Tenant did not pay- Martinsburg WV

[Bobby Scurlock]

Hey guys!

I'm pretty new to REI and my tenants didn't pay on time this month. My PM company sent me this yesterday (see below) and I'm unsure how to respond. Any advice on how to handle this situation would be extremely helpful. Thank you.

Hello Bobby, I wanted to touch base and let you know that we have received a notification from the tenant that both June and July rents will be late. One of the tenants had lost her job and they have temporarily fallen behind on things. June rent should be paid on or before June 24 and July rent - on or before July 15. An immediate eviction will be filed if they do not follow through with this arrangement. Please let me know if you have any questions.

[Marcia Maynard]

It will depend on the location of your rental property, the landlord-tenant law for that jurisdiction and the terms of your rental agreement as to when you can serve the tenant with a notice to pay rent or quit.

It also depends on your PM's skills in working with tenants and holding them to task.

It also depends on the tenant, how long they have been in place, how well they have performed so far, and whether this is a tenancy you feel is worth saving.

It also depends on your market and how well you can weather a turnover and vacancy right now.

So no easy answer. No guarantee the tenant is experiencing a "temporary" set back. No indication the tenant has exhausted all their resources.

Life can throw anyone a curve ball. Some are prepared for such and have a contingency plan in place to help them through hard times. Some don't.

Sometimes a tenancy is worth saving and being flexible pays off. Sometimes it doesn't.

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If I received a message like this, I would question how well the PM is doing their job. Based only on the information provided here, the PMs approach would not be acceptable to me. I would telephone the PM and have a serious conversation with him/her about the situation.

I would seek more information:

1. When did this tenancy begin?

2. How many people reside in the unit?

3. How well does the tenant take care of the unit? When was the last time the PM inspected the unit?

4. How often has the tenant been late with rent? If the tenant was late in the past, how did the PM handle it?

5. When did the tenant inform the PM that June rent would be late? [If a tenant informs me ahead of the fact, I am more likely to be flexible in working with them. If the tenant doesn't pay and waits until I contact them, then I will act swiftly to re-establish adherence to the terms of the rental agreement and serve legal notice immediately.]

6. If your contract with the tenant allows for a late fee, has the late fee been assessed and paid in previous months? Has the PM assessed the late fee at this juncture? 

7.  Has the PM informed the tenant in writing that the rent is late and now due with or without a late fee? Was such notification done with a formal "rent past due" letter and/or a legal notice to "pay rent or quit"?

8. When did the tenant lose their job? When will they be working again?  What proof do you have of that?

9. Has the tenant explored all options available to them for coming up with the rent money?  Has the tenant demonstrated that they consider paying rent to be their #1 priority? Has the PM guided the tenant about the importance of making rent a #1 priority and exploring all options? Loans from family members and friends, pawning belongings, temporary rent assistance from social service agencies, etc.?

10. What would it take for the tenant to pay something now, even if it is partial rent? Partial rent is better that nothing. In most jurisdictions you can accept partial rent and serve notice to "pay rent or quit" on the portion still past due.

11. Did the PM check if the tenant is current with payment of utilities? Are they paid in full? If not, when did the tenant fall behind? [Many tenants stop paying for utilities prior to not paying for rent. Some unpaid utilities can become a lean on your property.]

12. Did the PM go to the unit to check on the current condition of the unit? Is it in acceptable condition? Is the tenant taking care of the property? No unauthorized occupants? No unauthorized pets? No violations to the other terms of the rental agreement? [Many tenants stop caring for the property when they are on a downward tailspin. Before negotiating any agreement that allows a tenant to stay past the rent due date, make sure they are performing well in all other regards.]

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Note:  Evictions are hard on owners, property managers and tenants. If the tenant can't afford to stay, then they need to move-out. Sooner than later. Eviction should be the last resort. It's okay to talk about a payment plan if it is reasonable and likely to result in success. It's also okay to let the tenant know if they can't pay rent, then it's time to talk about a move-out plan. At a minimum, the PM needs to address this more swiftly and more effectively than what they have demonstrated thus far. What is the consequence for the PM if their leniency doesn't pay off? What is the consequence for you?