Tenant consistently late on late on rent, no sec deposit

General Landlording & Rental Properties
4yFollow

Tenant consistently late on late on rent, no sec deposit

Ryan Daniel Palmer
Member since 2021 · 13 posts · 14 votes

I own a three-unit in Chicago which has strict regulations about accepting security deposits therefore I've recently started doing non-refundable move-in fees as most landlords do here. I have a tenant that was great at the beginning but has been late the last few months on rent and still hasn't paid this month which has made him two weeks late. Lately, there have been other issues, such as smoking cigarettes in his unit and playing loud music late at night as well. I guess my question is twofold, 1. If he continues to be late on rent and I don't have a security deposit to withhold, how else can I incentivize him to pay on time besides adding the 5% late fee in his lease? 2. If I choose to not renew and there are damages or he doesn't pay his last few months (he has about 3 months left) what are the simplest actions to take to collect the rent owed or money for damages?

I'd prefer not to take things to court/sue. I'm hoping he's able to pay and I'm a pretty laid-back landlord overall but just want to have my ducks in a row here.

1Reply
109 views

Most Popular Reply

Julie Hartman
Property Manager · Denver, CO · Member since 2021 · 667 posts · 587 votes
4y

@Ryan Daniel Palmer Have you spoken with him to find out what is going on? Sometimes, having a conversation to see if there is a specific reason for tardy rent can help get things moving. I would let him know that it would certainly be a shame to be forced to take him to court or send this to collections; both of which will make it more difficult for him to find another place to live. If he isn't receptive to talking, I would post him asap. The longer you drag this out, the harder it will be.  

4Reply
See this reply in the discussion

30 Replies

Jump to latestLatest
  • Joe Jackson, Jr
    Rental Property Investor · North West Indiana · Member since 2021 · 20 posts · 16 votes
    4y

    Morning @Ryan Daniel Palmer,

    Maybe Cash for keys, I'm sure there are tons of posts about it and how to approach the conversation. In short it is basically offering the tenant some money to move instead of fighting and getting an eviction on his record. 

    In terms of ducks in a row, I think that has a lot to due with what your lease says regarding eviction, sounds like a simple breach of contract to me, if your lease says no smoking and you can prove he has been smoking, it says rent is due on the first and he is late, noise ordinance and he isn't respecting it? 

    Again, usually a lot simpler and hopefully painless option is the cash for keys. Save yourself the time and court dates, figure out if you can make that work. 

    disclaimer: I am not a lawyer and I am a fairly newbie investor/ landlord. 

    3Reply
  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    4y

    It sounds like you need to get him out as soon as possible.  I like the idea of cash for keys, but I would hold that back and play the court card.  You know the tenant better than we all do, but maybe it is something along the lines of if he is out in two weeks, then he only has to pay the pro-rated amount excluding the late fees and you won't take him to court for damages.  But I would make it clear that if he doesn't, then he is in violation of the lease and you have to take more aggressive tactics.  I would consult an attorney before doing anything.

    3Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    4y

    You lose no matter what.  Take the course of lower cost to you (court) and move forward.

    2Reply
  • Julie Hartman
    Property Manager · Denver, CO · Member since 2021 · 667 posts · 587 votes
    4y

    @Ryan Daniel Palmer Have you spoken with him to find out what is going on? Sometimes, having a conversation to see if there is a specific reason for tardy rent can help get things moving. I would let him know that it would certainly be a shame to be forced to take him to court or send this to collections; both of which will make it more difficult for him to find another place to live. If he isn't receptive to talking, I would post him asap. The longer you drag this out, the harder it will be.  

    4Reply
  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    4y

    @Julie Hartman, that’s a good point.

    One option is to change the date for which rent is due and just have the tenant pre-pay upfront. For example, instead of the rent being due on the first, it is now due on the 15th.

    1Reply
  • Julie Hartman
    Property Manager · Denver, CO · Member since 2021 · 667 posts · 587 votes
    4y
    Originally posted by @Rick Albert:

    @Julie Hartman, that’s a good point.

    One option is to change the date for which rent is due and just have the tenant pre-pay upfront. For example, instead of the rent being due on the first, it is now due on the 15th.

    And then he'll miss the new due date hoping you'll change it to the 30th. Why change the rules for one tenant that can't pay on time? Stick to your policies/lease agreement and if he can't adhere to it, he should be out. Some tenants are very skillful at finding weakness in a landlord. If you push the due date back, your flexibility will be exploited to no end. Good luck with this. 

