Handling Eviction in Rhode Island How to protect your investment?

Question

Recently Bought a turn key three family that I'm house hacking  and inherited two tenants with the purchase. Its the last month to their lease (February 28 is last day) and surprise surprise they're not paying. Currently the 7th.

Im still new to investing and property management. Any tips on finding a good Lawyer if I have to get them Evicted? Should I even go to a lawyer? My lawyer that closed on the house doesn't handle this type of stuff but he was saying all the eviction will do is maybe get them out but it won't get you your money. Maybe?? they didn't pay why maybe?   The eviction will also be on their record but if they are getting evicted then their record is probably not the best anyway. What happens if they reck the place when they leave I ask? Then you can take them to court but good luck collecting.

In short I'm screwed? At least that's what I got from the convo. I read the BP's book on property management and felt so confident but now it seems like there is no real way to protect your investment. Am I missing something ?

Anthony Thompson · Answer

@Marc Fin since this sounds like your first property and eviction, I would definitely recommend the use of an attorney to guide you through the process and make sure you don't make any mistakes.And especially because you already have one tenant sending you screen shots of the laws - not a good sign.If you send notices at the wrong time you can be forced to restart the eviction process which can cost you one or more months, giving the tenant more free living at your expense.As far as getting them out, you could try "cash for keys" which is offering them the same amount you would pay an eviction attorney, to leave with zero damages. It's tough to get it to work, but if you can it can be the most effective option (as galling as it may be).I would not try to enter the apartment. While technically you can do so with 48 hours notice, it sounds like one or both units are being difficult so I don't know what you're going to gain from it. If they're going to damage it on the way out, seeing the condition now isn't going to change it, and insisting on getting inside might only make relations worse.You do have the right idea that you probably won't ever see any money from these people.At some point your eviction attorney will ask you, "do you want a monetary judgment, or do you want possession?" (i.e., the apartment empty so you can re-rent it). The correct answer is possession. You want to be able to start over with new tenants, that you screen yourself, as soon as possible, and a judgment against people with no assets is useless. (And further, if their income is below a certain level, it's essentially uncollectible.)For your next tenants, yes my understanding (I'm not an attorney) is that it is illegal to collect more than one month's rent in a security deposit.I would also consider telling the next tenants that you aren't the owner, you're just a co-owner or manager, and someone else makes the real decisions. That way you can always blame a higher power. Can make it easier with some tenants.Also you should definitely familiarize yourself with RI landlord tenant law by reading the RI Landlord-Tenant Handbook.

Anthony Thompson · Answer

Also a minor point re: 20 days: my understanding is that the 5 day demand letter can be sent after 15 days of lateness, which many people interpret to be the 16th, but depending on how you read the law, you're safer with the 17th and that's what I've always used.

I also believe that if the tenants are habitually late, and you warn them repeatedly that they're violating the terms of the lease, you may be able to evict them for "reasons other than non-payment of rent" (which is a slightly slower type of eviction often used for things like repeatedly disturbing neighbors).

You'd also want to be careful not to let them basically change the due date by always paying late, thus establishing (by repeated practice and your not informing them of lateness) a later due date by practice.

But these are nuanced issues, not really germane to your current situation but something to keep in mind for the future and when discussing evictions with an attorney or other experienced RE investors.

KEVIN FLYNN · Answer

Contact  the tenants, maybe they don’t know where to send the checks, maybe they paid last owner last months rent, maybe they told last owner to just take last months rent out of security deposit.  Lots of factors, don’t run to a lawyer just yet, see what they say first.  Then go from there.  Let us know what they say

Jason Boulay · Answer

There's not all that much you can do to protect the condition of the inside the of home.  There may be damages and that goes along with inherited tenants and evictions.  You hope that when you bring new tenants in you avoid or reduce those chances going forward through your screening process.

Do the terms of the lease automatically renew or have the tenants give notice to vacate or have you sent a termination of tenancy?  It sounds like you expect the tenants to pay rent and vacate at the end of the month, but that may not necessarily be the case.

As @Anthony Thompson said, the safest day to send your 5 day demand is on the 17th of the month.  I have been sending mine out on the 16th and haven't had any issues in district court in Warwick.

I've worked with Sean O'Leary with O'Leary Murphy Law out of East Greenwich for years.  He focuses on evictions, among other things.  For all my evictions, I've gotten possession and a money judgment, not one or the other?

Don't refund the security deposit to your current tenants early.  The point of the security deposit is to cover any damages to the unit or cover any outstanding balances at move out.  You are required to refund the security deposit within 20 days of move out provided that you have been given a forwarding address to send it to.

Anthony Thompson · Answer

@Marc Fin sorry I missed your question last night, but just posted a couple of eviction attorney names in my last post.

