Can Prepaid Rent -- Eviction With No Refund Given?

Question

I have a client who recently completed a 3-year lease. They switched to month-to-month. I was planning on booting them out for a number of reasons but they offered to prepay for the year in advance. Since cash is king, I agreed and the new (in-writing) agreement was that they would pay me 55% on the day the agreement kicked off and the balance 60 days later.

60 days later is 3 days from now.  When I called yesterday to confirm the payment would be on time, they said "I gave that money to my son to pay his overdue rent, so I don't have the $7k I owe you. I plan to pay you by the month like any other person. You will get paid in a timely fashion."

I replied "There was never a plan to pay by the month. Paying monthly is not an options as we do not have any agreement in place to do so. For example: when is rent due? How much will you pay? The old schedule of what you paid monthly is no longer valid because the lease discussing those terms has expired. The only reason I agreed to let you stay for another year was because you offered to pay the year in advance."

While he's given me a chunk of cash, it's not what we agreed. The new agreement (which is in writing, agreed to in writing and acknowledged in writing that he's not living up to what he said he'd do), but is NOT in a newly updated lease format, states that they receive 1 year of rent in exchange for the full amount of $ they agreed to pay. So here's my question:

Despite the fact that they paid SOME of the rent, if they DO NOT pay the full amount on time, am I able to evict them without having to pro-rate or refund anything? Thanks for your thoughts, especially any legal experts out there. Stay safe and warm y'all!

Scott Mac · Answer

@Jonathan Dickerson

Hi Jonathon,

The son was behind $7,000 in rent (???)-(???)-(???)

In a penthouse in Beverly Hills maybe (???)

In a way it kind of reminds me of this video: https://www.youtube.com/watch?v=ZgyU0LyWZ9M

Good Luck!

Jonathan Dickerson · Answer

UPDATE: For anyone who's interested, the tenants finally agreed to a new lease which lasts exactly as long as the rent they pre-paid. They'll be moving out at the end of January 2020. No eviction lawyers were utilized, no refunds were given and never again will I make the mistake of trying to make a bad tenant a good one because they wave cash in my face. Thanks for all the input, everyone. Happy Monday!

Nathan Gesner · Answer

Johnathan, you're making a mistake by trying to figure out how to make a bad tenant good. You knew they were bad and wanted to get rid of them so they waved a bunch of cash in your face and you threw your standards right out the window. This is one of the oldest tricks in the book. Don't ever lower your standards for the promise of easy money because it's far more likely to bite you.

I would not hire an attorney yet. I would give the Tenant written notice that they violated the agreement and you are therefore terminating their agreement in 30 days. Offer to refund any unused portion of the prepaid rent. Deal with the security deposit like you would any normal termination. Get the tenant out and be done with it.

If that doesn't work, contact an attorney and they can help you with the next step.

Jonathan Dickerson · Answer

Not that anyone asked, but:

1) The tenants paid rent on time exactly 14 of the 36 months they lived there. So accepting month-to-month seems like I'm setting myself for lots more missed, late or unmade payments... hence the only reason I allowed them to remain: their offer to paid in full so I would no longer be on the hook to track down rent monthly.

2) During the 3 years they were under the lease, they were embroiled in a lawsuit with the HOA company and during that time fell more than $20k behind in their rent. As one of those landlords who give landlords a bad name, I allowed them to remain because we didn't want them to be homeless after their (adult) daughter who was on the lease left them high and dry and their (adult) son wound up on the pills and got arrested. They aren't from the area, and after the accident, both were disabled and unable to work, so booting them would have left the homeless.

3) After they received their settlement, they paid the full amount of back rent but did not pay any late fees that they accumulated to continue staying at my place. This is where our story picks up.

4) I intended to boot them out after getting the cash but they volunteered the agreement (again: THEIR idea). I believe that asking them to pay what they said they would is reasonable.

@Andrew B.

