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Property Management Tips: When A Tenant Stops Paying Rent

By
Real Estate Broker/Owner with Cordon Real Estate 01370983

When A Tenant Stops Paying Rent  Most rental property owners eventually face this question – what to do when a tenant stops paying rent?  Rent problems often start with several months of late payments or partial payments, and if left unresolved may escalate to no payments at all.  Even tenants who are behind on their rent have rights, so it’s important for landlords to take action as soon as possible and as prescribed by law to protect their investment.

Here are a few tips for dealing with the unfortunate situation of when a tenant stops paying rent.

1.    Contact a local attorney.  Landlord/tenant laws and regulations often vary from town-to-town.  Have an attorney who practices in the town where the property is located explain local rules for late rent collection and eviction and help you develop a plan of action.

2.    Communicate in writing.  Regardless of tenant’s rights laws and the specific collection or eviction process you use, avoid “he-said, she-said” verbal misunderstandings and mistakes.  If you end up in court, you’ll need a paper trail that documents how you complied with regulations and delivered proper notices to demand payment.  Even if you’ve had a cordial relationship with the tenant in the past, late or non-payment of rent is a game-changer.  You may want to hire a professional property manager who is familiar with these situations to deal with the tenant on your behalf and support your attorney until payments are caught-up or the eviction process is concluded.

3.    Continue to abide by the lease.  Until the tenant has vacated the property, they retain all the rights granted by the lease and the law regardless of whether or not their rent is paid current.  Do not disconnect or discontinue landlord-paid utilities or services, such as water or lawn care.  Make timely repairs when requested.  Do not harass the tenant or disturb their “quiet enjoyment” of the property.

4.    Inspect the property.  Unfortunately, when a tenant stops paying rent it is common for them to abuse the property.  It is also common for tenants undergoing eviction to claim that the landlord has failed to maintain the property or make repairs when requested.  Unless otherwise advised by your attorney, schedule a thorough property inspection as soon as rent problems start.  Confirm there is no deferred maintenance that would make the property uninhabitable or violate the terms of the lease.  Be sure to give the tenant proper notice of the inspection and document everything with photos and/or video. NOTE: Many landlords make the mistake of photographing only items that need repair.  It is equally important to document that the property is in good condition and that systems and appliances are working properly.  If possible, ask the tenant to sign the inspection checklist stating that there are no problems with the property.

5.    Follow your attorney’s advice on resolution.  Whether you want to evict the tenant or merely get the tenant caught-up on rent payments, follow your attorney’s advice and follow the steps prescribed by law to reach the desired conclusion.

6.    Reduce the risk of future tenant problems.  Learn from problem tenant situations and implement strategies to reduce the risk of future occurrences.  Thorough tenant-applicant screening is generally considered the most effective method of reducing tenant problems.  Some landlords prefer annual leases rather than month-to-month or collect rent at the property personally so the tenant knows they are always watching them and the property.  Find strategies that work best in your situation.

7.    Help other landlords.  A service that property owners and managers can do for others in the rental property business is to give honest responses to tenant screening inquiries.  If a tenant has been late on payments, disclose that when the tenant applies to rent another property and you receive an inquiry from the potential new landlord.  You’d want that landlord to do the same for you.  Just make sure that all inquiries and responses are in writing and can be supported with documentation.

NOTE: This article is not intended to offer legal advice.  Consult with an attorney whenever faced with lease compliance issues.

If you have questions or need help with property management or taking action when a tenant stops paying rent (or other problems), read about our Property Management Services or drop me a line:  Contact Us.

Comments (47)

Bryan Robertson
Los Altos, CA

Excellent advice.  It seems many tenants have a sence of entitlement when it comes to where they live - regardless of paying.  I've sold properties with tenants that made the process nearly impossible, especially when they're behind in payments.

Jul 24, 2013 04:19 AM
John Souerbry
Cordon Real Estate - Fairfield, CA
Homes, Land & Investments

Trisha #27 - thanks!

