I was in eviction court last week in Hennepin County.  I love sitting and listening to the other court cases.  Sometimes it is a little like a case of Cops or Judge Judy!  It is good entertainment to hear what the landlord and tenant say about why they are in court today.

This last week I just about fell out of my chair.  As part of the court process, the judge reads the eviction complaint:  ”According to the complaint the tenant resides at XXXxx.  The lease is from xxxx to xxxx and the rent is $800 per month.  Currently they owe rent for August through March.”  Wow.  This landlord let that tenant live in the property for almost 9 months!  This tenant owes the landlord about $7k.

This landlord probably blew all of his cash flow for 2-3 years by not evicting this tenant quicker.  Let’s talk plain here, this is a business, not a charity.  That tenant that is not paying their rent is taking money out of your pocket, food off your family’s plate.

Most landlords (me included), don’t pull the trigger quick enough to evict a tenant.  I have found that virtually no tenants can recover from being more than 1 month behind in rent.  If they can’t pay rent by the 15th of the month, it is highly unlikely (unless they are getting government assistance) to get caught up and then also make the rent for the next month.

I have said this before, but I will say it again, you need to pick a deadline in your mind for filing the eviction and sticking to it.  It may be the 6th of the month, it may be the 15th.  Just pick a date and stick to it.  Evictions are a stressful, but necessary part of being a landlord.

Get that eviction started today.

I get a lot of questions about tenant evictions.  I suppose it is like any job, it is the one thing that landlords have in common across all investment properties.  Here is a recent note I received:

I have a renter who’s lease expired in September so she is on a month-to-month lease currently. She has not paid November and Decembers rent. I spoke with her in November [2 weeks after she was late on her rent] and she told me she would pay and I said apparently you cannot afford to live there and maybe you should move out. Then I gave her [on November 27] an ‘unofficial” eviction letter telling her she needed to be out by today Dec 28th. Do I have the right to lock the doors tomorrow if she has all or her stuff or most of her stuff moved out??? I was in the property yesterday and there is damage to the property so I really don’t want anymore damage at this point. Just want to know what my options are.

This is a very common scenario.  Here are some thoughts about what she did right and wrong:

• This landlord did a good job of proactively getting in to speak to the tenant and assessing the situation.  Many times landlords want to quarterback from their cell phone and just leave messages.  She also succeeded by not waiting another 30 days to ask the tenant to move out.  She dealt with it in the same month.
• Despite that, I would have recommended that she proceed with an eviction instead of a letter to move out.  This landlord runs the risk of that tenant not being out by December 28.  Ultimately the tenant did move by December 28, but if she did not, the landlord would have then been forced to start the eviction process, which would have taken until mid-January before this tenant was out.  Starting the eviction on November 27, would have had this tenant gone by December 15th or so.
• In response to her question “Do I have the right to lock the doors tomorrow if she has all or her stuff or most of her stuff moved out??” That is a judgement call.  If you truly believe that the tenant has vacated the property by either giving you verbal confirmation or by removing all their stuff and leaving the keys, then yes, change the locks.  Alternatively, if there is a lot of stuff in the apartment, you may want to change the locks, post a notice on the door, and wait a week to see if the tenant returns looking for their stuff, just to be safe.

There is no right answer when dealing with evictions and non-paying tenants.  My best recommendation is to move quickly and decisively as every day they stay  is one more day without income.

Everyone knows the drill, you take a rental application and you call the previous landlords to see what this person was like as a renter.  Surprisingly, despite the number of tenants I go through in a year, I rarely get those calls.  When I do, I am happy to tell the caller what I think of that tenant, good or bad.  I will answer their questions.  Do I have any concerns about being sued if I give a bad reference?

****Disclaimer:  I am not an attorney and this is not legal advice, just my opinion*******

Yes and No.

• I have recently had a couple people send me emails (and I had one guy send me something on FaceBook) asking for a referral on a tenant.  I won’t answer those questions in any written format.  I will only discuss tenants verbally.  One less risk point that an email or fax could fall into the wrong hands and it could be used as proof at a trial.
• No, I don’t expect a tenant to sue me for liable.  I am mostly just stating the facts when asked questions.  Facts are facts.  If I evicted them, then that is public info.  No hiding that fact.  If the paid late, they paid late, while not public info, it is a fact.
• I can’t imagine any tenant having the energy, money, or guts to sue.  And for what?  Are they going to sue for $1 million cause I said they always paid late?  If yes, then get in line.
• While I do recommend you give factual information, I would refrain from hearsay and your opinion as much as possible.  I would expect that those opinions are what get you in trouble.
• There was a website going around that was asking for landlords to rate tenants to help each other.  While it sounds like an awesome idea, it will be plagued with issues if it gets widely used.

Using some common sense and taking the conservative road should keep you out of the courtroom.

