Landlord Tenant Lease – Is Yours Legal?

Whether your lease is actually legal is a loaded question.  What is legal?  Legal is whatever will hold up in a court of law on any given day, in front of any given judge.  Is there such a thing as an iron-clad lease?  I don’t think so.  Widely-used lease texts and formats may be utilized by many landlords and property managers for years, only to be determined by a judge down the road that these have been used in error.

I sometimes hear from landlords, “If it is in my lease and my tenant signed it, then it must be legal.”  Sadly, this is far from the truth. Just because your tenant agreed to whatever terms you put in your lease, does not make it a legal contract (lease) that will withstand judicial scrutiny.  Any contract is open to dispute; just take a look at the backlog of civil suits.  Disagreements over contracts happen every day, all over the country.

“Okay, Bill, now that you have suggested I may be using a lease that will not hold up to judicial scrutiny, what do you suggest I do?”  The best anyone can do in composing any type of legal contract is to write one that has the best “chance” of holding up in court: it is all about minimizing risk.

My advice to you is to hire the best landlord-tenant attorney in your area and have him/her review your lease periodically.  Laws and case law change often.  State

An Organized Landlord Has Less Tenant Debt and More Profit

An organized landlord is a more profitable landlord.  I have reviewed many thousands of tenant debtor files, and one thing is certain; by looking at a tenant file after the tenant moves out, I can usually tell you fairly accurately how the property is being managed.  A well-organized landlord who documents everything has less tenant debt, and, as result enjoys more profit.

Organize your files logically and consistently.  At least half of the files I review are little more than a pile of unorganized papers thrown into a file folder; and often very important documents are missing

Landlords Should Consider Settling Tenant Debt

Some of my most uncomfortable moments have come when talking to landlords about considering settlement offers.  Often, the landlord is so emotional about the debt he or she is owed that settling is not an option.

After 12 years of reviewing tenant debt accounts, I can tell you with certainty that landlords who seriously consider settlement offers recover much more money than landlords who don’t.

If a previous tenant makes a settlement offer, he or she is looking to resolve the debt for some reason right now.  Maybe he is trying to rent another place to live, or trying to obtain a mortgage or another loan. For whatever reason, he is motivated to pay you.  If you ignore the offer, he may find another way to rent or get a mortgage or loan without paying you.  This may be your only opportunity to collect even part of what you are owed.

My Previous Tenants Were Roommates – Who Owes Me the Money?

In most cases they both owe you.  First of all, each individual over the age of 18 should have signed the lease.  If this is not your policy, change your policy today.  There are several important reasons for requiring all adults to sign the lease, but for this article we are speaking simply to who owes you money.

Assuming your previous tenants moved more than 30 days ago, you should now report each of them to all three major credit bureaus – Experian, Equifax and TransUnion.  My article, “Tenant Moved Out – Left You Holding the Bag” explains how to determine how much, if anything, you are owed.

How do I Hire a Collection Agency to Collect my Tenant Debt?

Handing my tenant debt immediately to a collection agency is not my first preference.  Myself, I would first report the debt to Experian, Equifax and TransUnion, and let the ding on the debtor’s credit report work a few months before I gave it to an agency that will charge me a hefty commission.

Collecting tenant debt is much different than collecting other debts, such as credit card debt.  A collection agency represents you and your business, and you could be taken to court should they violate the law.  And, just as important as

Evicted Tenants – Will they ever pay you?

Are you certain your old tenant won’t pay his or her bill?  Landlords tell me several times a week there is no way their previous tenant will ever pay what they owe.  As I said in a previous post, if you have a crystal ball that tells you he won’t pay you what he owes, why didn’t you use that magical crystal ball before he became a tenant?

The truth is nobody knows whether the balance will be paid or not. The one way you can make sure not to get paid is by putting his file in the drawer and leaving it there.

Think about it.  Your tenant moved out with the knowledge that you were owed money. The renter might not have known how much, but most likely understood it was some amount.  After moving, the former tenant either hoped you would not go after the debt, or did not think you could.

Tenant is Long Gone – But the Debt was Never Paid

So, you gave your old tenant the opportunity to do the right thing and pay his debt; he gave you the salute and moved along without paying you a penny. He or she has now been gone over thirty days.  What do you do now?

Doing nothing is not an option!  In fact, doing nothing is a bad business decision.  It is not fair to you, your business or your other tenants.  Try skipping a credit card payment and see what happens.  They will be on you like white on rice.  Those who don’t pay their bills raise the prices for the rest of us that do pay ours.  Rent is no different.

In my previous post, I explained the process of determining how much you are owed, and notifying the debtor.  I recommended giving him 30 days to respond.  If

Tenant Moved Out – Left You Holding the Bag

Perhaps your tenant lied and took advantage of you.  He may have skipped out on the lease or you may have evicted him.  In either case, he damaged your rental and cost you money!  What do you do now?

1.  First, set your emotions aside and spend some time organizing your ex-tenant’s file.  Whether you own one unit or one thousand, or whether you manage your rentals full-time or part-time, you are running a business.  Any successful business keeps well organized, complete records.

2.  Keep copies of all receipts required to repair the unit, spent on legal fees, unpaid rent, etc.  Complete a move-out inspection checklist, preferably with the tenant if possible.  Both of you sign the document.  The move-out inspection will help you document the condition of your unit and the debt he owes you.  If you are not completing move-in inspection checklists now, begin doing so with your next move-in. This important step is often left out because “I didn’t have time”.  Take the time.  There is no excuse for not having a complete move-in inspection