Letting go of tenants who are behind on rent
Your real estate business is humming along. Things are going pretty good, except one tenant who’s fallen behind on rent. You’ve done all the right things though and immediately filed for rent court and/or eviction. The next week, you receive full payment from your tenant to include late fees and court cost fees. This process repeats each and every month. It gets tiring and frustrating. It seems the only way you get your money is the day before eviction, and they clearly have the money but can only find it in themselves to pay when their home is less than 12 hours from being taken. What would you do?
You could simply continue this process for the remainder of the lease and then not renew at the end. Or, you could file for a no right of redemption (in Maryland at least) after 3-4 prior warrants that were paid. This way, they are out no matter what even if they do pay you. However, perhaps it also could be a good idea to offer to release your tenant from their lease early. Give them a short time to move out such as a week or two weeks tops. You will keep the security deposit, but you will cancel any eviction process if they do the following:
- Return all keys to you on the agreed upon date.
- Return the unit very clean and as rent-ready as possible.
- Removed all personal belongings from the property.
If any of the above have not been done, you will not sign the agreement and will not stop the eviction proceedings. Usually this could be another option to consider if you have a generally good relationship with your tenants. This means, you’ve never shown anger and frustration towards them for the missing rent. You’ve always been professional and firm but fair. In the end, we need our property to generate income and the faster you can get a paying tenant, the better. After months of playing the eviction game to receive payment at the last minute is tiring and extra work that you don’t need when you could instead be expanding your business.
Have you come to creative agreements with a non-paying tenant? Share your story with us!
Comments (6)
We have had tenants do this too. Looking back on the situation, they were unable to provide the full deposit plus prorated 1/2 month rent on move in. We shouldn't have given them the keys. After months of late payments, penalties, lies, bounced checks, and a few 3 day notices to pay or quit, (we're in CO) we offered to stop the eviction if they paid all that was owed and moved out by the end of the month. This gave them about 1 week to collect everything and move. Unfortunately, they overstayed and so they have an eviction on their record now. But they moved after about 10-11 days into the next month before the sheriff could schedule a forcible eviction. We kept the security deposit and moved on. Lesson learned. If they don't have all the money to move in, we won't split the deposit into 2 payments again, they just won't be allowed to move in until they have all the money.
We may consider accepting rent biweekly in the future as you suggest. That might have helped the situation.
Adam D., almost 9 years ago
@Adam Dravininkas Yeah, when they're behind, it depends on the person, but many times they won't catch up. I honestly don't even expect them to pay all that's due. I simply want them to move out asap because the sooner they move, the sooner I can re-rent. I recently offered this to a couple who was behind. I simply wanted the place delivered to me clean and keys returned. For some reason they stopped answering me, so I moved forward with eviction. When I went in, the place was so clean, no repairs needed, and just a couple of small items left! I have no idea why they didn't take my offer to leave sooner and avoid eviction. Oh well.
Also, I would suggest to you that upon move-in/lease signing, not only should the tenant pay full security deposit, but also pay a full first month's rent. If they move in the middle of the month, you can prorate the *next* month, but I require they pay a full month's rent to move in.
Nicole A., almost 9 years ago
I tried to have them pay 2x per month. They still continued to pay late. I had a clause in the addendum that said if they paid late the addendum was null and void. We are back to the 14 day pay or quit with late fees every month.
Paul Chapman, almost 9 years ago
I've had some good tenants for whom dividing the rent made a difference. My demographics has mostly been younger renters moving in their careers, & when folks are first starting out they tend not to have a full month's expenses PLUS utilities PLUS deposit PLUS moving costs all saved up in their account (more mature workers should though, barring catastrophes). A split rent should be paid exactly on time -- asking to split rent then being progressively later on the payments is a HUGE red flag that the tenant is sinking financially.
Deanna O., almost 9 years ago
I've had the above scenario and it's usually due to the tenant's inability to manage money when they live paycheck- to- paycheck. To solve this, I make the rent due weekly or twice per month and the problem is solved. Then end up paying a bit more per year, but that's payment for the hassle of more frequent rent collection and they are usually delighted that I worked with them.
Amy A., almost 9 years ago
Great idea, Amy. I like that and might try it out myself. Thanks for commenting!
Nicole A., almost 9 years ago