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Updated over 8 years ago, 04/22/2016
One of 3 tenants lost job - options?
I'm renting out the other side of my duplex and there are 3 people on the lease. One of them just called and said he can't afford rent due to job loss and will be moving out. He said he's looking for a sub-lease already. What are my options (I'm a total noob!)? I'm guessing I should tell him (and the other 2) that I'm still expecting full rent so either they can figure out between the 3 of them how to pay it from now on or allow him to find a sub-leaser who will sign a lease with me and pay his portion of the rent each month. Right?
Or should I make it easier and just accept 2/3 rent and not risk getting into a weird situation with a random 3rd person causing issues with the other 2?
Thanks for any help!
Originally posted by @Nicole A.:
Read over your lease. It possibly/probably states that it is "joint and several liability in the case of multiple Tenants."
This means that everyone is responsible no matter what. You don't care how they divide up the rent. That is their business.
Also, what does your lease say about subletting?? Does it allow it? And you need to have the final say in who this person replacing the one tenant is. If your lease allows it, I would suggest you change your template for future usage to say it is NOT allowed.
Basically, this is their problem. Don't let them try to make it your problem. If they are late, you file for whatever the first step of eviction is quickly. Don't give them "another week to pay." You'll waste time. File, and if they pay, you can cancel the eviction.
If one person moves out, same deal. It doesn't matter. Physically there or not, they're on the lease.
I would caution following this advice. Almost every state has some form of common law (case law) modification to enforcement of joint and several liability. Whether a particular state's exemptions or exceptions kick in should be discussed with, and ONLY with, a licensed attorney in the state that you operate in. Please speak with an attorney before you take any actions in a court of law. You may jeopardize your ability to collect on past due rents depending on how you structure the case.
For instance, some states prevent you from collecting on a joint and several obligation against the other parties, because there is an inferred "discharge" of that liability by pursuing the obligation against any *one* of them. (Or even a discharge against the remaining obligors by virtue of failing to pursue a claim against the original defaultee) Virginia, luckily, does not have that rule. However, I would not be surprised if your particular state DID have that rule. Never take online legal advice from strangers.
"Read the lease" is an incomplete and often erroneous approach to Landlord/Tenant problems, as leases may often contain illegal material based on how a particular state treats Landlord/Tenant rights.
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@Matthew Kreitzer Well, I'm sure that most likely, the original poster has had their lease written by or reviewed by a local attorney. If so, then yes, "read your lease." I doubt the original poster just wrote up a lease all on their own.
Thank you for finding a 2-week old post to "correct."
Are you a real-estate attorney or do you specialize in another field? How long have you been an attorney? What is your experience with landlording again?
Originally posted by @Nicole A.:
@Matthew Kreitzer Well, I'm sure that most likely, the original poster has had their lease written by or reviewed by a local attorney. If so, then yes, "read your lease." I doubt the original poster just wrote up a lease all on their own.
Landmark cases happen with frequent regularity. Something that may have been legal in June could easily be overturned by late September. It happens quite frequently. Staying abreast of all these changes is the job of an attorney, and even if his lease had been reviewed and drafted with an attorney at the time, I wouldn't be surprised if the law had changed significantly since that time.
That is another reason why it is always the best legal answer that you should seek out a local attorney to help with your legal problems.
Also, please note, reading the lease would be incomplete even if he had consulted with an attorney. I was discussing the common law problems with joint and several liability among the various states. This is an issue that wasn't adequately conveyed to the OP, which illustrates the dangers of taking unlicensed advice. Even if a joint and several clause is enforceable, that doesn't mean you won't jeopardize your case by filing against one of the parties to the exclusion of the others, or even failing to have proceeded against the principal at issue. There are some states that have rules that require you to bring a suit against the breaching party prior to bringing suit against the other tenants.
If someone were to have taken your advice without consulting an attorney, there is at least one or two instances in which they would have gotten "bench slapped" by the Judge or opposing counsel. They would be out their security deposit and their case would have been dismissed with prejudice.
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You're simply exaggerating that you wouldn't be surprised that a law had changed significantly between say June and September, as you used in example. It's simply exaggeration because this is the only thing you keep harping on. Laws do not usually/always/typically change that often.
