First time owner, tenants not cooperating

[Diana K.]

I just closed on my first rental last week. It is in another state (Detroit), is tenant occupied, and needs many repairs (new roof, electrical work and plumbing to name a few). I spoke with one of the tenants today and she does not want to pay rent until the issues are fixed; she said she wants to look into putting rent into an escrow account to be held until the repairs are made. This is because the previous owner apparently made promises that weren’t kept. It could be months before I can get all the repairs done. Should I go along with this escrow plan or get a lawyer or try something else?? Any advice will be much appreciated. The second tenant appears to be following the lead of the first.

[Scott M.]

Hey Diana, sorry to hear about your difficulties.  Locally, meaning SE MI / Detroit, this is a familiar story.  When we take over homes from bad managers it isn't uncommon for a house or two in the portfolio who has a tenant in this very situation.  Meaning they have been promised repairs that are never made and they are fed up.  Frankly, most that are in this position I don't blame them.  A new owner / manager comes in promising things that never get done and well, they have had it.  

Assuming your home needs a new roof, electrical work and plumbing and does not have the certificate of compliance (a requirement in Detroit despite what some might say) your tenant has the legal right to pay into an escrow account until you make the needed repairs. if repairs are not made or the COC is not obtained in short order you can lose the rent as well.

Hiring a lawyer is a waste of money at this juncture and you should put all of your resources into fixing this home up, getting the COC and do things properly. The lawyer will simply tell you that if you don't have the COC in place and the home needs work there is nothing you can do but fix it up.

Also, most tenants are willing to work with you if you are showing them good faith.  Meaning, you might have luck getting the tenant paying if you put the new roof on and start something else.  Generally, they want to see effort as they have seen nothing for years.  

Now, on the other hand, if the tenant is lying and the home is in excellent condition and you have the COC then yes, you can hire a lawyer and take other actions. But first you have to be honest with yourself and your position before you know what road you can go down.

Feel free to reach out, we have full crews that can assist you get this home back into shape.  We help a lot of people in your situation get out of this situation.