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Dealing With Late Paying Tenants – By Bill Biko, “The Educated Landlord”

Posted on 01. Dec, 2016 by in all, Magazine Articles

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I received an email recently asking me what steps a landlord should take when a tenant is late with rent and I was kind of taken aback.

You see, this is one of those issues that is so easy once you’ve gone through it a couple hundred times. The problem for me is it was so long ago, I’d forgotten what I do is a learned response.

And I learned it so long ago that when a tenants late with rent, I simply take action.

So, rather than making you learn it on your own, I’ll just go ahead and break down the steps you need to follow if this occurs to you, but before I get there,  I want to talk about the challenges of evicting a tenant.

It’s these challenges that create the need for your actions to follow a specific process on your end as a landlord, so let’s dive in.

The Challenge of Evicting a Tenant

Just about every jurisdiction has a specific process for evicting tenants. Sometimes it involves a Three Day Notice to Pay or Quit, other times a 14 day notice to vacate. Some places require a court application to make it official and others have tribunals.

The one consistent challenge this represents for landlords is you need to prove your tenant has breached your lease and/or that you have a valid reason to evict them.

In my experience, those valid reasons for an eviction tend to revolve around three main issues:

  • Non-payment of rent
  • Damage to the property
  • Conflicts with other tenants

You would think any of these would be easy enough to prove, but when you end up in a hearing, landlords often find themselves ill prepared compared to the excuses or lies that a nefarious tenant may be able to come up with when faced with eviction.

I’ve had tenants late with rent lie about paying cash and not receiving receipts, I’ve had tenants try to explain the gaping hole in the drywall was there when they moved in and I’ve had tenants explain they had no idea there were conflicts. So what’s a landlord to do? Especially when a tenant is outright lying?

Prepare For Evictions Before They Are Necessary

Now, the point of this article is about what to do when a tenant’s late with rent. It could just as easily apply to damage to your property being damaged, conflicts between tenants or any other reasons that could lead to requiring an eviction of a tenant.

The important sub message for you is that every issue like this you need to understand could be the first step to building up a case for eviction. Assume the worst, and hope for the best!

That’s why the first step you need to take is to create paper trails you can refer back to if the situation doesn’t correct itself and goes further out of control.

When I’m consulting with landlords about evicting tenants I continually harp on documenting everything. It’s not just a matter of talking with them, you need to document it as well.

That’s part one of preparing, but just because you’ve documented it doesn’t end there.

Part two is making sure the tenant receives copies of your notices/documentation so you have a complete paper trail and takes the ability away from them to say they weren’t aware. 

Creating a Complete Paper Trail

So what is a complete paper trail? It’s evidence that shows everything along the way, whether it’s the written notice you provide informing tenants rent is late, to complete documentation showing the condition of the property when they moved in all the way to dates and instances of previous conflict issues with the tenants.

Hopefully, this is making sense, but to clarify even more let’s walk through an example.

It’s the 1st of the month and Joe, your tenant, is late with rent. Now maybe he usually sends electronic transfers later on the 1st, so you sit back and eagerly check your email on the 2nd, again no money! 

Step 1

I’d suggest calling and/or texting the tenant immediately advising them they haven’t paid rent for the current month yet. It could have been an honest mistake, or it could be a sign of pending trouble. You can often tell by how easy it is to initially contact them. Although sometimes you may simply get strung along as well if you do reach them first time, so be diligent and stay on top of this. If you get paid great, you still want to move onto step 2, but at least the pressure is off.

Step 2

If you were paid, great, but you’re not done yet. Follow up with a written letter for the tenant informing them that you understand late payments can happen, but this can only be a one off type situation as the rent payment is required to cover your bills for the property like a mortgage (you may need to ad-lib here a bit depending on your situation).

If you weren’t paid, you want to create a stern letter for the tenant explaining all of this.

In both cases you need to refer to the conversation and/or text correspondence that you previously had about this issue. This is a matter of building up your evidence and paper trail.

I’d suggest bringing up potential repercussions if it’s not dealt with immediately and what may happen if the situation isn’t corrected (eviction, extra costs to the tenant and more, but all without being threatening, just informative).

Step 3

It’s important that you hand deliver this if possible. If it’s not, you want to create some potential trail of delivery and receipt. If you’re hand delivering, make note of the date and time and follow up with a text and/or email referring to the letter you dropped off. A frequent tenant response in hearing is they never received any notice about the problem, this solves that.

If you are not able to hand deliver you can send it via registered mail or courier which provides a tracking process.

If neither of these are possible as the tenant is trying to avoid you, then your option may be posting the notice on the property. The challenge with this is it’s still hard to prove they received it, so here are some additional steps.

Make sure you post it on every entrance to their unit. If it’s an apartment, it’s easy, just post it across the door and the door frame so they can’t miss it as they go in or out.

If it’s a house with a front and back door, post a copy on the front and back door, again across the frame and door. If it’s a house with a garage, post it on the two doors and the garage door.

Perhaps most importantly whatever the circumstance, once it’s posted then make sure you take a photo with some sort of date and time stamp to verify when you took the picture(s), just in case you need to prove it later.

Just as a warning, be aware some pro-tenant jurisdictions may claim this is tenant harassment or potentially slanderous if it’s posted for everyone to see. Always be aware of local rules and laws and make sure you can back up any claims that may be indicated to protect yourself.

Step 4 – Follow up!

Once you’ve talked to the tenant, left them notice or documentation about the issue, follow up with an additional text, email or follow up phone call which you also document.

I’ve run into numerous situations where tenants have confirmed via text they received the notice, then in a hearing deny it and their entire claims fall apart due to the text evidence showing they are lying.

The final proof ends up often being your follow up, so don’t take a short cut and miss that final step as often it can be the deciding factor. 

Final Thoughts

One way to stand out if you do ever end up in an eviction situation is to be a professional. If your tenant is late with rent it requires more than a phone call or text to be a professional. You need to do the extra work!

As is often the case it comes down to treating this like a business and doing your job professionally. If you’re in a hearing and you come across as a professional who has all the evidence, is following all the rules and are going through all the proper processes evictions become much easier.

[Editor’s Note:  We recommend serving AOA’s form # 103 (series) the day after rent is due which is required when starting an eviction for non-payment of rent.]

 

Bill Biko has become “the Educated Landlord” through both training and the school of life. With almost a decades experience of land lording Bill’s been mentoring and assisting landlords for the last five years and you can find more of his tips and articles to make your life as a landlord easier, more profitable and less stressful at www.TheEducatedLandlord.com.