Should I Take Ex-Tenant to Court for Unpaid Rent

Question

Hello Investors,

I would appreciate some advice on my situation below. I would like to know if it makes financial sense to take my ex-tenants to court for late rent payments or just cut my losses and move on.

Here is my situation:

I gave tenants a 30 day notice that I would not be renewing their lease due to late rent payments. Besides the late rent, they have taken great care of the property.

I’ve been promised on several occasions that all let rent and late fees will be paid in full. The tenants moved all of their personal belongings out yesterday October 31st.

They still owe rent for August ($180), September and October and three months worth of Late Fees ($35/month) for a grand total of $3,085.

I currently have their security deposit of $1,000. The place is en good condition and rental ready as I have been in the unit to show it to new potential tenants.

Should I hire a lawyer and take the ex tenants to court to try and collect the late rent or just keep trying to pursue the rent on my own?

Thank you in advance!

Patricia Steiner · Answer

You're running a business.  If they had leased a car, kept the car in great condition but failed to pay $3000 in payments, would the bank just let the unpaid amount go?  No.

Again, you're running a business.  Sue for unpaid rent in small claims court.  You won't need a lawyer and neither will they.  But one thing is for certain:  you'll never be paid what you are owed if you do nothing.

Value yourself more.

Chris John · Answer

@Andrew Marsh  Do it for the rest of us.  It's great to hear they took care of the house (definitely not always the case).  We've been taken for a ride by tenants more than once only to find out that their previous (unmentioned landlord) had issues with them.  I'd have loved the warning on the credit report to be able to make an informed decision for myself.

Joe S. · Answer

If you have a lot of time on your hands and would not be emotionally drained...then go for it. If you don’t have a ton of time on your hands and you know your own personality that this could be emotionally draining and a distraction then I would suggest passing.

The last person I evicted owed me for six months!! I was happy to have the superstars gone and I hope I never see them again unless we can meet up in heaven. :-)

Patricia Steiner · Answer

@Andrew Marsh

The cost to file in Michigan is based on the claim amount but it ranges from a fee of $30 to $70 -  a cheap date:

https://michiganlegalhelp.org/...

And, the nice thing about getting a judgement is that those tenants won't be able to buy the next car, get the next apartment, a credit card - while that unpaid collection/judgement is reported on their credit bureau report.

Go get your money!

Charles Kao · Answer

@Andrew Marsh

In this situation no.  I generally only take them to court as an F U for bad behavior and garnish and its more on principle versus return on time or dollar to make sure they don’t do it again. If they left it in good condition I chalk it up to they simply could not pay but if they trashed place or tried to milk not paying when they could have then I definitely would.  Right around this time of year it’s easiest to garnish.

Kyle J. · Answer

@Andrew Marsh I would try to collect it. Even after you apply the money from the security deposit, they’re still going to owe you over $2,000. That’s a fair amount of money. If it’s rightfully owed to you, why wouldn’t you try to collect it?

It’d only cost about $70 to file a small claims case for that amount of money in your state, and you won’t need a lawyer. Should be an easy case to win.

Granted, it’s not just about winning, but about collecting too. Lucky for you, your state has lots of options there, including wage garnishment, which is very effective if your ex-tenants are working. (I actually used it to collect on a judgment against one of my ex-tenants, which you can read about here if you’re interested: Finally collected on a small claims judgment against an ex-tenant).

And if they’re not working, there’s still a number of other options you can use to collect on a judgment, which you can read about here:

Michigan Courts: Collecting your money from a small claims judgment

Best of luck to you.

Theresa Harris · Answer

Patricia is right.  Take them to small claims court, but even if you get a ruling in your favour, I wouldn't expect to see the money.  Definitely keep the deposit and apply it to the outstanding rent and late fees.  Be thankful they left the place in good condition.

Account Closed · Answer

Hi @Andrew Marsh I'm not a landlord and I don't play one on TV. Yet. So I'm curious.  What would a lawsuit and judgement get you?  It seems to me that if the tenants were responsible enough to take good care of the property, that they would have paid to stay put.  (Maybe I'm just being terribly naive here.)  It just seems to me that having a judgement against someone without them having any way to pay it is throwing more good money after bad.  Yeah, they might have the ability at pay at some time in the future but what's the cost of of the lawsuit as measured against the chances of actually collecting on it?   Did you communicate with them before they moved out?  What was their situation?  I'm also curious as to whether other landlords have other ideas such as going through a collection agency.

Marita Jojo · Answer

@Patricia Steiner Thanks ! We inherited these tenants and unfortunately the seller didn’t provide us the application so we have no information where they work. What we found out is that they are evicted almost every other year when we did our due diligence so some landlords who skimp on the background checks end up renting units to them. They are professionals didn’t even bother to come to eviction hearing and waited till last day when sheriff was going to throw the stuff out to leave. I really want to do something to save others from them.

Patricia Steiner · Answer

@Marita Jojo

Marita, I'm sorry you were put in the position of having to sue but you did the right thing.  As a former banker, I can tell you that a judgement in any amount gets reported to the credit bureau and that's the fastest and best way to recover what is due you.  It ensures that your former tenants aren't getting a new car, another credit card, or maybe even the next rental - with an unpaid collection on their report.  There are also collection agencies that will work for a percentage - or even a flat fee.  That Judge obviously wasn't a real estate investor/landlord.

And, you don't need their current address. Send to the last known address with Address Service Requested  which "provides forwarding and address correction services when possible."  You can also serve at their place of employment.

It will always be easier to "just let it go" but running a business isn't about "easier" - it's all about ROI.

"Address Correction

Should I Take Ex-Tenant to Court for Unpaid Rent

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