    2Reply
  • Bud Gaffney
    Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes
    4y

    @Ryan Daniel Palmer Evictimmediately.com

    0Reply
  • Paul Vail
    The Triangle, NC · Member since 2021 · 193 posts · 117 votes
    4y

    I don't have anything but empathy for you and a tenant that's clearly heading to the curb.

    Maybe adjust your future leases -- Is there a regulation/law in Chicago that would preclude 'refunding excess rent'?   My half-baked idea: charge a bit more every month as an 'ongoing maintenance escrow' or some similar language.   Maybe $50 more than you'd otherwise charge, but with the stipulation that any excess 'escrow' at the end of their tenancy would be reimbursed.  Then basically the tenant is building your 'security deposit' over time, without using that language?  Naturally, longer-term tenants would create a substantial reimbursement, so maybe discontinue additional collections after 5 yrs, or a rent-reduction for 'long-term' residents.   I've just started listening to the podcasts (I'm on 97 now) -- so I've heard you have an encyclopedic rulebook up there for landlords.   Maybe there's a loophole to use as a future carrot.   Wouldn't matter with this guy, but could solve solutions moving ahead?

    1Reply
  • Ryan Daniel Palmer
    OP
    Member since 2021 · 13 posts · 14 votes
    4y

    Quick update here @Julie Hartman @Joe Jackson, Jr @Rick Albert @Joe Villeneuve @Bud Gaffney

    I just spoke with the tenant after a few unanswered calls and texts. He doesn't believe he'll have rent for a couple more weeks and can't give me a clear timeline. He said if I need to file paperwork/go to court he understands and didn't seem open to breaking the lease early or a reasonable amount for cash for keys. I know he's done two years of law school so probably feels confident that he can fight the eviction. He also said that he would be able to pay everything back before the eviction goes through so that might be another reason why he's not as worried about it.

    I talked to a law office today and I think I'm going to start heading down that route. I haven't had to go through this process so please let me know if any of you have recommendations and I greatly appreciate all the help so far!

    2Reply
  • Ryan Daniel Palmer
    OP
    Member since 2021 · 13 posts · 14 votes
    4y
    Originally posted by @Paul Vail:

    I don't have anything but empathy for you and a tenant that's clearly heading to the curb.

    Maybe adjust your future leases -- Is there a regulation/law in Chicago that would preclude 'refunding excess rent'?   My half-baked idea: charge a bit more every month as an 'ongoing maintenance escrow' or some similar language.   Maybe $50 more than you'd otherwise charge, but with the stipulation that any excess 'escrow' at the end of their tenancy would be reimbursed.  Then basically the tenant is building your 'security deposit' over time, without using that language?  Naturally, longer-term tenants would create a substantial reimbursement, so maybe discontinue additional collections after 5 yrs, or a rent-reduction for 'long-term' residents.   I've just started listening to the podcasts (I'm on 97 now) -- so I've heard you have an encyclopedic rulebook up there for landlords.   Maybe there's a loophole to use as a future carrot.   Wouldn't matter with this guy, but could solve solutions moving ahead?

     Hi Paul, there are a lot of stipulations for holding money, such as a security deposit, for a tenant in Chicago specifically. This is why I didn't take a security deposit, to begin with. Therefore, I don't think this option is feasible. Thanks though!

    0Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    4y

    Talk to them and find out what is happening.  Give him notice that he's late on rent and their have been complaints about noise and smoke.  Tell him he needs to get current on his rent by a set date or move out.  Also if there are any more complaints about noise, he needs to move.

    1Reply
  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    4y

    Talk to the attorney but generally speaking once you start the eviction process you cannot collect any more rent.  Even if you collect $1 you would have to start the process over.

    1Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y

    Have you talked to them about applying for the Emergency Rental Assistance Program (ERAP)? I believe every state still has a large pot of money and they're working hard to give it away. Tenants can apply for past due rent, current rent, and even future rent. It's a good way for him to get ahead. I had a tenant that wasn't even behind on their rent. They applied for three months of future rent and were approved, then they received a notice two weeks later that they could apply again. They've received six months of rent with very little effort.

    P.S. I hate government give-aways, but people should take advantage of it when it's available.

    The DIY Landlord Book4.7247 Reviews
    WebsiteView Page
    3Reply
  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    4y

    @Ryan Daniel Palmer - That's honestly a tough situation that stinks.  First of all, I am sure there are some key learning opportunities you took away on properly vetting tenants and figuring out the Chicago Landlord-tenant ordinance (i.e, move-in fee).