For example, I've been a landlord for about 5 years now in Baltimore County (longer in another county), and only two small rental law changes have been made in that entire time. That is 2 changes in 5 years rather than your claimed minimum of one change every few months. Oh, and it wasn't exactly rocket science to hear about the law changes.
The OP wouldn't have been "bench slapped." Stop trying to use your title to instill fear into the OP. You have no idea that they would be "out their security deposit and case dismissed with prejudice." I don't even know how you came up with that.
You are not a real-estate attorney. You haven't been an attorney for all that long. You've never been a landlord. I get it. You are proud of your job. It's a great title to have. But stop with the high-horse posts.
Originally posted by @Nicole A.:
You're simply exaggerating that you wouldn't be surprised that a law had changed significantly between say June and September, as you used in example. It's simply exaggeration because this is the only thing you keep harping on. Laws do not usually/always/typically change that often.
For example, I've been a landlord for about 5 years now in Baltimore County (longer in another county), and only two small rental law changes have been made in that entire time. That is 2 changes in 5 years rather than your claimed minimum of one change every few months. Oh, and it was exactly rocket science to hear about the law changes.
The OP wouldn't have been "bench slapped." Stop trying to use your title to instill fear into the OP. You have no idea that they would be "out their security deposit and case dismissed with prejudice." I don't even know how you came up with that.
Once again, a prime illustration of how people who are not licensed attorneys are absolutely wrong about how the law works. Although statutes do not change with regularity, it is most assuredly the case that case law can, and often does, change every other month. Or at the least, a new case is handed down that could dramatically change the analysis in a given case. Why does the law function this way? Because of basic principles of case application to unique facts.
This is a further illustration of the problem you had in the other thread. The plain language of a statute is not where you end the analysis. Case law is where true analysis really begins.
Attorneys subscribe to listservs and practice groups in order to get the most recent and up to date case law and information. We have to stay abreast of these changes, because we can easily lose our case if a Judge in a city two hundred miles away suddenly decides he doesn't like current case law.
It may very well be the case that since you've started landlording, the statute hasn't changed more than twice. That doesn't mean there haven't been numerous cases that have been decided in those five years. When was the last time you did a Key Cite or a Sherpardized case search to show how current cases are applying those laws? You probably haven't, because it is likely you don't even have access to legal research databases.
Yes, it is quite likely that the original poster could lose his case over some case law that was decided last month. That is why he should hire an attorney. Once again, this isn't me personally attacking you, I am merely explaining that there are aspects of the law that you don't know. You are not an attorney. It is unlikely that you do case law research on a daily basis.
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Rent court isn't typically that difficult of a "case." You make it sound way more involved than *typically* is.
You're right, I haven't looked at how all other similar rent-court cases have been handled. Why would I? I see how my cases are doing and they're consistently in my favor because I know the local laws and I have a strong lease that reflects those laws (that I change as needed). Also, while waiting to be called forward, I get to listen to all the other rent court cases called before me. I hear those outcomes. No research required.
In addition, yes, you're right, a judge could just decide against something on a whim. But typically, any decent judge decides by what is written in the law because again, typically, these cases aren't really worth their time to hem and haw over. Rent is either paid or it's not paid. It's pretty typical stuff.
The OP doesn't have a difficult situation here. This isn't some huge lawsuit. People don't typically need to do "case law research on a daily basis" for rent court.
After a quick glance, Texas and Iowa evictions are very similar in that the cases are handled at the small claims court(Justice of the Peace in Texas) These are informal courts and a landlord is just not going to get "bench slapped". JP's are elected officials and more often than not are not even lawyers
All tenants on the lease will have joint and several liability in Texas unless otherwise written into a lease
Originally posted by @Nicole A.:
Rent court isn't typically that difficult of a "case." You make it sound way more involved than *typically* is.
You're right, I haven't looked at how all other similar rent-court cases have been handled. Why would I? I see how my cases are doing and they're consistently in my favor because I know the local laws and I have a strong lease that reflects those laws (that I change as needed). In addition, yes, you're right, a judge could just decide against something on a whim. But typically, any decent judge decides by what is written in the law because again, typically, these cases aren't really worth their time to hem and haw over. Rent is either paid or it's not paid. It's pretty typical stuff.
