhaps through family? or other charities in the area?) to pull the money together and catch up on rent. I appreciate @Jon Holdman's comments comparing this to their other expenses (food, gas, etc). If they need help coming up with the money, there are people and places they can turn to for help to make sure they can pay their rent.

I manage a rental house for our church and had a tenant who started missing rent payments, always with a very plausible story... until finally we had to evict him. We lost around $6k on the deal that we'll never see because I kept giving him chance after chance. I wanted to be gracious! It's a church, after all! But really I was just being gullible. I won't make that mistake again. I'm not saying I won't be flexible... but not THAT flexible!

[Jennifer T.]

Originally posted by @Sandra Holt:

Well, I feel like a heartless ***, but I told my tenants "no deal" and that they owe the full amount of rent.  

Thanks to all who gave me opinions on this issue (even if the advice was hard to hear :).

Now I'm curious if they will magically be able to come up with the full rent for the next two months.  Since it does sound like there was a legitimate problem as opposed to them being professional tenants, I wouldn't be surprised if they find the money now.  They just might have to go through less pleasant channels now, like getting a loan from a family member/friend, a cash advance from their CC, and/or a payday loan (since the wife starts working in Nov.).

Keep us updated!  And good for you for standing strong.

Here is my "I'm a heartless ***" story.  I bought a duplex in August that had the seller's disabled brother living for free in one of the units.  My first order of business after closing was to pop on over and serve him with a 30-day notice to vacate. 

He had a friend of his there to also speak with me and, although she was obviously on his side, she was actually a rational individual who understood the situation and in essence acted like a mediator.  Granted, I could have just served the notice and left and that is what most people would have done, but I knew he'd be upset and at least wanted to give him the opportunity to vent.

He was furious...though I think more at the situation than at me...and couldn't even talk to me.  So, again, great his friend was there.  "He'd lived in the house for ten years", "He didn't want to move...but only got $530/month in disability and really couldn't pay any rent", "There was no way he could move in 30 days because he is constantly in the hospital", "He was going to end up in a homeless shelter if I didn't give him more time", etc.

I was nice, I was calm, I patiently listened to it all without interrupting, I was sympathetic.  But I also made it very clear he needed to be out in 30 days.  I offered cash for keys if he was out in 30 days (was going to do that anyway).  I also pointed out it was not necessary for me to do that, but I was trying to make things easier for all of us.  I even told him, "I realize it's going to be hard for you to move after living here for so long, but this is now my house.  I'm happy to and required by law to give you a 30-day notice but, the fact of the matter is, I'm not a charity.  I'm a small-time investor and every day you are living here is money out of my pocket."

Here is what I wanted to say (but didn't):

--I realize you are bummed about losing your 10-year long free rent gravy train.  I would be too.  But you had to know it couldn't go on forever and now its over.

--To his friend (though I liked her) who said he would be homeless if I evicted him.  "And that has what to do with me?  Homelessness is tragic and I hope that doesn't happen to him.  However, I see homeless people all the time, but I don't invite them to live in my house.  He isn't my friend.  He isn't my family.  We are almost strangers to each other.  So, if you don't want him in a homeless shelter, why don't you take him in?"

BTW, he was out in 30 days even after swearing multiple times there was "no way".  And he found a room to rent, so no homeless shelter either.

[Joel Owens]

People can say all kinds of things. What some landlords do is tell the tenants the building has to collect rents as the bank requires it. Basically you are pushing off to a third party they cannot contact or try to manipulate.

This way you are not the bad guy. Don't feel bad about things. Imagine 2 plates with food on them. One is their plate and one is yours. If you don't eat you starve and croak. That is what happens to your investment and your business when you don't feed it.

Tenants will thank you,be your best friend, and pump your ego to the moon if you do what they want. The minute they know you will not be manipulated their true colors show. If the tables were reversed you better believe when you the landlord gets in trouble for running low on reserves and paying your mortgage note the tenants will say "tough not our problem".

You put a process in place and condition your tenants to perform with paying rent on time. This is especially true with multifamily where word travels between tenants fast if someone gets over on the landlord or gets a concession etc. You want the word to be that you as the landlord have a " no pay, no stay " policy.  

[John Thedford]

@Sandra HoltI think you are being too easy. I see you have a heart of gold...and that is admirable. Too many people in this world don't.  However, I believe they are playing on your emotions and goodness. It IS a business and if you fail to run it as such it will cost you. My suggestion; ask them to borrow funds from their family, pay you current, no longer accept checks, and stand your ground.

[Account Closed]

Originally posted by @Sandra Holt:

Thanks @Amanda Davis for the advice.  I just met with the tenants and we've agreed for the rent to be lower by $300 for November and December and for them to pay $100 more in rent for January through June to pay back the $600.  I'm also asking them to sign an addendum to the lease (thanks for that advice Amanda) stating that if they cannot pay the rent within 5 days of the due date then they agree to move out by the end of the month.  It is a better solution than going through eviction proceedings and besides this family really is trying to get back on their feet.

Thanks again for the advice.

Not sure where you got the idea about signing the addendum about moving voluntarily.  It could set you back a whole month.  Having them sign away their rights to an eviction isn't a thing.  It may be helpful in that the tenants may believe their agreement is binding and cooperate by moving.  But if they aren't gone, you're still going to have to evict, and that's after you've waited a whole month to see if they move.  

[Anthony Gayden]

@EVERYONE

Thanks for telling the OP what I was going to say. You saved me a lot of time writing.