Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
Situation:
Tenant who was consistently late on rent payments was finally given the boot. After months and months of "giving the mouse a cookie", I'd finally had enough.
Tenant agrees to vacate, actually vacates by the date agreed, and promises to pay the back rent amount. While I realize I am probably already ahead of the game... I'm wondering, what happens now that tenant is disappeared?
I'm pretty good at finding people when need be, but the question is, what do I do once I find her? Anyone more familiar than me with landlord/tenant law in CA? Do I have any right to enforce the lease agreement? How does this usually end up in practice? I've kept meticulous records and have what I believe is a pretty good case, but if a judge will just side with "some poor victim of the economy" I'd rather not spend too much time on it.
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
15y
I'd say don't throw more money and effort into this. It's very likely that you won't collect from her, even with a judgement. Save an eviction suit for when you have to get someone out. Also, you did well in that she left the unit in good shape.
Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes
15y
Hi Jake, I'm interested in how this turns out. I have a tenant in FL who has been consistently late by 5 - 7 days, and this month has still not paid the rent. She's been served with a Pay or Quit notice.
How did you get your tenant to agree to vacate? Thanks.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
15y
You have to get a judgment to have anything worth enforcing. To get a judgment, you have to know where the papers are to be served first, so that you get a date in court. While they are living in your rental, you know where to serve them. Once they move, you might have a bit more difficulty with serving the papers.
Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
15y
Aly- I told her that she could no longer afford my place. She agreed. Needed some time to find a new place, which I gave her, and then she cleaned the carpets for me and even agreed to sign a promissory note for the back rent.
She then didn't show up to the Move-Out inspection (where she was going to sign the aforementioned promissory note), so that was my first clue that this was going to be more challenging than I wanted it to be.
She did however leave me all of my keys, garage door openers and parking permits (this was a condo).
Steve- so once I find her, what do I need to do to obtain a judgment? This is my first time.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
15y
For your first time, you should use an attorney that specializes in landlord / tenant (or evictions). They should be able to help you file the papers to get a court hearing. Then comes the fun part of serving the papers. Of course, you just might want to wait until you find the ex-tenant; just be aware that there are statue of limitations timeframes that you will have to adhere to.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
15y
Jake, find out what CA statute says about notice. It might be to the last known address. You can send it certified mail return receipt requested. If the letter comes back to you, do not open it. Let the judge open it.
If you must have a formal service provided, handed to them, you might be out of luck.
As Steve said, you have a timeline, small claims in civil matters is generally three years, but tenants may be specifically addressed and it could be shorter, I wouldn't think less than a year.
Your lease should include costs of collection. If you know you will be going down this road, better to start when they are still there, since occupancy has nothing to do with past due amounts owing. Then you can serve notices required.
If you do get a judgment, good for you, but now you have to collect. I have had a few in the past where I really didn't make much of an attempt to collect than what is required, like aletter saying pay me. You will need to seek payments to keep the judgment alive, if you make no attempt, you can lose the claim. The judgment will "expire" IAW state law, so you may need to renew it with a filing. Keep it current.
I have received money orders with a letter from who knows who, saying it was for full payment of the judgment years later. No one with an open judgment willbe getting a conventional mortgage (or government) unless the obligation is paid off. Some employers will not hire peoplewith open judgments. If they go in the military, it will be paid, just make the demand to the commander. Judgments screw people up if they are persons who try to improve themselves.
If they are deadbeats, it's a cost of doing business and is often throwing good money after bad to collect. You can always sell the debt to a collector too and walk away.
I don't recall ever hearing a tenant say they would not pay me, they all said they would pay.
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
15y
I'd say don't throw more money and effort into this. It's very likely that you won't collect from her, even with a judgement. Save an eviction suit for when you have to get someone out. Also, you did well in that she left the unit in good shape.
Real Estate Investor · Hudson, NH · Member since 2011 · 76 posts · 25 votes
15y
I agree with Jon. Don't throw good money after bad. In my experience, it will be unlikely that you'll be able to collect, even with a judgement. I currently have a $3,000 judgement from a recent eviction. Doubt I will ever see anything from it. I'd be happy to sell it cheap if anyone is game ;-)
Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
15y
So really it sounds like the calculation I should be doing is:
Amount Debt Collector Would Pay - Cost of Obtaining Judgment = X
If X is negative, don't pursue. If X is positive, pursue if I feel like it.