Edward & Celia #29 - Landlords retain the right to inspect with proper notice even when the legal side of the eviction is in-process, and certainly do so.  99% of tenants I've helped evict left damage that exceeded their security deposit with no hope of ever recovering the difference.  Owners should build contingencies for this into their business plan and consider insurance coverage for major damage by renters.

Bryan #30 - I believe that entitlement mentality has been given to tenants by politicians shilling for their vote.  Sad...

Jul 24, 2013 05:00 AM
Tamra Lee Ulmer
Arizona Resource Realty - Payson, AZ
NRBA ~FORCE~ Over 1000 REO Assets SOLD!

Excellent tips, thank you! I Specialize in Property Management, and so far things have been going smooth. I've had to promptly have my Vendors take care of some minor repair issues, but I have not yet ran into the Tenant not Paying Rent issues. I do thorough background checks. Hopefully things will continue to be smooth. Thanks for your great tips!

Jul 24, 2013 06:23 AM
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

A SMART eviction starts with a GOOD LEASE that incorporates the latest in landlord tenant laws and removal guidelines....

Jul 24, 2013 09:19 AM
Aaron Hofmann
Atlanta Communities - Smyrna, GA
aka Mr. Smyrna Vinings
Just hate the thought of a tenant not making payments, but it happens and I would definitely get an attorney involved quickly. Sometimes just a letter from them will let them know that you're not messing around.
Jul 24, 2013 11:20 AM
Michelle Francis
Tim Francis Realty LLC - Atlanta, GA
Realtor, Buckhead Atlanta Homes for Sale & Lease

John, 

Great tips.  We are 11 years in executive leasing and PM with NO evictions and collecting every dime of rent due.  Probably our best advice would be to get the very best tenants you can, collect TWO months of secuirty deposit (not last month's rent, two full month's of security deposit) and only work with owners/clients that allow us to have the philosophy no tenant is better than a bad tenant. 

We are fortunate to be in an area where there is strong demand for properties and have very low vacancy rates.  

Life is too short to deal with evictions if we can help it. 

All the best, Michelle

Jul 24, 2013 11:37 AM
John Souerbry
Cordon Real Estate - Fairfield, CA
Homes, Land & Investments

Tamara #32 - you're welcome

Wallace #33 - true, a good lease helps

Aaron #34 - an attorney letter does seem to carry more weight with tenants than an ugly guy like me showing up at the door with a 3 Day Notice.

Michelle #35 - In California it's illegal to collect more than an amount equal to 2 months rent up front for an unfurnished property, including both 1st month's rent and deposit.  Our best defense against deadbeat tenants is good screening, regular inspections and a lawyer on speed dial.

Jul 24, 2013 11:50 AM
Jimmy Faulkner
Florida. Homes Realty & Mortgage - Wantagh, NY
The Best Of St. Augustine

Great refresher course on how to handle tenants. It is a difficult business that requires a lot of attention and caring. You have to watch out for signs of trouble and act on them immediately. NO nice guy.

Jul 24, 2013 12:25 PM
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

A very informative post.  It is important for landlords to act quickly. 

Jul 24, 2013 01:00 PM
Jennifer Spanbauer Brodoway
Lethbridge Real Estate.com - Lethbridge, AB
just call jen

Thanks for all the tips.  If every tenant paid on time, being a landlord we be so much easier.

Jul 24, 2013 01:32 PM
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

John, I like your list - or should I say, detailed steps? One of my client is just waiting for eviction before I could list his home.