I have written several times about how much joy I get in having to store a tenant’s stuff after they move out.  This is really a kick in the teeth if I have to store it after I just evicted them.  Not only do they owe me money, they probably didn’t clean the place at all, and now I have to take care of their stuff!

Previously, a landlord would have to store the tenant’s “Abandoned Personal Property” for 60 days.  This should be inventoried and stored somewhere secure. I often will leave it in a bedroom in the unit if possible or at least in the basement.  Still, I have to move it and ultimately I have to dispose of it (as tenants never come back for it).

A new law that went into affect on August 1, 2010 reduces the retention period to only 28 days.  Much easier and nicer.  While I don’t like to store their stuff ever, at least this way I can get rid of it a month earlier.

I know it is very common for people to rent this homes or apartments to friends.  I suspect that like most things in life, 80% of those rental relationships do just fine. I probably just here about the 20% that do not.  Here are some tips to making sure that you as the landlord (not as the friend) is protected if this friendship goes south and your “friend” becomes the bane of your existence!

• Many “friend” landlords simply let the tenant “friend” move in and just pay them some verbally agreed on amount of rent.  WRONG!  You need a standard written lease.  This may seem formal, but this really protects both of you.  With a written lease there is no opportunity for one party to remember the conversation differently.  Plus, as the landlord, if the friend stops paying you or does something you disagree with, it will be difficult (but not impossible) to evict them.  One example is a couple that let a brother rent this old house in the country.  After about 6 months, the brother started paying parts of the rent every couple weeks when they would hound him.  He then started to remodel the house, plus he moved in a couple other roommates and they all had parties every weekend.  Without a lease in place, these landlords had a terrible time getting this guy out.
• Keep a key to this home and install a 2nd one in a lock box that only you have the combination to.  You can give out this lock box code to repair guys that need access to the property for repairs without bothering your friend.
• Do not allow your friend to be late on the rent.  This will be worse than letting the average stranger tenant be late on their rent.  You will get into this strange situation where you want to hang out with your friend, but will be frustrated when he is buying a round of drinks for the bar, all the time you know he owes you back rent.
• Consider putting your friend on a month to month lease.  Then you can simply give him 60 days notice to move out if the relationship starts to sour.  Then there doesn’t need to be an eviction involved (unless he doesn’t leave).  You just part company from a housing standpoint and go your separate ways.

Renting to friends can be a great way to have a quick and most likely wonderful tenant.  Just don’t leave all your landlord experience and common sense behind!

On May 11th, Governor Pawlenty signed a new bill into law.  Although the official name is HF2668, most are calling it the Tenant Bill of Rights.  It is the first change to landlord/tenant regulations and law in over a decade.  As a landlord, you should be aware of these changes as some will come as a surprise.  Some are tougher rules, more are neutral and others are simply clarifying unwritten rules and rumors we all assumed were true.  Most of these changes go into effect on August 1, 2010:

• Tenants living in homes in foreclosure will have the right to stay in the property until the end of the term of their lease or 90 days, which ever is longer.  This brings state law inline with current federal laws.
• Property left behind by a tenant had to be stored by the landlord for 60 days.  This has been changed to 28 days, but now a landlord can be held liable for disposing of the property early in the amount of triple the damages or $1000, which ever is greater.
• Not returning the proper amount of security deposit at the end of the lease has a penalty that is not at $500, up from $200 previously.
• Division of Utility Costs is not very common from what I have seen, but now if the tenant can prove that the landlord has improperly divided the utility costs, the landlord is liable to the tenant for triple the damages or $500, whichever is greater.
• If tenants can be forced to pay Attorney’s Fees if they lose a court case and your lease contains that language; now, if the tenant wins, they can force the landlord to pay the attorney’s fees also.
• Tenant Screening Fees and Criteria have changed. While I thought most of this was already law, it appears they have clarified it further:
  • The landlord must use a clear and consistent screening process for all applicants.
  • Landlords much provide the criteria in written form upon which they will screen applications, prior to accepting and screening fee.   It is thought that if they read the criteria and see something that will disqualify them, they may not then chose to pay the fee and apply.  [In my experience, they will apply anyway!]
  • You must process applicants in sequential order as you cash their check or take their money.  You may NOT take all the applicants money, process all of them and then compare the applicants choosing the best one (and keeping all the money).
  • If the tenant is reject for any reason other than what was specified on the written screening criteria form, the landlord must return the application fee.
• Tenants that knowingly provides materially false information on the application or omits information can be held liable to the landlord for damages plus a civil penalty of up to $500, court filing fees, and attorney fees.  Not sure how you prove this or get the civil penalty charged against them.
• Tenants must be given a receipt if they pay with cash.
• Late fees will now be capped at 8% of the rental amount. This provision begins on January 1, 2011.  You can not charge daily late fees either.

Make sure to start integrating these new changes into your leases and tenant screenings.  You do not want to be the first test case for this new law!