Unusual Tenant Issue-- What would you do?

Question

Howdy BP,Right so this is a bit of a long one but I will try to keep it brief!

We have been very fortunate in our RE careers to not have any serious issues with tenants at our properties. That being said, we have now run into a strange situation where I am not quite sure how to proceed.

The tenant in question funnily enough happens to be my neighbor, as I own several units on the lot and for this reason, I have managed it personally over the years unlike other assets in our portfolio. I have generally had no problems managing it myself until our long term tenant moved out 15th of December (typically a slow month to find leads for leasing in our market) and our new tenant moved in on New Year's Eve after a slog of hardcore interviews and showings.

Let's call this new tenant Kevin. Kevin moves in with his girlfriend and is extremely communicative from day 1, proactively keeping me updated with his move plans and the like. I do my due diligence on Kevin (and his girlfriend) and he has zero evictions, zero criminal history, great credit score, referrals etc... ticks all the boxes. The only quirk was that he wanted to pay for the year up front. He showed me his cash statements and had a quarter of a million dollars in his checking from a recent inheritance of a deceased family member. We negotiated a 7 month lease (his request... which I thought was fine seeing as if he chose not to renew, it would be easy to find a tenant in Summer) with a condition in the lease that if wanted to extend to the end of the year, he would need to let me know by the end of February. He paid for the security deposit and the 7 months up front no issues.

Kevin typically is a great neighbor, even doing (approved) home improvements to the unit (he repaired a fence that was damaged due to weather conditions for example) as he was moving around a lot beforehand and was excited to settle down somewhere and call a place "home".

A few weeks into the tenancy something strange begins to happen-- I am suddenly hearing very alarming arguments between the two of them from next door (which is saying something as noise does not find its way into my house easily). These arguments happened several times to the point where we almost considered calling the police as there was clearly violence involved. Since these arguments ensued, Kevin has not replied back to any of my texts, deadlines, or anything else that relates to letting me know he wants to extend his lease agreement to the end of the year. He has already paid until July when his lease is over, but is now completely avoiding me. I know having been a landlord for many years that this is not right, but clearly, may be a sensitive issue. Whenever I send a message regarding rent terms or lease information, it is a given that we hear arguments next door.

I am considering soon placing a penalty notice on his door for "failing to communicate by the deadline I had provided him with (end of Feb)." What would you do in this situation?

Assumptions:

1. I am either thinking that the arguments between the two are sadly making them rethink extending the lease together which is why he is avoiding speaking with me about the matter.

2. Since he has moved in, there has been a myriad of sports cars and expensive motorcycles that have adorned the driveway. I am not one to assume personal finances but perhaps he is worried about extending due to financial constraints? I failed to mention he doesn't have a job, he is solely living off this lump sum which I thought was fine considering all the great references I received.

Any help or advice would be much appreciated as always and hope you are all having a great Tuesday so far.

Many thanks,

A

Chris Seveney · Answer

@Adam M.

Is Kevin a drug dealer or involved in some other type of shady business? That was my first gut reaction.

Laura Stayton · Answer

I would call the police next time you hear a potential domestic situation and get a police report.  With that you can send him a violation notice (according to your states landlord tenant code) I would also send a notice to vacate at the end of their lease term now (no need to wait) so there's no choice to extend or gray area of assumed compliance.

Good luck

Nathan Gesner · Answer

1. You mention Kevin's screening results, but what about the girlfriend? Anyone living in the rental should be screened, approved, and on the lease.

2. People with excellent credit and rental history typically have a work history. Even if he's living off a recent inheritance, I would have asked to see his work history to ensure he's not (a) scamming, or (b) earning money from criminal endeavors.

3. You should have addressed the noise immediately. First, a polite warning. Second, a written notice delivered or posted to his door. Third time is termination.

4. Failure to communicate is a sign they are hiding something. I don't abide by it and my lease states it is grounds for termination.

5. You agreed he would let you know by the end of February. He missed that deadline, so stick to your consequences and notify him that the lease will not be extended or renewed so there's no confusion.

Personally, I would give him notice of termination and expect him out no later than 30 days from notice because of the noise, potential violence, and failure to communicate. I would let him know that any unused rent money would be refunded, along with his deposit, assuming he meets the lease requirements.

Personal opinion based on the information shared.

Bruce Woodruff · Answer

This is a tough one..... I would recommend never taking that much rent in advance, it creates problems exactly like this. Now you're locked into him for a while....

I would send him an email (so you have a better record) and insist that he respond within 48 hours. Ask specific questions, this is your property and you have a right to know what is going on.

If he still does not respond, then I think you have to at least call an attorney and make sure that you are proceeding legally (for your state).

I would bet @Nathan Gesner would have some ideas on this.....

Good luck!

Adam M. · Answer

Thank you all for the comments and guidance here.

Update: we served notice and was received with no problems-- they will be vacating in July. Noise was brought up once in a warning and we have not heard anything since then. Unfortunate situation but learned our lesson with up front rent payments!

Thanks again all!

Jorge Pimienta · Answer

@Adam M. Good afternoon even though I am a very small landlord of only 4 homes/7 doors, I do deal with lots of family issues.

Dave Ramsey always says, "you should rent for the first year of marriage to know how far from your in-laws you want to live". It sounds to me that Kevin came into a lot of money very quick and was not prepared to handle it properly. New home, car, bikes, etc....on top of that moving in with a girlfriend and what it seems to be a new relationship this is going 1000 miles an hour.

If I was in your shoes, I would be completely honest and level with him as a man. Share how was it for you or a friend the experience when moving into a new place with a girlfriend/wife. The ups and downs, maybe that will get him to open up a little and maybe communication starts to flow again.

If that does not work you can always go to plan B, put a notice on the door and go hardcore through the court systems.

Bruce Woodruff · Answer

I would definitely get on this sooner than later. Bad stuff multiplies fast....

And a lot can happen in 4 months.... :-)

Adam M. · Answer

@Bruce Woodruff thank you so much for taking the time reply! Yes, I must admit this is actually the first time I have ever taken rent up front and will probably be my last-- lesson learned!

Great idea on the email. I think it's awkward also because July is still a ways away to involve an attorney just yet? You are right though I do have a right to at least know what's going on seeing as it is technically my property at the end of the day (all personal problems aside).

Unusual Tenant Issue-- What would you do?

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