Jul 24, 2013 02:12 PM
Mark Delgado
houses for rent, Solano County & Glen Cove - Benicia, CA
Benicia and Vallejo, Property Management, rental h
Wallace is correct, as always, and the list provided in the blog is also solid. However, don't overlook the power of persuasion and what a good phone call can do to help tenants re-align their priorities and pay. Of course, to do this successfully you need to speak with knowledge and confidence. Probably better to hire a property manager in the first place.
Jul 24, 2013 02:36 PM
Jordon Wheeler
The Jordon Wheeler Group - Fairburn, GA
J W Group Real Estate Sales and Service

Hey John,

Congrats on the FEATURE!  I too believe the process starts with good screening upfront, and I agree with Michelle #35 about collecting two months upfront.  Best of GREAT success to you this year!

Jul 24, 2013 02:38 PM
John Souerbry
Cordon Real Estate - Fairfield, CA
Homes, Land & Investments

Jimmy #37 - You can be a nice guy up front, as long as you're not taken advantage of.  Payments cure all...

Joan #38 - I've found that landlords will usually act quickly if properly guided through the steps.  It's getting the attorneys to file the Unlawful Detainer and get it properly served that sometimes takes a long time, but heh, they gut brunches, tee times and vacations to take care of first...

Jennifer #39 - It would also be nice if plumbing didn't spring leaks at 2am...

Praful #40 - No buyer wants to acquire a deadbeat tenant, we've helped clear out problem tenants in lots of multi-family properties that always had 1 or 2 late payers that de-valued the building.

Mark #41 - We always start with the calm approach aimed at finding a solution, but they seldom work out. Best to get the paperwork going right away.  You bring up a good point, some owners either don't have the time or the stomach to handle confrontations.  Better that they hire a property manager or an eviction specialist when things get sticky.

Jordon #42 - Thanks!  As I responded to Michelle, extra deposits are a good idea in states where they are allowed, we can't do more than 2 months rent total here in California, including deposit.

Jul 24, 2013 03:28 PM
Jay & Michelle Lieberman
Keller Williams World Class - Agoura Hills, CA
Creating Calm in the Buying and Selling Chaos

Screening and background checks obviously the best start to a LL and T relationship. If and when that relationship starts to fail, I always hold the tenant to the letter of the lease.  Unless there is some very out of the ordinary circumstance.

Jul 24, 2013 03:43 PM
Jane Chaulklin-Schott
TEAMCONNECT REALTY - (407) 394-9766 - Orlando, FL
TeamConnect Luxury Homes - Orlando, Florida, 32836

Your list is thorough and excellent. Each point is valuable and important. John, your post covered it so well. Most rental property owners have probably and sadly experienced some or many of the issues you cover.

Jul 24, 2013 04:29 PM
Kevin Henry
Henry Realty - Fort Wayne, IN

Great tips. I am thinking of going into this area which is new to me. I do know Indidna laws, but I would hate to have a deadbeat renter. I guess a background check and a good lease agreement would help.

Jul 24, 2013 10:03 PM
John Souerbry
Cordon Real Estate - Fairfield, CA
Homes, Land & Investments

Jay & Michelle #44 - It's great when the tenant is up-front with you about their "extraordinary" situation and can work out something with the landlord.  No one likes to evict a tenant who is merely having a temporary employment or other problem.

Jane #45 - yes, eventually every owner has a problem tenant of some type.

Kevin #46 - Most standard leases provided by the state NAR affiliate cover all the legal bases, but good screening and regular contact with the tenant help to maintain a mutually-respectful relationship.

Jul 24, 2013 10:14 PM
Wayne Johnson
Coldwell Banker D'Ann Harper REALTORS® - San Antonio, TX
San Antonio REALTOR, San Antonio Homes For Sale
Getting everything in writing is one of the easiest but maybe most overlooked aspect of property management. The judge was not there to hear every exchange. If it's not in writing, judges presume it didn't happen in most cases.
Jul 27, 2013 03:23 PM
John Souerbry
Cordon Real Estate - Fairfield, CA
Homes, Land & Investments

Wayne #48 - very true.  It's also important to use a process server or require that the tenant sign a receipt for each written notice delivered.  I've heard several say "I never got that notice..." - only to be confronted by their own signature.

Aug 01, 2013 10:31 PM