What to do When A Tenant Stops Paying Rent
If you've ever considered investing in real estate and renting out your newly purchased property or if you are a new to property management, here are some great tips via John Souerbry that should be required reading for every investor on what to do if a tenant stops paying rent. Among his recommendations is to make sure that you maintain a paper trail and that you continue to abide by the lease while setting things in motion. Sound advice!!
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.