    I'd just talk to your tenant first and see if he can be reasonable, then resort to cash for keys. Curious @Mark Ainley opinion on this one?

    I am kinda with @Joe Villeneuve no one really wins here, you just need to figure the way to mitigate your costs.  What area is this property in?

    [email protected]
    Quality Builders4.966 Reviews
    WebsiteView Page
    1Reply
  • Ryan Daniel Palmer
    OP
    Member since 2021 · 13 posts · 14 votes
    4y
    Originally posted by @Jonathan Klemm:

    @Ryan Daniel Palmer - That's honestly a tough situation that stinks.  First of all, I am sure there are some key learning opportunities you took away on properly vetting tenants and figuring out the Chicago Landlord-tenant ordinance (i.e, move-in fee).

    I'd just talk to your tenant first and see if he can be reasonable, then resort to cash for keys. Curious @Mark Ainley opinion on this one?

    I am kinda with @Joe Villeneuve no one really wins here, you just need to figure the way to mitigate your costs.  What area is this property in?

    It's in Avondale, Chicago (60618). The good news here that I failed to mention is the tenant's lease is up in three months, which doesn't mean they will move out but I feel there's more of a chance they will. I'm going to talk to him one more time about additional options and look into the Emergency Rental Assistance Program Nathan mentioned.

    I'm definitely looking for the simplest, cost-effective solution here so want to try a couple more things before moving towards eviction.

    1Reply
  • Ryan Daniel Palmer
    OP
    Member since 2021 · 13 posts · 14 votes
    4y
    Originally posted by @Nathan Gesner:

    Have you talked to them about applying for the Emergency Rental Assistance Program (ERAP)? I believe every state still has a large pot of money and they're working hard to give it away. Tenants can apply for past due rent, current rent, and even future rent. It's a good way for him to get ahead. I had a tenant that wasn't even behind on their rent. They applied for three months of future rent and were approved, then they received a notice two weeks later that they could apply again. They've received six months of rent with very little effort.

    P.S. I hate government give-aways, but people should take advantage of it when it's available.

    I'm definitely looking into this Nathan, this could be an effective option. 

    0Reply
  • Aaron ZimmermanBusiness Member
    Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
    4y

    I'd be inclined to say you should give them notice now that you will not renew his/her lease. You need to provide this notice anyway and depending on the length of time that he/she has been in the unit, it may be up to 4 months. 

    I'd say to ride it out and apply for housing assistance that I believe is coming out from IHDA in a few weeks. You will have to see if you qualify but that would probably alleviate the pressure and make your tenant more cooperative. 

    [email protected]
    Brick House CPAs53 Reviews
    WebsiteView Page
    0Reply
  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    4y

    @Ryan Daniel Palmer the best way to do this is most likely to part ways at the end of the lease. I would not renew the existing tenant, but you don't want to do this going into the holidays/winter. Be strategic about things here and bide your time. Eviction is too quickly mentioned with most people, but really your goal here is to move on and get a different tenant. 

    0Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    4y

    @Ryan Daniel Palmer the best advice I can give is change your approach. You can't be laid-back when it comes to rent payment, lease violations or court actions. You should start the eviction process after rent is 5 days late. The first step is notice to pay or quit. You should provide written lease violations for smoking in the property or loud music (assuming you have clauses for smoking and quiet enjoyment in the lease). Lack of security deposit doesn't mean you can't get reimbursed for damage and doesn't mean you have no leverage. Consequences are bad rental reference, eviction and judgement. That means taking them to court if necessary. 

    All the people suggesting cash for keys makes no sense in this case. People fear confrontation so badly that they think just throwing money at problems fixes them. It often makes the situation worse, because it gives the tenant a stronger position of power. You tip your hand by saying "I am weak" when you offer them money. This is completely avoidable if you just enforce your lease with consequences. Cash for keys should be reserved for a situation where you have exhausted other options. 

    The tenant takes your lead on what is and is not acceptable. It is like raising children. You don't fix behavior problems by giving them what they want. Eight hours a day on the iPad and unlimited candy won't make your kid behave better. That is lazy parenting and what you are doing is lazy landholding.

    1Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    4y
    Originally posted by @Ryan Daniel Palmer:
    Originally posted by @Paul Vail:

    I don't have anything but empathy for you and a tenant that's clearly heading to the curb.

