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Your tenant isn’t paying the rent, and there are no
signs that you’re going to get a rent check in the foreseeable future. Should
you threaten eviction? Or is it easier and cheaper to offer your tenant the
option to break the lease?
You may never get your rent money
Laws regarding tenants,
landlords, and eviction vary by state and even by municipality. “There are also
substantial differences between commercial and residential leases, with
residential tenants afforded much more protection than business tenants,” says William S. Heyman, aBaltimore attorney practicing in real
estate.
Eviction can be costly
for a landlord. And it isn’t always a quick process, either. “Eviction and the
threat of eviction if a tenant has defaulted can be a legitimate tool,” says
Heyman, “but it is almost always better to allow the tenant to break the lease
and reach a negotiated resolution. A tenant can fight eviction proceedings in
court, and a negotiated solution is usually easiest and most financially
prudent.”
However, even if you manage to get your delinquent
tenant to vacate your property, you have no guarantee you’ll ever get the back
rent you’re owed. G. Brian Davis, real estate investor and co-founder of Spark Rental, explains that the outcome can be financially
disappointing for landlords: “Landlords can get a money judgment after the
eviction, but it’s impractical. It costs even more time and money, and it
is impossible to actually collect from most tenants. Most states’ laws have
become quite tenant-friendly, and it’s easier than ever for tenants to avoid
paying their rent.”
Consider the mindset of your tenant
The threat of eviction
isn’t necessarily enough to motivate a tenant who isn’t paying the rent. Yet
other options may result in even more aggravation for the landlord. “Offering
tenants the chance to break the lease and move out early isn’t particularly
tempting to the kinds of tenants who don’t pay their rent,” says Davis. “Why
move out today when it costs nothing to live in the home for the next four
months and force the landlord to go through the entire eviction process?”
On the other hand, the
threat of eviction could spur the tenant into action. “Tenants who are facing
financial crises will go several months without paying rent if they can.
Sending a Notice to Quit, however, which is the legal document that demands
payment by a certain date before an eviction case will be filed, often triggers
payment because people realize they are close to losing their home,” says Thomas J. Simeone, an attorney with Simeone & Miller,
LLP in Washington, D.C.
The eviction of a tenant
who doesn’t voluntarily pay back rent ultimately results in a judgment against
the tenant—and that shows up in a background check. “A judgment is not only
enforceable against the tenant’s assets, but will hinder the tenant’s ability
to buy a home in the future and otherwise damage his or her credit,” says
Simeone. “If the tenant has assets or is buying a home of their own (which
is a common reason why tenants sometimes stop paying rent), then pursuing
eviction is the better method of getting back rent.”
However, if your tenant
really doesn’t have the funds to pay back rent, eviction isn’t going to get you
the money you’re owed anyway, and it’s going to cost you legal and filing fees
to go throughthe entire eviction process (plus, no one will
be paying the rent). In such cases, breaking the lease makes more sense.
“Allowing a tenant to break the lease can get the tenant out of the property so
that it can be re-rented without the legal and filing expenses,” says Simeone.
Alternatives to eviction
If eviction is
ultimately too time-consuming and expensive, what alternatives does a landlord
have to get their property back in their possession without going further in
the red? “Some landlords pay their tenants to move out immediately and skip the
eviction process. The logic is that it costs less to pay them $500 to
$1,000 now than it does to waste three to six months going through the entire
eviction process and receiving no rent the entire time,” says Davis.
This option, however,
doesn’t sit well with many landlords. “It rewards irresponsible behavior, and
it leaves no record that the tenant doesn’t pay their rent,” says Davis.
Consequently, the tenant’s next landlord has no paper trail to tell them that
they’re dealing with a potential deadbeat.
If you do choose to
pursue eviction, don’t attempt to do it without seeking professional legal
counsel. “Hiring an
attorney familiar with the law and the courts is well worth the $250 to $1,000
charged in my state,” says Bruce Ailion, an attorney in Georgia. “Even as an owner, property
manager, and attorney, I hire professional assistance, and I usually prefer a
settlement over eviction.” Ultimately, as a landlord dealing with a problem
tenant, your best option is to select whichever path costs you the least and
gets your property back to earning rent the most quickly.
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