Collecting on a tenant who left state?

Question

Tenant left state.  I have their address, and they owe me about $2500 after damages and back rent.  I'm in Alaska, and will be sending her the security deposit statement tomorrow.  If they don't pay I can sue them in small claims and get a judgement, will probably cost a few hundred dollars in court costs.  Is this worth doing?  I've never tried collecting from someone in a different state:/

Jeff Willis · Answer

You can sue and you have to have them served which will cost several hundred more and there is no guarantee of service. If they are not served, then you can not get a judgment. Assuming they are served and you get a judgment, they are usually worthless. You have to be able to collect it and the odds are about 90% you will not be able to. Each state has different rules for the execution of out of state judgments, and that can get expensive.

My 2 cents - keep the security deposit and move on. Not worth the time and expense.

Marc Winter · Answer

@Karl B., if you have a judgment, PLEASE do yourself and everyone else a favor and have it properly recorded.  You MIGHT get something in the future, and it will help your fellow landlords in their screening process.  If we all did this, screening would take on a whole new meaning!

If you DO NOT have a judgment-- unless you are positive about their new address to have them properly served--it will be a waste of resources.  Going forward, make sure to get a judgment.  If you don't have possession (they have not given you back the keys) you can have them served at the property you are renting to them.  If they don't show up in court you will get the judgment by default.

NOTE:  I have lots of years as a broker, but none as a lawyer, so speak with a lawyer to make sure what will fly in AK!  Good luck!

Karl B. · Answer

Get a lien against your ex-tenant. It's based on principal. I'm going to the Prothonotary's Office (AKA The Office of Civil Records in this instance) and will be getting a lien against a tenant. It costs less than $20 for me to do this.

I may not get my money but at least it'll show up in his credit report and hinder him with getting any loans in the future. Though in the event he receives an insurance settlement or sells a property I'll get my money and since he's still a young person there's a chance I'll someday get paid.

Chris S. · Answer

Good thing with Alaska is you can file a judgment and dock their PFD, assuming they apply for it the upcoming year. There are a lot of rules about applying for PFD, but if they did get it next year then you could get the money from there.

However, with them moving out of state they may not qualify to even get it. Just lind of a heads up in case you were unaware you could for any future issues.

Ralph R. · Answer

@Tyler Bobo Tyler good to see an Alaskan on here. I lived in Bethal 14 years and have a sister in Big Lake. I’m in Colorado now but my hearts in Alaska.  Forget your loss I’ve been down that road and it’s throwing good money after bad. It’s a better tax loss and cheaper than trying to collect blood from a turnip. Besides you know most people that are going to leave wait for the PFD right?  Then leave!  Next time someone is late in oct serve them right away. Get them out quick as you can and move on. RR

Holly D. Metzger · Answer

I know things may be way different in Alaska than they are in Colorado, so you should probably consult an attorney before you send out the Deposit Reconciliation letter.  Your attorney will be able to guide you as to the manner of mailing (regular snail-mail or Certified Return Receipt Requested) which may be legally acceptable when personal service is difficult, given the distance.  He or she will also be able to advise you on the wording of the letter so your letter will satisfy all the legal requirements of a Security Deposit Reconciliation and a Demand for Payment.  In other words, with this letter, you should show enough teeth in the bark that they'll fear the bite, and hopefully throw you a bone (at least part of what they owe).

Since you're already in possession of the property, you'll want to discuss with your attorney how to take them to court and get a judgement for the money they owe you.  You'll need to present evidence of the debt, so make sure you have written documentation of everything you're charging them for.  This means a copy of the lease to support the rent amount and any late fees, penalties, etc., and their payment record showing when the rent payments were made, and in what amounts.  Then you'll also want to have copies of invoices that you've received (and paid) to any repairmen, painters, cleaners, etc., with proof that you paid them  (cancelled checks, credit card statements, like that).  These are the actual financial damages you will have sustained.  Pictures of the property as it was when they left are critical for you to have to demonstrate what the physical damage to to property was, and why you had to pay what you paid for restoring it.  For any damage that has been done, but not yet repaired, you'll want to include copies of estimates of what it will cost you to repair that, too.  Remember, this is a Civil case, so Preponderance of the Evidence is the standard, not guilt beyond a reasonable doubt.  So you'll want to bring every piece of evidence you have with you to court.  If you take all this with you when you consult with your attorney, you might also bring up the possibility of punitive damages (which is not the same thing as actual damages).  Also, your attorney will be able to advise you about what pieces of evidence best support your claim, and which don't.

