No landlord ever thinks their tenant is going to default. Eventually at some point in every residential, commercial or industrial lease this is often the case. When it happens how you handle it can make all the difference. An eviction can engulf your business, and your life, for months on end. Not only it is a source of stress but it is also very expensive. To minimize the damage there are a few important steps you should take at the first indication of a problem. Taking these steps will help expedite the process and get your unit rented again in no time. Here are five steps you need to take if your tenant is late.
- Contact An Attorney. Like most other problems you face in the real estate world the quicker you deal with them the better. This is especially the case with a defaulting tenant. Every day that your tenant doesn’t pay is costing you money. You need to have the eviction process started as quickly as possible. The first thing you should do is reach out to an attorney. You want to make sure that everything you are doing is legal and well within your rights. They will help go through your lease line by line and advise you on the next steps to take. The will do what they need to do with the courts, service the tenants notice or anything else you may not be aware of. If there was ever a time to spend money on legal counsel an eviction is it. Let your attorney be the first phone call you make.
- Avoid Confrontation. When your tenant is avoiding your call and not paying their rent the natural instinct is to drive to the property and demand payment. This is one of the worst things you can do. For starters your actions will be brought to light if and when your eviction goes to the courts. The judge may side with the tenant and give them additional time to get out of the property. Secondly this often doesn’t help get the tenants out any faster. All it does is possibly lead to police at the property and publicity you don’t want or need. In most cases your tenants are not paying because they are trying to get one over on you. They may have hand an unexpected bill or other short term issue pop up. Instead of dealing with a sympathetic tenant who is trying to make things right you can escalate the situation. Now they will attempt to stay in the house as long as possible and treat the property without any regard. Confrontation rarely ever works but definitely does not when your tenants are in default.
- Know Tenants’ Rights. Before you go to the property and change the locks you need to know your tenants’ rights. As unfair as it may seem to you your tenant has rights even in default. If you overreact you can damage any chance you have at a speedy resolution. For starters you may be in violation of the lease without realizing it. Even if your tenant is late they have the right to an opportunity to rectify the situation. It is possible that if you storm in the house and change the locks you may be guilty of trespassing. Additionally you have to consider the tenants possessions. You may think your tenants have no right to the property and kick them out and throw all their stuff away. Some states can actually view this as an act of theft and levy you with a stiff fine and force you to pay for damages. Before you do anything rash you should have some understanding of the tenants’ rights and know what you are legally allowed to do. In most cases the answer is to let the courts handle it.
- Consider Resolution. Evictions are expensive. If you hire your attorney the first day your tenant is in default you are looking at a few months of attorney fees. Additionally you are looking at a few months of missed rental payment. Once you throw in the court fees, filing costs and costs to find a new tenant the amount can be staggering. If you don’t have the reserves to cover this is will quickly lead to a loan default that could end up in foreclosure. The best way around this is a resolution. Find out what the problem is with your tenant. Is the issue something short term that can be resolved? Can you work out a discounted rent plan for a few months or find another alternative? Doing this doesn’t mean your tenants can push you around. It means you are savvy enough not to let a small issue turn into a much bigger, more expensive one.
There is not much you can do to prevent a tenant default. Sometimes you can do everything right and still have a bad tenant. It doesn’t mean you are a bad landlord or a bad real estate investor. When it does happen it is important that you seek help right away. There will be plenty of people telling you what they would do or what you should do. Let the courts and your attorney be your guide. Never try to take matters in your own hands. Evictions are never easy but don’t make the problem worse than it already is.
