What To Do When a Tenant is Not Paying Rent
You've finally experienced what every landlord eventually goes through - your tenant is withholding rent.
Refrain from changing the locks and tossing their stuff in the street...for a few minutes at least.
It's important to keep a cool head and try to resolve this before you end up in court.
Keep reading to learn ways to make your tenant pay their rent.
My Tenant is Not Paying Rent, Now What?
It's easy to overreact when someone owes you money. The key is to stay calm. More often than not, you can resolve the situation without an eviction.
If you do end up in court, you want to appear to be the calm and cool one while the tenant is the 'unhinged crazy person'. Appearances are meaningful, so maintain yours.
Here are the 5 steps to take after a tenant missed the rent
- Check the Lease
- Understand the Law
- Contact the Tenant
- Send a Notice to Quit
- Start Eviction
- Sue and pursue
1. Check the lease and Receipts
Always check the lease or tenancy agreement before contacting the tenant. What, you don't have one? Go download a sample lease for free.
You should always be armed with the law and with the contract. If there is a dispute, you want to point at the agreement and explain why they still need to pay the rent.
When the tenant complains about (insert ridiculous excuse), you can point at the agreement and explain why they still need to pay. Most people will get grumpy, but still pay when they realize they are under contract to pay.
Also, make sure you double check the receipts. Before starting any issues, make sure the tenant actually missed the payment. If you own more than a few properties then it's easy to mix up names and addresses.
2. Understand the Law
The most important thing to do is check the local laws. Every state is different so it's really important to understand the tenant's rights and your responsibilities.
There are a lot of books out there, like "Every Landlord's Legal Guide." These can be a great resource for you and you should definitely shop around and pick one up.
In fact, the best $40 I ever spent was a book about being a landlord in Massachusetts.
You can see my book is stained, bent, wrinkled, and clearly well used. I've been through numerous evictions with it and I've never lost.
back in 2009 when I got my first property, I grabbed this book and immediately thought of something funny. I crossed out "successful" and added in "asshole."
I realized early on that being nice doesn't work with tenants. The fact is people seem to interpret 'tough' as 'asshole'.
I'd rather be an asshole than lose in an eviction.
A tenant may have a grace period to pay the unpaid rent. Make sure you don't initiate legal action before the grace period.
Some states set limits on late fees or when you can charge them. Some states even require a 30 day period where late fees can't be applied (they are already evicted by then anyhow!).
Courts will be quick to crush a landlord that violates these rules, so stay well within the law.
Tenant's right to withhold rent
Tenant's often have the right to withhold rent if certain conditions aren't met, such as having working heat, windows, appliances etc. These laws can be nuanced and often require the tenant to keep the rent in an escrow account.
The point is, you should know when the tenant has to right the withhold rent, and how they legally can do so.
3. Contact the Tenant to ask why they didn't pay the rent
You should politely speak to the tenant about their late rent. In my experience, at least 75% it's simply that the tenant gets paid on Friday and will deposit the rent just a few days late. Is it right? No. Is it worth going to court over? Nope!
Make sure you don't harass the tenant by calling too many times. Also, if you do call make sure you leave and extremely professional voice mail that asks about the late payment.
Never, ever, ever, EVER make threats or leave angry voicemail or texts. The tenants will absolutely use this against you. Remember what I said about appearances?
Work with the tenant when they can't pay
This is a tough one. Sometimes you can allow a tenant to pay a little late if you are really confident they will pay.
Other times, they will just take advantage of you and delay the eviction as long as possible.
It really takes a gut instinct to know who will or won't pay you.
I usually recommend delivering the legal notices even if they plan to pay. At least you won't be behind the schedule with the eviction should they try to screw you.
4. Deliver the Notice to Quit
When the tenant stops paying, you will eventually need to deliver a notice to quit. You may need a constable or sheriff to deliver your notice, or you may just need to send it registered mail. Check your local requirements.
Either way, the notice to quit is just a document that says they have a certain number of days to pay, or you will begin the eviction process. You can download a sample notice to quit here.
This is not an eviction, but simply giving the tenant a specific period of time to pay.
Legal notices are scary to a tenant so be cautious
Tenant's get really scared when they see a notice to quit. Often, you need to explain what it means and that they aren't being evicted if they pay.
Some tenants may simply refuse to pay after receiving the notice. I don't know why, but some people simply shut down and can't handle the stress of it.
It's an important step to follow
Regardless how the tenant perceives it, you need to follow this step. The sooner you send the notice the sooner you can get to court to evict.
The goal is to get them to pay, but you also don't want to delay your day in court. It's best to get the notice out quickly.
5. Evict the non-paying tenant
Don't penny pinch on an eviction. It may cost you more to hire a good attorney, but you will save that money by not losing.
The required paperwork can be confusing and it's easy to have the case tossed due to a technicality. You don't want to start over because you forgot to file some piece of paper.
Points to remember when evicting a non-paying tenant
- You may want to inspect the property for damages, but be cautious with this. It's usually not legal to enter a tenant's apartment without notice and without a reason. If there is no reason to suspect damage then avoid going in.
- Try not to accept partial payments, but if you do make sure it's for "use and occupancy only." Some courts may interpret partial payments as an agreement to pay less. Make sure this is clearly done in writing.
- As soon as the tenant is not paying rent, begin to document everything! I would make this points 4, 5 and 6 if I could. Seriously, write everything down. Notes taken when an event happens are worth more than memories a month or two later.
- Always evict everyone. If John and Jill live in an apartment and the father-in-law Bill also co-signed, make sure you evict John, Jill, Bill and "all other occupants." Leave no one out that may slip through the cracks.
- Always follow the laws and local eviction rules.
- It's never acceptable to lock a person out or throw away their things! It doesn't matter how much rent they owe.
When you get to court, make sure you dress professionally and avoid conflicts with the tenant. Never argue and always appear to be the one that's calm and cool.
6. Sue and Pursue
You've successfully evicted the tenant, and now they have to leave.
Many people are happy just to get them out. I've done it too... I've settled for losing money just to get really bad tenants out. It's not always smart though
Sure, you need to pick your battles. Not every battle is worth fighting and not every eviction is worth your time to sue.
But it's good to create your reputation.
Unless you own property in a giant city, you'll eventually earn a reputation. If a tenant knows you will chase them to the end of the earth and take their last possession to satisfy the $3000 judgement you have against them, do you think they will hang around your property rent free?
No, of course not.
This is why sometimes it makes sense to sue, get a judgement, then go after them.
And when that tenant goes crying on the phone to your other tenants in the building, they will know to never mess with you.