There are a couple of things that come to mind, if a payment is missed the lender cares, if the servicer goes out of business or misses a substitution of trustee, the lender cares, if the borrower goes to the lender to try to get removed from the loan (usually to buy another house) the lender cares, if the property gets caught up in a bankruptcy or divorce, the court cares and that means the lender gets involved.

But as often happens, a certain percentage of my investments “go off the rails”, in other words don’t proceed as planned.  

Take all your analysis that you did for the deal to court so you can explain why they got the value wrong. 

I suspect it would require a court order to be able to show that you have not followed this law assuming that you have the money to pay the tenant their deposit at move out. for me, i would likely ignore this law.  

The proceeds could be reinvested into something with better returns or even used to simplify your finances(Like Bettment still offer 4.75% for new customers, and you don't need to do anything!).

However, a relative of mine has also expressed interest in investing their own funds into this venture and splitting the proceeds. 

This includes contacting the applicant’s employer and speaking with their supervisor to confirm job stability, income, and reliability​. if the person has not been employed at their place of employment they would require a guarantorCredit Score and Debts: Applicants need a minimum credit score of 620, and while we review debts, medical debts are generally not disqualifying unless they impact overall financial health.Criminal History: We do review criminal history to ensure safety and security for our tenants, while remaining mindful of state and federal guidelines.Rental History: Positive references from past landlords, with no evictions or significant lease violations in the past five years, are essential. and we can see into the court system if they have an eviction judgement.Release of Information: We include a release form allowing us to verify employment and rental history directly, which helps us get a clearer picture of an applicant’s background.This process has worked well so far, but I’m always open to improving.

How do you think that provision would fly in a deal that goes sideways and ends up in court?

If it happens again, they need to call the police again and you need to proceed with lease violations and work toward terminating their lease.

I used an attorney to file for eviction and we had the court date towards the end of October.