Bill Gray – The Landlord Doctor

Insider Advice on Collecting Tenant Debt and Screening Tenants

Posts Tagged ‘Attorney’

Failure to Comply With Tenant Deposit Notifications Could be Costly

Posted by Bill Gray on February 22, 2010

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A Landlord's Worst Nightmare

Imagine being forced to write a check to a previous tenant who still owes you money.  This is a very real possibility if you fail to comply with the law after the tenant moves out.  With the amounts and occurrences of tenant debt rising, having to pay a previous tenant who still owes you money only adds insult to injury.

In most states, landlords and property managers are required to notify their tenant if they do not intend to refund the tenants deposit after they move out.  States vary in the required timeframe and method of notification, but most do require it.  This notification is referred to in various terms such as SODA (Statement of Deposit Account), Deposit Disposition, Final Account Statement, etc.  Some states require the notice be sent via certified mail, while others accept First Class mail notification.  I advise landlords to mail this notice via Certified Mail, whether the state requires it or not.  Sending it Certified Mail provides you with a receipt proving you mailed it and complied with the law.

Failing to notify your previous tenant of how you intend to apply the deposit he paid you may end up costing yourself even more money!  Regardless of the unpaid rent, damages, eviction legal fees, etc., if you fail to notify the tenant as required by law in most states, the tenant can demand his deposit back.

Let’s say the tenant paid a $1,000 deposit on a twelve-month lease. Six months into the lease, the tenant skipped, leaving your rental trashed and owing you a month’s rent.  Once you calculate your losses, you determine that the tenant owes you $3,000.  After subtracting the $1,000 deposit, you are in the red $2,000.

If in this scenario you do not notify the tenant of how you intend to apply the $1,000 deposit toward the $3,000 loss, the tenant in many cases could demand his $1,000 back, regardless of what he owes you.  Yes, he may have to sue you to get the deposit back, but if you have violated the law, he most likely will win.

So, take a look at what your failure to comply with the law may cost you in addition to a big headache.  Immediately, you have cost yourself the $1,000 deposit plus any legal fees you paid to defend yourself in court.   A quick Google search will give you further proof, revealing a number of class action suits against landlords and property management companies who failed to notify past tenants of how the deposit was applied.

In many cases, you might not have a forwarding address to mail the notice to. Your only option is to mail the notice to the last known address, which is the address of your rental. Half or more of these notices will be returned to you as undeliverable or having a wrong address.  File the returned mail with the tenant’s file and save it.  You may need the returned mail as proof that you did attempt to send the notification.

Comply with your state’s deposit notification law.  Doing so may save you money.

The information contained in this article is provided for informational purposes only, and should not be construed to be legal advice.  Consult a local landlord-tenant attorney to discuss your specific situation.

Email me your tenant screening and tenant debt questions.

Bill Gray

Bill@thelandlorddoctor.com

www.thelandlorddoctor.com

Tenant Debt & Screening Forum www.theinformedlandlord.com

Copyright 2010 – Click here to reprint/re-post

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Accepting Late Payments Can Land You in Court

Posted by Bill Gray on February 11, 2010

There are many reasons why you shouldn’t allow a tenant to pay rent late, but the legal implications must always be at the top of the list.[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5D Unfortunately, by being the nice guy, or gal, and accepting late rent payments, you might be establishing grounds for a Fair Housing lawsuit.  Last year, I sat in on a seminar given by Milwaukee landlord-tenant attorney Tristan Pettit, where I learned that case law has been established that says you cannot accept late payments from one tenant and not accept late payments from another.

The Fair Housing Act makes it illegal to “set different terms, conditions, or privileges for sale or rental.”  By accepting late payments from one tenant and not another, you may be violating the law.

Any trip to court can be precarious and expensive in terms of time and money. You can never be certain of what the outcome of a court case or dispute is going to be.  Any good attorney will tell you that avoiding court altogether is always preferred.

To compound the issue of being sued for a Fair Housing violation, consider what you are doing to the terms of your lease by habitually accepting late rent. Let’s say your lease requires the rent to be paid by the third of the month. But for the last six months, you have accepted the rent on the fifteenth. Suddenly, in the seventh month you put your foot down and demand the rent be paid by the third, but the tenant ignores you and continues to pay the rent on the fifteenth. In the eight month, you file for eviction when the tenant again is late with his or her rent.

If the tenant were to hire a savvy attorney to represent them, the attorney could easily argue that you had amended the terms of the lease by accepting the rent late the first six months of the lease. Not only could this force you to continue accepting the rent, it could cause a counter suit.

Enforce the terms of the lease and require that the rent be paid on time—from each and every tenant.  Doing so may keep you out of court.

The information contained in this article is provided for informational purposes only, and should not be construed to be legal advice.  Consult a local landlord-tenant attorney to discuss your specific situation.