5) The new agreement makes no reference to a prior lease or arrangement. In response to your question "On a completely separate moral issue, how can you justify keeping rent for months in which you don't intend to provide the service? That's shady business practice in my mind." I agree completely, which is why this is not my plan. My plan is to ask them to pay what they owe IN THE MANNER OUTLINED IN THEIR proposed agreement. I'm not understanding how this is different than any other legal arrangement where someone doesn't hold up their end of the bargain: If you bought a car, put $5000 down and then stopped making payments, your car's gonna get repossessed and you will not receive a down payment refund. If you bought a house on a 15-year note, paid $50k down and then called the bank to say "I know I said I'd pay you $1000 every month, but I've decided (unilaterally and without talking to you) that I'll just pay you the full amount at the end of the 15 years," I'm confident you'd get foreclosed on them and the bank wouldn't return your $50k down payment. If any of that is inaccurate and/or if someone can walk me through how my analogy doesn't hold, I'm (truly, not sarcastically or defensively) all ears.

@Wayne Brooks - I don't want them evicted. If I were in front of the judge, I wouldn't be asking for them to get evicted, I'd be saying "Your honor, can you please have them pay what they said they would?" If tenants (in front of the judge) were to say "we don't wanna,"  I think I'd say "Since they aren't doing what the legal agreement says they should, can you evict them now?"

@Mary Mitchell - In reference to them being a 'good tenant,' see above and then consider this, which is an exact quote from the tenants (after buying the car and the furniture): "We have the money, but if you don't mind, we would like to sit on the [settlement] money for a while. It just feels good to know it's there right now."  So to clarify, I wouldn't be evicting them because of what they spent their money on. I could care less. I wouldn't even be evicting them because they HAVE the rent money they agreed to pay, they've just decided on their own they'd rather not pay it according to the terms of the agreement... I'd simply be evicting them because they are horrible at paying month-to-month and are in default of the agreement.

There were many things I was hoping to receive from this post, but the chance to justify evicting a non-paying tenant wasn't something I foresaw. Very interesting.And YES: I'm well aware (now) I should have evicted them much earlier and then I wouldn't be in this position... but I didn't want injured/disabled individuals homeless if I could help it. I don't regret not putting them out on the street, even though I fully acknowledge that would have made my life, wallet and stress much better off. At that point (12 months into the 36 month lease), I just couldn't picture evicting someone my parents' age. After the last 2 years and knowing that they HAVE the money they just don't want ME to have the money, I can picture it.

CJ M. · Answer

@Jonathan Dickerson

I don't know, but people's situations change. I guess I don't understand why you wouldn't allow her to go m2m now (she's a 3 year tenant and vacancies are not cheap). Then just start the eviction process if she doesn't pay on time.

Mary M. · Answer

Wow.....this is why some landlords get a bad name. You are going to evict a good tenant because you dont like what they spent their money on?   Come on dude....  be a good person, flip it to month to month. Its not a good time of year to be looking for a tenant and you may just find yourself in a worse situation.

ETA if I were that tenant I would be calling the local tenants union and asking for free legal help.  This will also tip the scales in the tenants favor so IMO I would rethink the strategy

Tyler Bobo · Answer

Great questions! You may need a real estate attorney or ask a very solid property manager that is located in your area, since these laws are going to be different in every state and city.  Here, I would evict him for non payment of rent as agreed.  If the agreement was clear and not paid I'd post the eviction, wait the 7 days, and file suit and run that process if needed.  I would definitely consult a property manager at least though, after reading through our landlord tenant booklet.  I know our landlord tenant laws don't apply the same for rentals that are under 1 month (to distinguish hotel or BNB guests from tenants) and there may be long term lease rules that differ too, but I'm pretty sure it would be like that.  Good luck!

Matt M. · Answer

@Jonathan Dickerson

#1 all tenants lie

#2 they paid you a bunch up front

#3 they have lots of time now to bank some money (if they are smart) and be able to pay rent on time

I’d draw up a new month to month, starting with when their pre-paid runs out, if they don’t obey the lease at that point, then move to evict. Be a good dude and appreciate that they made good on the $20k they owed you and then paid months up front.

Jonathan Dickerson · Answer

@Max T. Thanks, Max. That is the general consensus of this forum, though it is at odds with what my lawyer says. I don't want to evict them at all, so I'm hopeful it doesn't come to that.

Can Prepaid Rent --> Eviction With No Refund Given?

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