Can’t Evict if Always Late on Rent!
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There are many urban legends, rumors, and old wives’ tales surrounding owning investment real estate. Did you hear the one about the landlord not checking on his house for 3 years; when he finally went over there, the tenants had flooded the basement to grow fish to sell at the fish market?
Many of the investment real estate urban legends surround evicting tenants. Most try to tell the listener how hard it is to get the tenant to leave the property. I would bet some of those stories actually keep people from buying investment property! This next tale was not as outlandish as the fish story, so I figured it may have some truth to it.
I heard it from a seasoned landlord who heard it from someone else. The summary of the story was that a landlord had allowed a tenant to pay their rent late every month, but eventually decided to evict the tenant when they were late the next month (per the lease). The tenant took the landlord to court claiming the landlord had always accepted the late rent and therefore, what was different the month he finally decided to evict her? In other words, the landlord had set a precedent of allowing late rent payments.
This story sounded plausible, (probably because anyone can sue for anything), but I figured no tenant would go through the legal work or be smart enough to come up with that argument in front of a judge. Hold onto your UFO books and big foot videos, this actually happened in Wisconsin! Read the full Court of Appeals Decision from 2002. The tenant in the case had paid her rent at least 10 days late for the last 2 years, thereby setting a pattern and precedent. The landlord finally decided to evict her because he had not received the rent on the lease-specified due date and the court eventually overturned the eviction stating that “A pattern of late rent payments can operate to change the time the rent is due”.
The moral of the story is to read your leases and evict your tenants in a timely manner. Alternatively, I would at least recommend updating the lease to reflect the updated/later due date and/or send the tenant a letter periodically stating that although you are accepting the rent payment late, the due date is specified on the lease, and you are not waiving your right to evict them if they do not pay by the due date.
Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own Minnesota investment property. He owns and manages almost 30 investment property units from single family to multi-family. Find his website at www.minnesotainvestmentrealestate.com or receive his blog via your RSS Feed or in your Email.
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December 17th, 2007 at 10:01 pm
…or live in a jurisdiction that isn’t so liberally friendly to tenants. I mean, if you set the rent to be due on the 10th I’ll guarantee you that you won’t see rent till the 20th.
December 17th, 2007 at 10:02 pm
Very true!
December 18th, 2007 at 5:30 pm
[…] suggestions on how to save for your down payment to buy property. and Finally, Scott Ficek presents Can’t Evict if Always Late on Rent! posted at Minnesota Investment Property Blog. Copyright © 2007The OC Coastal Group Garry Loss […]
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Landlording tips…
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April 3rd, 2008 at 3:36 pm
Wow I hope none of you are 10 days late on any of your bills. Sounds like the robbing Peter to pay Paul syndrome to me. If someone is consistently 10 days late you are still getting your rent every 30 days, sit down and shut up. Where is the compassion. At least your getting paid. If you have never had money trouble I hope for your sakes the people you owe are more understanding. I can’t believe a landlord would evict a tenant for paying 10 days late for 2 years. Consistent monthly payment is obvious in that case and you know you will always be paid. Most landlords collect a nice little average of $50 extra a month. As long as it’s all getting paid quit looking down your noses at people.
April 3rd, 2008 at 3:51 pm
Shawna-
I don’t necessarily agree with evicting someone that does pay every month (even if they are consistently late). I have had investors get upset at a tenant for something minor and then decide to evict them for late payment (after accepting late rent for years). This message is mostly a warning to them.
I also do collect several hundred dollars extra each month from my tenants for late rent charges, so I don’t mind!
Alternatively, I disagree that we need to be more understanding. As landlords, we have mortgage payments, taxes, insurance, utilities and other bills to pay. Those vendors don’t care if my tenants are late on their rent.
I have been “understanding” with more than a few tenants over the years only to have several of them move out in the middle of the night and/or never pay me (leaving me owed $1000s). This is business and as such, landlords need to run it as a business.
April 3rd, 2008 at 4:04 pm
Shawna, I can tell you that twice in my new landlording adventure i’ve had to put in $500 here and there of my own money to cover the mortgage because my tennant pays late. Now she’s always only two days or so and pays the late fee but because late isn’t until the 5th and Eviction starts on the 15th i’m feeling pain even before she’s late because I have to pay my mortgage on the first of the month regardless. If she gets to the 15th I have to start the process because now I’m probably paying my own money from the 1st of the month plus not likely to receive in time for the next payment. Keep in mind it’s a business, we’re not running shelters.
On that note while that may sound cold I view my lease as a two way contract. I keep the place nice and in good repair, the tenant keeps their rent paid on time. I have always held up my end so I expect them to do the same. I don’t pay my mortgage late when my tenant pays late so while we should be compassionate and flexible when possible you do need to stick to hard dates. Besides you can always call off the eviction if they pay but your better to get the process started should they decide not to.
April 3rd, 2008 at 4:13 pm
I would also say that I have been patient to help people out when they come to me. But when I have to chase them it’s completely different.
Why do tenants believe the landlord should be a bank. The statement “you collect a nice little average of $50 extra a month” doesn’t take into account any late fees the owner may have to pay to his mortgage company, does it?
Many a landlord I know will work with tenants. But nowhere in a lease does it state cooperation all goes to the landlord.
And yes, I think you would find most landlords have had tough months in their lives. But paying rent comes first to those that want to live indoors. Not the car payment. Not the credit cards or eating out or even the medical bills. Prioritize like everyone has to do.
Shawna, this isn’t a rant. It’s just trying to get you to look at it from the landlords’s point of view, too. Both landlords and tenants would be well served by staying in communication with each other.
April 3rd, 2008 at 9:10 pm
Sorry to be late to the party.
Tenants don’t get to tell me how I run my property. They have given their word to do A as long as I keep doing B.
I’m not their mother. It’s been this sense of entitlement which has literally bankrupted many income property owners.
Compassion? That’s the landlord’s choice.
When we begin researching new (for us) regions, we always begin by applying our ‘Santa Monica’ test. If the local and/or state policies tend to be unfriendly towards business in general and tenants specifically — we pass.
In Santa Monica the local Marxists have legislated tenants into near partnership status. Prudent, experienced investors have been staying away in droves.
When it’s your property, you get to make the rules. Until then…
Well, suffice to say a sense of entitlement is usually followed by a life of siphoning assets from those who made consistently better life decisions. And all under the guise of ‘compassion’.