Email me your tenant screening and tenant debt questions.

Bill Gray

www.thelandlorddoctor.com

Bill@thelandlorddoctor.com

Tenant Debt & Screening Forum www.theinformedlandlord.com

Copyright 2010 – Click here to reprint/re-post

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Ten Common Landlord Mistakes

Posted by Bill Gray on January 3, 2010

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Effectively Dealing With Tenant Delinquencies And Eviction Proceedings

By Jon L. Farnsworth, Esq.

(Editor’s note: This article was initially published in the September 2009, Minnesota Real Estate Journal, and has been edited and reprinted with the author’s permission.  While the article mentions Minnesota law, and includes commercial leasing issues, the discussion points are generally applicable in other states and to residential lease matters.)

The poor state of the economy threatens tenants’ ability to satisfy their lease obligations. Unfortunately, landlords are feeling pinched by tenants’ mounting delinquencies.

Some tenants lack the cash flow to make lease payments, while other tenants voluntarily withhold rent for business reasons (i.e., conserve cash flow; obtain a lease modification with more favorable terms for the tenant; etc.). This article summarizes ten common mistakes made by landlords when dealing with tenant defaults and eviction proceedings as well as offers insights of how to effectively manage tenant delinquencies.

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SUING AN EX-TENANT FOR PAST DUE RENT: What Factors To Consider

Posted by Bill Gray on September 14, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DTristan R. Pettit, Attorney at Law, Milwaukee WI –       Tristan’s Landlord – Tenant Law Blog www.petriestocking.com/blog/

Your tenant has already vacated your rental unit – so there is no need to file an eviction action — but they left owing you money.  Is it worth your time and effort to sue them in order to obtain a money judgment?  This is probably the third most frequently asked question that I receive when talking to landlords (the first two most asked questions in case you are curious are (1) which notice do I use when? and (2) how do I evict my tenant?).

There is not a simple answer to this question.  It depends . . . on many things.  Many variables need to be taken into consideration before deciding to spend the time and effort to sue an ex-tenant.  Let’s consider what some of those variables are.

1.     How much money does the tenant owe you?

Is the amount that is owed to you worth the time, energy, and cost to attempt to collect it?  You will need to purchase a small claims summons which will cost you approximately $100.  You will need to personally serve the ex-tenant with the assistance of the Sheriff or a private process server — typical cost between $35-$100.  If you are representing yourself you will spend time away from work and therefore lose some wages.  If you opt to hire a lawyer to represent you, you need to consider how much you will have to pay the lawyer.

There is no magic dollar amount that makes suing a tenant worth it or not worth it.  The “breaking point” as I like to call it, will be different for different people. Read the rest of this entry »

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Landlord Tenant Lease – Is Yours Legal?

Posted by Bill Gray on September 10, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DWhether 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 givenFlexLease 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

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State Specific Landlord/Tenant Law Links

Posted by Bill Gray on August 19, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DI receive many questions about specific state Landlord/Tenant laws.  It would be very difficult to stay current on laws that change often.  I have added a link to state specific landlord/tenant laws.  The link can be found in the sidebar links section or here:  State Specific Landlord/Tenant Law Link

I am not an attorney and can not give legal advice. This is page is an attempt to link you directly with the laws of any particular state.  Please verify that what you are reading is the most current available.  If in doubt, always consult with your attorney.

Regards,

Bill Gray

Bill@thelandlorddoctor.com

www.thelandlorddoctor.com

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When a Tenant is Behind in Rent, When Should You Call it Quits?

Posted by Bill Gray on August 17, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DToday I reviewed over eighty tenant debt accounts and noted that the average balance due is significantly higher than a year ago. With theemptypockets exception of the most expensive areas (such as California, New York City, and the northeast), the average amount of tenant debt is normally between $2500 and $3000.

I separated all accounts over $4000 and took a hard look at them to determine why there were so many high balances.  The answer was that landlords allowed tenants to go month after month paying little or no rent, before they were eventually evicted or the tenant skipped out. This is obviously a sign of the times.

I assume landlords are allowing tenants to live in their units for three to four months without paying rent for one of two reasons:

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Posted in Collection Agencies, Credit Bureau Reporting, Evicted, Landlord Tenant, Tenant Debt Collections | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 2 Comments »

Landlords Should Consider Settling Tenant Debt

Posted by Bill Gray on August 11, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DSome of my most uncomfortable moments have come when talking to landlords about considering settlement offers.  Often, the landlord is somoney4 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.

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

Posted by Bill Gray on August 6, 2009

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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.

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

Posted by Bill Gray on July 28, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DHanding my tenant debt immediately to a collection agency is not my first preference.  Myself, I would first report the debt to Experian, Equifaxmakingdecisions 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

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