The OP doesn't have a difficult situation here. This isn't some huge lawsuit. People don't typically need to do "case law research on a daily basis" for rent court.
"Rent Court", as you call it, can be as difficult a case as the other side makes it. If the other side hires an attorney, you could easily lose. The reason you win so often is because Debtors don't know how to properly put up a fight, introduce evidence, or make counterclaims against their landlord. Rent Court cases are contract actions, and as such all defenses to contract are technically available to the renter. Did you make some deviation to the lease agreement yourself? Did you make some oral modification to the lease terms? What was the reason for the underlying contract breach? Is there a prima facie unconscionable term in there? A trained eye, such as an attorney, would probably tell you that many of your cases would have severe deficiencies in them.
As an attorney who regularly handles these kinds of cases for local real estate firms, I see this all the time. I've had to tell the landlords "no, you're going to lose because your 'accounting' isn't up to snuff" or "no, you're going to lose because you did not provide a certain type of required common law notice" or "no, you're going to lose because you also breached the agreement in some form or fashion".
Much of my advice sounds like doom and gloom, because I am trying to stop that one case from coming along in which someone is going to get blindsided by the other side hiring an attorney, and then they suddenly find out the procedure they've been using for the last few years is entirely wrong, and the tenant ends up getting treble damages against the landlord in a counterclaim. There goes your operating budget.
I've definitely won cases in general district court that, if the other side had an attorney, I would not have won. As an attorney, I can admit that because I know the law of Contracts and can recognize when there are issues with my case.
I urge you, like everyone else, to seek out an attorney.
Originally posted by @Greg H.:
After a quick glance, Texas and Iowa evictions are very similar in that the cases are handled at the small claims court(Justice of the Peace in Texas) These are informal courts and a landlord is just not going to get "bench slapped". JP's are elected officials and more often than not are not even lawyers
All tenants on the lease will have joint and several liability in Texas unless otherwise written into a lease
In most jurisdictions, mine included, if the other side hires an attorney they have a "removal of right" from small claims court. Since I am not licensed in either Texas or Iowa, I am not going to comment on whether such a removal of right exists, but I would not be surprised if there was.
Can we all just agree to disagree or something here? Honestly I'm just sick of the email notifications and nothing being said here today is very helpful. I'm thankful for others walking me through the initial conversations I needed to have with my tenants. If something else goes bad in February I might need some "NON-LEGAL" advice at that time :) Until then I think I'm okay.
Thanks! Have a good week!
@Ryan King I've always avoided renting any of my properties to roommates or even unmarried couples for this reason unless one of the tenants is able to qualify for the entire rent amount and willing to be responsible in the event the roommate situation changes. As you can probably guess, these applicants usually move on to a different property. I'm curious how you were able to resolve this situation if you'd like to post an update? I feel like I've been missing out on a large share of the available tenant pool with my policy, especially as rents have skyrocketed in my market, wondering if I should start doing things differently.
@Julie O. I allowed a friend of the 2 that were staying to move-in in-place of the 3rd that moved out. I'm sure a lot of people will say that was dumb but it worked for. I had everyone sign a Lease Termination Agreement and then had the new 3 sign a brand new lease so technically it wasn't a sub-lease which I felt more comfortable about. It's worked out great, no problems at all.
I can't imagine requiring one of the tenants to qualify. I could never get the rent I want from young professionals or college students if I did that (which is what my area is mostly). I think the risk does go up but if someone has to leave you just make them terminate the agreement and find a new group. Simple as that.
@Ryan KingThanks, Ryan, I'm glad this worked out for you! I like the idea of terminating the lease and resigning all of them. I should clarify that I'm still getting top rents and had over 65 applicants in three days last time I had a vacancy. So yeah, I'm missing out on a lot of potential applicants, but it hasn't been a problem yet. Our market here in metro Denver is just insane. However, my daughter is starting college in a year, I was thing of investing in that town and renting to students. I have no idea how to rent to roommates, your advice has been very helpful!
@Julie O. oh wow, yea sounds like you're just fine as-is! That would be a good opportunity for you. I've also heard of people around the college renting by the room. That way if something goes wrong with one, you still get rent from the others. Not sure exactly how that works (idk if it's separate leases or 1) but it's another option. Good luck!