All Forum Posts by: Chris Purcell

Hi All, I have a landlord-renter dispute that I was wanting to run by you all to gather some input before I proceed further.

For some background, I bought a property in a small college town in July 18’ in which I inherited an existing lease. That lease ran through April 30th 2019 and I was able to secure tenants for a year-long lease starting May 1st. The shape of the property was “not great” when the new tenants walked through the property and subsequently signed the lease (3 tenants total each with their parent’s co-signature). Per our discussions during the “lease signing process” since they were college students, none of the tenants would be occupying the property during the summer and since this was the case, I relayed to them that I would take that time to make renovations (repair holes in walls, paint, renovate bathroom, etc.) to improve the state of the property and have it available by August 1st (they stated they wouldn’t even need the property available until Aug. 12th).

Here’s where the fun starts. At various times throughout the summer, the tenants and their parents have made trips to the property to drop off furniture, clothes, etc. and each time have called to voice their displeasure in the state of the property e.g. the bathroom is completely unusable (even though I have stated numerous times the renovations that I would be making and the date that it would be ready by). In the most recent instance of this occurring the mother of one of the tenants informed me that they would like out of the lease and would also like their security deposit plus the two month’s rent that I have collected thus far returned. She was adamant that I broke this section of the rental agreement:

POSSESSION. Landlord shall attempt to have Tenant's house ready on the date stipulated on this lease but cannot be held liable for failure to do so. In the event delivery is delayed, rent shall be abated on a daily basis until you are offered possession. If Landlord is not able to deliver Tenant's apartment within seven days of the date so stipulated, then, upon Tenant's request, Tenant's deposit and any prepaid rent will be refunded in full and this lease will become null and void.

From my perspective, the house was ready and in a “livable” standard on May 1st (the start date which was stipulated on the lease) or else they would not have signed the lease in the first place. Since it was communicated to me that the property would be unoccupied during the summer (early May-August 12th) I wanted to take that time to improve the property however whenever the tenants and their parents have visited the property periodically during the summer (never staying the night) they have stated that it is “unlivable” due to the bathroom being “gutted” and pieced together slowly but surely (finally finished the rehab of the bathroom today).

With all of that said, I have reached out to a lawyer to discuss some potential options but I wanted to see if any fellow landlords had any advice or have previous experiences that may help me out with this situation.

Thank you,

Casey

California is a different beast, especially if the property is located in a rent control neighborhood. Tenants are protected by all sorts of laws and getting rid of them isn’t easy. 

My suggestion: Next time they complain, let them know you are willing to let them out of their lease. 

It is my impressions that the tenants are mistaking your kindness for weakness and it’s time you start channeling your frustrating correctly. Put your foot down and take control of your property. Don’t let them bully you into doing things. 

To your success! 

After a second opinion the itemized break down is:

Stair landing welding / brick repair $950 

Laundry room door repair / change $500

Remove vegitation from building / stairs $150

Repair / repaint ceiling bathroom @ kitchen $1200 

The deal - $152,500 quadplex , fully occupied $1,775/mo rent. All utilities paid by tenant 

Would like some advise here I’m under contract for a quadraplex, during the inspection period I had a property inspector find a few issues, damage to the ceiling from a prior leak , safety issue with the stability of a staircase , and mold in the laundry area. These were the major issues in my opinion. A contractor quoted $3500 to fix these issues which may be a bit high , but the seller came back and said he would contribute $500 to repairs. Is this something I should just deal with and fix myself or back out?

Backing out would cost me $900 for the appraisal I already paid for plus $525 for the inspection.

On a side note the roof was replaced at a cost of $6500 2 days ago at the sellers expense.

What I said is not accrual method.

Cash method = revenue when cash is received and expenses paid when money goes out

Accrual method = revenue earned regardless if you received cash or not, expenses recognized when work has been done or billed regardless if you paid or not.

Just because someone prepays doesn't make it an accrual basis, all prepaid rent income is a liability, and all prepaid expenses are assets.

So if you are on a cash basis, and a tenant prepaid 1 month, are you going to your CPA to tell him to switch to accrual method because 1 of your tenants prepaid you?

Why is everyone making such a big fuss about this?

You do not need to switch your whole accounting basis to accrual if you are cash just because a tenant decides to PREPAY.

No need to open a separate bank account for it.

1. Deposit money into your operating account

2. Record the receipt as Prepaid Rent

3. Post monthly charges each month and it would draw on the prepaid balance.

The prepayment would be marked against Liability account on the balance sheet, not the P&L.

Take it this way, if you have 100 tenants and 1 tenant decides to prepaid 1-2 months in advance, are you going to put that money in a separate account and change your basis to accrual?

@Chris Purcell It is a highly unusual situation. I haven't needed to go before a judge in this situation. In a perfect world, they pay and take care of the property and everybody is happy. But the world is not perfect. If you have ever rented from a corporate apartment complex, what I am saying would not be so alarming. They charge you for the entire year regardless if you are there for the year or not.