I built my team by attending the local real estate group that meets monthly in Warwick, getting to know some of the experienced investors, and asking around.

When you start to hear the same names repeatedly you get a sense of who are the main people you should at least consider working with.

Then of course, when you find good people (attorneys, contractors, etc.) you ask them who they recommend. Because good people who show up on time and do good work, don't have patience for working with people that show up late, make excuses, and do shoddy work. So they tend to work with other good people.

Screening is the primary way of protecting your investment because it's 100% easier to prevent a problem than to try to mitigate damage (figuratively or literally) after you have one.

Obviously get a security deposit, though you're limited to one month's rent as I mentioned last night.

That sound basic, but I can't tell you how many tenants want to move in and then give you the security deposit over time on a "payment plan". NEVER DO THIS. You will never get that money.

If someone can't afford the first month's rent AND a month's worth of security deposit, they are going to have problems paying you the rent on time.

Do NOT let them move in unless they give you first month's rent and full security deposit, up front, before moving in.

Also, insist that this initial money be cash or money order ONLY, even if you want future rent payments to be by check. That way, you don't let them move in with a personal check that bounces, now you have to evict them.

(You can, if you wish, say that you don't normally accept cash but move-in money is a special exception, and you will be happy to provide a receipt if they want to pay that way rather than a money order.)

To my knowledge, insurance doesn't normally cover tenant damage. Even if it did, chances are that it wouldn't exceed your deductible. But I don't think it's usually covered (check with your insurance agent of course).

It's not usually worth going to a collection agency, usually like I said, you have the choice between a money judgment and possession and you should always choose possession.

However if the tenant doesn't show up and you can get both, sure, get the judgment along with possession and then feel free to take it to a collection agency. Just understand, the chances of actually getting any money from it are extremely small.

A typical eviction costs, if you use an attorney who does it all the time like Steve or Murray, somewhere around $500-600. Other attorneys that do it less often tend to charge more, because they're not going to be in eviction court that day anyway.

As far as cash for keys, it's a delicate operation as you picked up on. But if you can get them out in the near future (end of this month) with zero damage, for the same cost as an eviction, I'd mark it as a win.

Thomas S. · Answer

Post notice to do a inspection, take a friend along and take plenty of pictures. Begin the eviction immediately. If you do not there is no guarantee they will leave. Depending on your state small claims court system you may be able to roll the eviction ruling into small claims and garnish their wages.

Nelson Taylor · Answer

In Providence I have used Murray Gereboff. I think he’s still practicing. Old and sloppy guy but gets the job done for a good price.

Re: inheriting tenants, I have clients who put in two offers. The higher one includes the entire property vacant.

Good luck!!

Jason Boulay · Answer

@Marc Fin Just to clarify the situation, you sent a notice on 15 Jan 2019 stating that the rent will increase as of 1 March 2019?  If that is the case, that may be considered a lease renewal offer.  By not vacating at the end of the lease, the lease term would renew on a month to month at the rate specified in the letter.

Depending on the terms of you lease, you may be able to charge court costs and legal fees associated with an evictions to the tenant.  You'd have to review the terms of the lease to see what is permitted in the event you are challenged by your tenants.

You can use the security deposit for any legitimate outstanding balance.  You must send the remaining refund and/or statement listing the damages deducted from the security deposit within 20 days of move out.  Fail to do so may leave you liable for damages of twice the amount due back.  You simply cannot take the security deposit to cover the outstanding balance without notifying the tenant in writing of the damages even if they may be aware.

Be sure to get a forwarding address from the tenant.  It's a good practice to have all occupants sign a vacate form in writing that they are vacating the premises on a particular day - nothing verbal.  There should be a spot for them to provide a forwarding address on the vacate form.

Akeim Fin · Answer

@

Jason Boulay

That is my concern, that they will just pay after I send the 5 day notice but before the eviction then do the same thing next month dispite the lease coming to and end. I sent a notice that the rent will increase on Jan 15 and I feel like that’s what started the entire thing. Right now I just want them out and the place in good condition. The lease says they do not have the right to hold over without consent. Can I use their security to cover attorney fees and unpaid rent ?

Anthony Thompson · Answer

Yes, Murray Gereboff and Steve Conti are the two big eviction attorneys in Rhode Island, that I'm aware of.

Both have presented at RIREIG in the past. Each has pluses and minuses. Murray seemed like a genuinely good guy but somewhat disheveled. Steve is organized and efficient but crisp/curt/brusque.

Both do only evictions and are used to dealing with judges and tenants, and will get the job done for a reasonable cost. I've only used Steve but know other investors who have used Murray and were happy as well.

There may be other regular eviction attorneys I don't know about, but I know I've always seen those two every time I've been in eviction court.

Handling Eviction in Rhode Island How to protect your investment?

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