    Maybe adjust your future leases -- Is there a regulation/law in Chicago that would preclude 'refunding excess rent'?   My half-baked idea: charge a bit more every month as an 'ongoing maintenance escrow' or some similar language.   Maybe $50 more than you'd otherwise charge, but with the stipulation that any excess 'escrow' at the end of their tenancy would be reimbursed.  Then basically the tenant is building your 'security deposit' over time, without using that language?  Naturally, longer-term tenants would create a substantial reimbursement, so maybe discontinue additional collections after 5 yrs, or a rent-reduction for 'long-term' residents.   I've just started listening to the podcasts (I'm on 97 now) -- so I've heard you have an encyclopedic rulebook up there for landlords.   Maybe there's a loophole to use as a future carrot.   Wouldn't matter with this guy, but could solve solutions moving ahead?

     Hi Paul, there are a lot of stipulations for holding money, such as a security deposit, for a tenant in Chicago specifically. This is why I didn't take a security deposit, to begin with. Therefore, I don't think this option is feasible. Thanks though!

     There are security deposit alternatives. These services offer insurance to cover damage and the tenant pays a monthly fee to the service. You can get reimbursed, tenant pays no big fees and it complies with areas that have strict policies on security deposit. 

    The other important thing is tenant screening. What was the applicants credit score? Did they have any late bill payments on their credit report? Did they have any judgements or overdue balances? Generally speaking if the credit report is clean, the tenant will pay their bills, including damages. People with bad credit don't care about paying bills, because they have nothing to lose. 

    0Reply
  • Corby GoadeBusiness Member
    Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
    4y

    I don't have much to add, there's already some great advice here. That said- you did collect a 'move in fee" which you alluded to being in place of a security deposit. Just because you call it something different doesn't mean that same compensation isn't there- though I understand you lose some motivation for him to pay because of that. 

    Secondly- you are posting here because your tenant is not following your lease. The truth is, you aren't either- he is paying late, smoking in the unit and you have not acted on your rights via the lease. If we want tenants to follow the lease as it is written, we must do the same, otherwise we are training them that the lease doesn't matter. 

    Sorry you are dealing with this, best of luck!

    0Reply
  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    4y

    DO NOT collect partial payment.  Make sure you close any pathway he has to pay part of the rent and always say that all of it is due in full, plus late payments...and still he needs to correct the smoking deficiency, whatever that is.  Maybe cleaning carpet, washing walls, whatever will remedy that.

    0Reply
  • Kyle D Birch
    Rental Property Investor · Chicago, IL · Member since 2019 · 77 posts · 36 votes
    4y

    I’m no lawyer, and I don’t use security deposits, but I would read up on the law you are referring to. Last time I checked, it was geared towards bigger investors with large portfolios.


    Here’s a quick excerpt of what I found online “Interest Payments: Illinois landlords are not always required to pay interest on security deposits. According to the Security Deposit Interest Act (765 ILCS 7150), it requires landlords who own 25 or more units “.

    Again, I use a move in fee and it has worked out better for me, but you might want to read up on it. Sorry if someone already mentioned this. I didn’t read every post word for word.

    0Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    4y

    Be aware that if you point your tenant to the rent assistance that there may be strings attached for the LL - such as not being able to evict while you wait for payment, etc. 

    What I did with a similar situation is I looked up all the info and sent the tenant the link, a basic 'snap shot" of what the webs site said was available, etc.  I also would periodically contact the tenant to see if they had any updates.... and thankfully  I finally heard that the govt will pay this tenants rent til jan 2022 - when I will actually get the money is a different story but at least the said they would pay it. 

    0Reply
  • Daniel SmythPro Member
    Rental Property Investor · Rockford, IL · Member since 2019 · 471 posts · 342 votes
    4y

    @Ryan Daniel Palmer

    Ryan, can you point me to an online link to the Chicago rules on deposits you don't like?

    I am curious.

    If your lease has no late fee language, you need to get that in as an addendum.

    You also should consider filing the paperwork to evict. I doubt he will be moved out by the sheriff soon, but that paperwork needs to begin asap!

    The notice of default and notice of what is to come, may straighten this guy out a bit or it could send him looking for another place.

    If he intends to bolt, I bet he stops all payments.

    The guy needs to come together with the lease agreement or be removed before he does more damage than smoking cigarettes.

    Good luck.

    [email protected]
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free