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.

I attended a landlord seminar today that was hosted by an attorney that represents tenants.  It was a fascinating look at landlord issues, but with a tenant advocate teaching it.  He spoke about many of the loopholes and other places that landlords have a tendency to not follow the law or the letter of their leases and how the tenants can win lawsuits or defend against evictions.

There was quite a discussion about security deposits and I thought it made sense to lay out some of the gotchas and give you some reminders on how the process is supposed to work.

• If possible, take pictures of the unit prior to the tenant moving in and store them on your computer.  The attorney explained that often the “move-in” form is simply filled in with OK and a line through the entire column for each room.  He stated it was easy to defeat this in court as meaningless.  Pictures before the move-in will give you considerable ammunition if you get pulled into court by the tenant for the amount withheld from the security deposit.
• A landlord has 3 weeks from the date that the tenant moves out or the receipt of the tenant’s new address, whichever is later, to get the security deposit or security deposit disposition letter in the mail.  That is the law, but the attorney recommended that even if you do not know the new address of the tenant, you should still put the letter in the mail to the old address.  If that letter forwards to the new address, great.  If it is returned, put that in your file so you can show you tried.
• Even if at the end of the lease or tenant’s occupancy, there is nothing left of the security deposit, you must still send a written disposition letter.  Even if the tenant owes you 3 months of rent, do not neglect this.
• If you fail to send the letter or security deposit within 21 days, the tenant can take you to court.  If they win, you owe them double the entire security deposit, plus interest (without any deductions for missed rent or damages), plus $500 as  a penalty.  For example, if the damage deposit was $1000 and the tenant lived there 1 year, the amount would be $1000 + $5 + $1000 + $5 + $500 = $2510.  That is a lot of money!
• You can only deduct for physical damages beyond “ordinary wear and tear”.  So what is wear and tear?  Although that is somewhat subjective, repainting and cleaning carpets is NOT considered excessive, normally.  If they are really worn or dirty, you could make a case that it is excessive damage (and I have seen excessive).  Make sure to document this fully.
• When you put amounts on the security deposit disposition letter, make sure to use real numbers.  A friend of mine was sued by a tenant for the damage deposit money withheld.  The tenant won the case.  The judge said that if my friend would have had receipts he would have easily won.  Do not put round numbers for supplies and repairs.  Did you really spend $20 on cleaning supplies?  Was the carpet cleaner really $60?  Use the exact figure.  It may help convince the tenant that you have receipts and you may not end up in court.  Use a time sheet if possible to account for your time if you do the work.  Do not round the hours.
• Before you start any work or cleaning, take pictures of all the problems.  Then you can use those pictures to compare to the before photos if you get to court.  As a side note, if your tenant leaves the property a mess and they are on rental subsidies, like Section 8, send the after pictures to their case worker.  It may help the next guy (and you can get some secret pleasure out of getting the tenant in trouble).
• Do not always assume you are keeping the security deposit.  I know some landlords that are keeping the deposit despite having a good tenant.  They find anything they can not to give it back.  Be honest and fair.  Otherwise you may end up in court.
• Effective August 1, 2010, the time you as a landlord are required to store your tenant’s left over stuff has been reduced to 28 days.

Following the letter of the state law and the details in your lease is the proper way to keep yourself out of court fighting over the disposition of security deposits.

Now I am not suggesting that you let the tenants live there for free or pay rent as late as they want, but I think there are 7 simple things you can do that will keep them happy. And happy tenants will treat your property better, pay their rent on time, stay in your building longer, and recommend you to their friends as a good (possibly great) landlord.

1. Be friendly, respectful, and courteous always. Then when you need to be firm, they will know you are serious.
2. Answer your phone when the tenant calls or return their call promptly. Nothing is more frustrating when you have a question or problem and someone will not return or take your calls.
3. Stop by or call to just chat and see how they are doing. This lets them know you care about them as a person. Ask about their work, their kids, or what they enjoy.
4. Repair everything in the unit that the tenant calls about. Even a simple dripping faucet can fester into a frustration in time.
5. If the tenants have lived in the apartment for more than 2 years, touch up the paint in the main areas, paint a room a color that you both agree on, or shampoo the carpet. You are not only keeping them happy, you are maintaining your property.
6. If the tenant always pays on time and they call and tell you the rent is going to be late, forgive the late fee this one time. Even the banks do it!
7. Offer an incentive if they find a new tenant for you. I give my existing tenants $200 if they find a new tenant that signs a lease. It costs the same as a newspaper ad and much cheaper than a vacant unit.

It is cheaper to keep a tenant that to find a new one. These simple (and in many cases free) tips can keep your tenants happy and make your life as a landlord easier.

Landlords, when is the last time you read your standard lease from start to finish?  Should I dare say that some of you have never read it?  Your lease is your contract with tenant.  I assume you spent a considerable amount of time working on your purchase agreement (another contract) for the purchase of that investment property.  Why are you now just coasting along with any old lease?

Regardless of whether you buy your leases at an office supply store or you found one on the Internet and print it off your computer, here are some items to put in your leases and some to take out:

• Require at least 60 days written notice for the tenant to vacate the premises even at the end of the lease.  The 60 days notice should start at the beginning of the next month; so you should get a minimum of 2 months notice.
• Rent is due on the 1st, but late on the 6th.  Most tenants look at that as the rent is due on the 5th.  Make sure they understand it is due on the 1st.
• Consider raising your late fee to a large enough amount to make it painful for the tenant to be late (check if your state has a legal limit).
• Put in a clause like the following:  “All drains, waste pipes, and plumbing are accepted as clear by the tenant at the time of occupancy and any material blocking them after occupancy shall be repaired by the tenant except blockages caused by roots or backups from the streets.”  This should put a end to late night blocked toilet calls.  I do recommend, however, supplying a $6 plunger to alleviate any potential problems!
• Remove any automatic 1 year renewal clauses in your lease.  At first it may seem like a good idea, but this clause can backfire on you when the tenant simply refuses to return your calls and the renewal notification window expires, leaving you bound to re-rent to this tenant.
• Include the following language:  “Payment of rent may be made by personal check until first check is returned unpaid.  Thereafter, tenant will be required to pay using certified funds or cash.”
• Confirm your lease has the following regulation:  “Use of property for business is strictly prohibited”.  What if your tenant opens an auto repair shop in the garage or is using the basement as his warehouse?
• Specify the number of adults, children, pets, and automobiles in the lease and set requirements for notification if the number of any increases.
• If you accept pets, make sure to have a pet deposit and some of it should be non-refundable for additional wear & tear on the house and/or carpet cleaning.  Also include the type and/or size of the pet (I have seen a tenant start with 3 approved dogs (10 pounds each) and then after a year upgrade to three 50 pound dogs.  They were still in compliance with the lease!
• Consider requiring the tenants to make any repairs under a certain dollar amount, depending upon the type of property you are renting.  You may also make them responsible for some or all pest control costs (depending upon the building).
• Do not allow any move-outs during November to March as these are the most difficult times to lease properties.

Here are a few others that you should consider using in the right market and circumstance:

• Specify the apartment or entire building as smoke free.  Have the tenants initial or sign a “smoke free addendum”.  This will save you some repainting and cleaning costs.
• Require the tenants to call a locksmith at their expense if they get locked out or lose their keys.  At least set a comparable price ($50-75) for you to unlock their apartment.
• Have all tenants sign a “Non-violence” and “Drug Free living” document with the threat of eviction if violated.

Making these easy changes will make your leases and your position stronger when working to aleviate problems with tenants.  They should also save you money and frustration in the long run.

(Confirm any of the above changes will work in your state and market.)