Anybody care to assign actual numbers to these? The amount owed is roughly $4,000, and I can make it far more if need be (adding in expenses, late fees, etc).
Real Estate Investor · Hudson, NH · Member since 2011 · 76 posts · 25 votes
15y
I've heard that debt collectors may buy it outright for around 10-15%. I've also heard of other scenarios where agencies work on contingency basis for 50% of the total.
I've never used any service like this, so if I am off target with the numbers, please feel free to correct me.
Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
15y
i'd be happy she left as agreed...around my parts, they don't leave til the sherriff locks them out, and they all know how to drag it out and extend it...these tenants know the laws better than most landlords
Investor · Chattanooga, TN · Member since 2009 · 1k+ posts · 903 votes
15y
Jake,
This being CA, which is tenant friendly state, you may want to actually consult with an attorney who handles evictions. It's more than likely you will get some pretty decent legal advice without having to pay for it. What is really important is that you send her an itemized copy of the move out report with all related charges within 21 days. This has to be sent and can be sent to the last known address. You do this because under CA law, you can actually be sued for damages and lose if you fail to do so, even though she owes you back rent.
Your move out report should contain all related expenses (cleaning, painting, etc.). In addition you need to compute a daily rate for rent. You do this by taking your monthly rental rate and dividing by 30. You take all days beyond 1 calendar month and multiply by the daily rate to get your total back rent owed, which should be up to and including the date you get possession. You can also deduct late fees here as well.
As far as the judgement goes though, you will not be able to collect late fees in court. A judge will toss your whole case out and you will have to refile. You can get back rent + attorney's fees+ court costs. You can do the paperwork yourself at the courthouse (someone there can help you) or hire an attorney. Keep in mind if you make an error and the judge catches it, you have to start over. That is the benefit to hiring the attorney. And as others have said, you will more than likely never collect, but getting the judgement also potentially prevents her from taking advantage of future landlords. I do judgements more as a matter of principle than anything else.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
15y
One thing about Jake's topic title:
Originally posted by Jake Kucheck:
Tenant Doesn't Want to Do Things the "Easy Way"
BIG mistake to expect that a tenant will do things to make it easy for you as a landlord. Break that habit of expecting that ASAP.
Originally posted by Brian Levredge:
...
As far as the judgement goes though, you will not be able to collect late fees in court. A judge will toss your whole case out and you will have to refile. You can get back rent + attorney's fees+ court costs. ...
To make this possible, you should have lease clauses, wherevere there is some added fee or penalty to be paid, that say something to the effect "tenant agrees that such fees are rent due to the landlord."
Once it is considered rent due, the judge should allow it in the judgment.
Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
15y
So what seems fairly clear is that I may be able to get a judgment but collecting on that judgment is not likely.
With that being the case, if I am able to actually locate the tenant, has anyone had success using the judgment as a bargaining chip? My guess is that tenants don't want open judgments, and probably have some money (having lived rent free for a few months), so I'm thinking something along the lines of:
Me: "Pay me the $4,000 you owe or I will file a judgment".
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
15y
There is a small chance you could get a settlement, but she probably does not have the money. Usually you'd offer the deal before you sue and win, rather than afterward.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
I think you should take Jon's great advice and move on, write off the small loss, it was very small compared to the loss of eviction and major tenant damage, you got off cheap!!!
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
@Jon - In TX, what is the notice protocol for serving a tenant late on rent? Here in CA, I could send a 3 day pay or quit notice once the tenant is in default( Due on first, late on 4th). Is it the same notice for TX?
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
15y
In TX it's a 3 day quit notice. Then you can file on them and the court takes 10-20 days to serve and then a court date is set within 7-10 days after that. This is from memory, so I might be off by a small margin. In a fast county you could have your judgment before the end of the month,
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
15y
Once you have a judgment, you can suggest that you will send the debtor a 1099C "forgiveness of debt" that will be classified as income, as well as report that to the IRS as all 1099 forms must be so reported. Any extra income can knock some of these renters off of some of the public assistance programs that they participate in, or reduce their eligibility for some programs.
Without the judgment, there is no "proof" of the debt. Had you received the promissory note from the tenant, and recorded it - then that might be enough to be considered a form of proof to send a 1099C.