Creative Property Evictions
You have thoroughly vetted the applicant. Everything checks out. The lease for your high end condo has been signed. Finally, the new tenant moves in and the rent checks begin arriving. Five months later there is a problem. The tenant has been diagnosed with a crippling disease and must abandon the career she has trained for and worked within for two decades. It is no longer possible for her to pay the rent, yet she has seven months left to go on his lease. She has few options, the most reasonable one is not available for another two months.
Income from your rental has ceased. Your tenant makes a request to remain where she is until she can move on to the new place - her parents home which is being renovated. The eviction process will take time and cost money and most likely you will not be able to recover your losses. The owner of the property isn’t pleased with you, the property manager, concluding that your background checking process was substandard. You see bad recommendations from everyone in your future. You are caught between the proverbial ‘rock and a hard place’. The owner wants a paying tenant, yesterday. The tenant is asking for mercy ‘for just two months.’
What are your options?
- Evict - begin the eviction process as quickly as possible, following each step by the letter of the law. Remind your client (the property owner) that this kind of thing is always a possibility no matter how thorough the background check. Remind your tenant that regardless of circumstances, she has a legal obligation to pay the rent or to move out.
- Negotiate - evictions can be a messy proposition for all parties, the property owner, the tenant, as well as the property manager. Your property management business needs the rental income, yet the long term viability of your business requires having a good reputation in your community. Can you negotiate a win-win process, rather than end up with a lose-lose scenario?
- The Property Owner - your first responsibility is to your client, the property owner. They usually need the rental income to pay the mortgage on the property on time. They also need to know that their property is being well taken care of. Frustrated tenants sometimes take out their anger by destroying the property they rent. This is an important consideration as damage done to property can be far more costly than losing a month or two of rent and suing someone who has nothing is rather pointless and merely increases the loss.
- The Tenant - your other responsibility is to the tenant. If you have done your homework, you most likely have a good and responsible tenant. Yet life isn’t fair. Unexpected and unavoidable ‘stuff’ happens in life that can turn even the most responsibly led life upside down. If you treat every tenant as a bad person when the problem is not the person but ‘bad’ circumstances, your reputation in the community will take a massive hit. The unfortunate circumstances of an otherwise good tenant needs to be mercifully taken into consideration.
- Your Business - your third responsibility is to keep your business in the black. You also have bills to pay. You need the income generated from the rental. Yet, if you only think about the next 30 - 90 days, you might engage the eviction process in a manner that may cost far more in terms of potential business lost in the years to come.
Specific Factors Involved in Creative Evictions
- Pay the Tenant to Leave - huh? Spend more money? Give the tenant money when they aren’t paying their rent? Because the eviction process takes time and money and leaves a bad taste in everyone’s mouth, if you can incentivize your tenant to move out, you could save a bundle. Sometimes that may mean placing them in a hotel and/or paying to have all their possessions moved into storage. The upside is that you are more quickly able to prepare the property for a new tenant which will please your property owner and generate income for your business again.
- Let the Tenant Remain - Sometimes, as the story presented at the beginning of this article portrays, the only or best option for a tenant may not be available for a month or two. If the market for your particular rental is slow, would it be better to leave the unit unoccupied during that time or occupied? If your tenant keeps the rental unit immaculate, is willing to permit you to show the place to other potential tenants as available after a certain date, this may be the better option.
- Lower the Rent - When a tenant is nearing the end of their lease, yet has suffered a financial set back, it may be more cost effective and legally ‘cleaner’ to lower their rent to what they are able to pay. Again, when you run the numbers - all the costs involved to evict, the lost rental income while the property is vacant, the cost to advertise, the potential that an angry tenant will damage the property, and the cost to your reputation as a business person within the community if you come across as cold-hearted - receiving a lowered rent for a few months may actually save you money.
Keep it Legal
- State and City Laws - Be sure to know what can and cannot be done in your particular state and city.
- Special Circumstances - Some localities may have rules that prohibit evictions under some special circumstances such as during the winter months or because of changes in health. In other words, the courts may ask that reasonable accommodations be made.