Eviction - you cant make this stuff up

[Jay Scott]

You cant make this stuff up…

In July, an applicant contacted me about renting an upscale home I own in NY. 720 credit and no evictions, he paid the realtor with a check and made the deposit and first months rent through the web portal (ACH).

Second month paid on Sept 4, and by Sept 9th all ACH Payments had been reversed by another person on the checking account (I was not aware an ACH payment could be reversed). After numerous promises to pay, he submitted an electronic check through a PayPal bank that was returned for NSF. A third party gets involved and sends a paper check for $25k to cover all rent, deposit and next month rent – check bounces.

My attorney sues them (cant recover late fees, pool, lawn care or other fees tenant agreed to pay in NY – just an FYI) and we win $12k in Dec – about half of what is owed. Sheriff serves eviction notice in Jan and we show up to physically remove them mid-Feb. They are still in the house when the Sheriff shows up.

We move their belongings to the curb as Sheriff supervises and discover $8k in damages to heating system. They had run out of heating oil and were buying diesel fuel, 5 gallons at a time and pouring it in the heating tank. They had no vehicle; the driveway had not been plowed since they moved in but somehow, they could get fuel.

Anyway, they sat at the curb with three young children for over 2 hours in 27-degree weather before they finally got a ride to get a U-Haul. Loaded up most of their stuff and drive off.

They owe over 30k in back rent, maintenance and damages.

Where did I go wrong?

#1 by believing their lies. They did everything from falsify pictures of checks they were going to send to altering receipts of cash/checks that they gave to my attorney.

#2 by not involving my attorney on the 10th of the first month they had not paid. I was trying to work with them, then I tried cash for keys, they I tried “getting tough”.  Just go to the attorney and start the eviction process.

#3 not understanding that the legal system will give them plenty of time to catch up – I don’t need to give them anything more than what is required by law.

#4 I have figured out how to report them to the credit bureaus. We now have a company policy to report all tenant’s payment history to the credit bureaus on the 15th of each month. I fill it out after speaking with my attorney concerning who will be receiving a knock on the door.

We paid the extra money to report all payment information dating back to the day they moved in (or 7 years ago) and we are also going after the credit of every person that moved out and owes more than $50 in the last 7 years.

Today was the last day I will be a nice guy and there is no excuse – none for not paying the rent. Call me an A$$hole but Im evicting the pregnant lady next…

[Nathan Gesner]

@Jay Scott thanks for sharing and helping warn others.

I always recommend the security deposit should be collected in full within 24 hours of approval. The rent and other charges should be paid in full before handing them the keys. Both of these payments should be in certified funds (money order or cashiers check) to ensure they are good before you ever let them step foot in the house. Once they are in, I accept ACH and personal checks but I definitely watch them closely. ACH payments can be reversed up to 60 days after the payment is made, just like a credit card payment. I've never had it happen but I know it exists and it's a risk I'm willing to take for the sake of convenience because about 60% of my 340 tenants pay by ACH and it's a huge time saver.

ALSO: if a tenant is paying late (after the first of the month) then you should require certified funds. you don't want to take a personal check on the 5th and then find out a week later that it bounced.