Once you obtain a judgement for the money they owe you, and assuming that they don't pay, you can look for a collection agent who can help you through the collection process in both your state and the state where the tenant now lives.  This may take you into the realm of garnisheeing wages, tax returns, government benefits, etc.  The immediate result of the judgement for the money is that the tenant's credit rating is sincerely negatively affected.  But the good part is that most collection agents only charge a percent of what they're able to collect.  The ones I've dealt with are 60/40 with the collection agent getting the 40.  Keep in mind, too, that your judgement for the money may expire at some time, so if you're determined to collect, start the process soon.  You can also re-instate the judgement if it is about to expire and you still are determined to collect.  (This at least will keep their credit rating in the trash for as long as you can keep re-instating the judgement).

So your Reconciliation Letter is the bark, your attorney will help you put the teeth in the bark, and your collection agent can deliver the bite.

Dennis M. · Answer

You won’t get a dime of that . Don’t throw good money At bad money .. brush it off as a loss

Holly D. Metzger · Answer

Hey, Tyler, Happy New Year to you too  :-D.  I've inherited quite a few tenants in my time, and after having experienced situations similar to yours, I've made it a point to always but always get a new application on file.  Not that I re-screen the tenants after they're already in the unit, but just to make sure I have current job info., bank info., and emergency contact info at the ready should I need it.  Even if they have a current lease with the former owner, I ask for a new application.  I always tell them it's just to make sure I have complete files.  Then, if I get resistance from them, I can get a feel for how to deal with them going forward.

As for payment methods, I am a die-hard fan of money orders.  They NEVER BOUNCE. Ever.  They may be late, but they're always good when they get there.  Personal checks work for me until one, and only one, bounces.  Then it's back to money orders or Certified Checks only.  I'm also not a fan of PayPal, or Venmo, or any other e-payment service because I find them to be just a little deceptive about how they get paid for their services.  For example, when a tenant uses, say, PayPal, to pay the rent, they'll authorize PayPal to take an amount equal to the rent out of their bank account.  Then, PayPal, or Venmo, or whoever, will take their service charge out of that amount before sending the remainder on to you.  That means that you're left getting shorted on the rent by the amount that the bill pay service deducted.  The problem is that the bill pay service doesn't clearly state that they will deduct their fee before paying your bill, and the tenant often doesn't understand that.  And they will occasionally do a "grab back" if for some reason the tenant's funds can't transfer to them.  (When the tenant has had a "hold" placed on their bank account, for example).  Cash is always good, but you have to be real scrupulous about writing receipts because the tenant needs to have the proof of payment for his records.  As an old lady, though, I don't like to have a lot of cash in my house or on my person if I can't get directly to my bank.  But that's just me.

Additionally, from a pure bookkeeping standpoint, those types of services force you to open an account with them so that you can receive the payment.  Sure, you can have the payments received transferred directly to your regular bank, but you can also have them hold on to the funds so that you can make payments to someone else, too.  So, essentially, the bill pay service becomes yet  another bank account that has to be reconciled because it becomes an asset under your control.  So I try to steer completely clear of the e-payments thing.  I don't need any more bank service charges than what my regular bank charges, and the bill pay service accounts sure as heck don't pay interest, so I'm outta there.

So, Tyler, and everyone, have a wonderful and prosperous 2020.

Tyler Bobo · Answer

Chris S, they shouldn't be able to file for the PFD since they moved, however that doesn't mean they won't lie. I'm sure that never happens (I say while rolling my eyes.)Holly, I'm not aware of being able to put a lien on someones vehicles here without there permission, and when they moved they likely sold their vehicle and flew out.  I did put a lien on someones vehicles before while lending them money and using it as collateral, not too difficult but had to have there permission.  If there's another way to lien it without there permission in AK anyone is aware of let me know:)     And... these tenants were inherited, they were paying good the first 2+ years and I didn't have them through Cozy because they were used to paying with money order and I didn't press it. So when they fell behind I didn't even notice at first. Oops:/ I need to keep a better eye, or rather, make all my tenants pay the same way moving forward so it's easier to keep a better eye.

Thanks everyone, have a great New Year!

Billy Smith · Answer

Find out how to leave a ding on their credit report .

Collecting on a tenant who left state?

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