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Rental Property Issue
Old 10-15-2010, 09:26 AM   #1
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Rental Property Issue

I've had tenants in a townhouse I own since August of '09. We resigned a 12 month lease this past August. On Monday I got a phone call from one of my tenants saying she lost her job and thet would be moving out in 30 days. I told her that she's still liable for the rent for the remainder of the lease term, which she disagreed with, so I told her to read the lease.

They're determined to move out and break the lease. I've already started looking for new tenants because I obviously don't want it to sit empty. But, it's going to be difficult because nobody wants to move in Fall/Winter in the Chicago area.

My question is, what are my legal options to recover money from my current tenants assuming I can't get the townhouse re-rented and if you've been in this situation, how have you handled it?
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Old 10-15-2010, 09:36 AM   #2
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Old 10-15-2010, 09:40 AM   #3
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You can sue them in court but it will be very difficult to get much of anything if they are out of a job. Once you have a judgment it will follow them for a long time and you can start to take their stuff if you choose but don't expect to get much for it at auction.

Remind them that it will affect their credit and ability to get another lease in the future but I doubt it will make a lot of difference if they are in dire straights.

I have a buy out option in my leases which says they can buy out of a lease for 1 months rent penalty. I have had it used twice with great results. Better than nothing I feel. A winner for both parties. Maybe offer them that option?
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Old 10-15-2010, 10:15 AM   #4
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Keep the security deposit, hopefully they don't trash the place when they leave. Count your blessings, if they don't.
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Old 10-15-2010, 10:27 AM   #5
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Most leases have a 1 or 2 month penalty for breaking the lease, having to pay for the full term is pretty rough. If they can't pay to stay, they can't pay the same cost not to stay either. Hopefully your security deposit was a full month's rent. As someone else said, can't squeeze blood from a turnip.
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Old 10-15-2010, 12:30 PM   #6
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Originally Posted by Eyerishgold View Post
My question is, what are my legal options to recover money from my current tenants assuming I can't get the townhouse re-rented and if you've been in this situation, how have you handled it?
For starters, you're screwed.

If you initiate any sort of action before they move out then they'll leave the place in crappy condition and may even allow it to be vandalized. (Imagine the effect on you if they mailed you the keys and walked away leaving the front door ajar.) So until you actually change the locks, I don't see that you have many options now that will keep you from losing lots of money/effort/time later.

I don't know your local landlord law, but if it puts most of the rental rights in the tenant's hands then you're doubly screwed. You won't get far with the legal system when you're Snidely Whiplash throwing out unemployed widows and starving/shoeless kids in the middle of Midwest winter.

I think it's far more productive to focus your energy on finding a new rent-paying tenant and to leave the former tenants' legal actions until later (if ever).

You've reminded the tenants of their lease's legal obligations, so the next step would be to arrange the time when they want to walk through the place and turn over the keys. It might be a good idea to show up with a camcorder to document the property's condition... more for the effect that it has on the tenant's behavior than for any legal documentation purposes.

If you're asked about the security deposit then I'd tell the tenants that you're going to handle it IAW the lease, including any property damage. (Hawaii landlords have, IIRC, 14 days to return the tenant's security deposit to allow for contractor's cleaning & repair estimates.) Tell them they'll have their answer after they've moved out and turned over the keys and you've finished the inspection. Of course you're going to keep every penny of their security deposit as a down payment on the foregone rent in the remainder of the lease, but there's no reason to taunt the tenants in person with that info.

Once they're out then you're changing the locks, prepping the place, and spending all your time on getting new tenants. I'd wait until the last possible legal moment to mail the tenants your letter explaining that you're keeping their security deposit as partial satisfaction of the money they owe you IAW the lease. But I wouldn't negotiate or threaten-- just tell them what you're doing and quote the applicable lease terms. Hopefully they're too busy moving or seeking employment to bother sending over cousin Vinnie to trash the place.

While you're waiting for the phone to ring you could total up how much they owe you and then think about whether you want to be compensated or whether you want to be happy with righteous legal approbation. If you rent to a new tenant within a couple weeks then you might as well drop the whole issue because a court would find that you didn't suffer any actual damage, despite the tenant's violation of the lease terms. It's all the compensation you're likely to get.

Otherwise you'll spend a lot of time and money finding lawyers, filing paperwork, and obtaining judgments that will probably never be paid... and even if some miracle paid it then you'd be endorsing the check right over to the lawyer for their legal fees.

You could file a negative credit report with the agencies and Choice Trust. You could also hope that someday you'll be able to extract your karmic vengeance when you're contacted by their prospective new landlord to provide a reference. But I wouldn't waste time on these actions until you had a new tenant's check clear your account.

I guess the "good" news is that you'll be able to document less income on Schedule E they've decided to move out instead of stringing you along on late rent or even a possible eviction.

Perhaps you should commiserate with her about the economy, tell her you've appreciated her tenancy, and offer her $150 cash (or a half-month's rent, or whatever's appropriate) if she finds you a tenant who signs a one-year lease before Christmas...
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Old 10-15-2010, 01:28 PM   #7
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Originally Posted by Eyerishgold View Post
They're determined to move out and break the lease. I've already started looking for new tenants because I obviously don't want it to sit empty. But, it's going to be difficult because nobody wants to move in Fall/Winter in the Chicago area.

My question is, what are my legal options to recover money from my current tenants assuming I can't get the townhouse re-rented and if you've been in this situation, how have you handled it?
Are you in the city of Chicago, cook county if the suburbs? The laws heavily favor the renter. I had to look into evicting a sibling, the lawyer wanted $850 for only the 1st 3 hours of time, then hourly after that. Also, you need to pay for the sheriff to serve notice too. I talked to my neighbors that own several apts in Chicago, every time they had to evict, they never got any restitution for back rent. It's easier to let them go and find another renter. It took us almost 3 years to evict my deadbeat sibling, but it was connected to a guradianship civic suit. Good luck, it's never easy doing this, try to keep your losses as low as possible.
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Old 10-15-2010, 01:44 PM   #8
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You can sue them in court but it will be very difficult to get much of anything if they are out of a job. Once you have a judgment it will follow them for a long time and you can start to take their stuff if you choose but don't expect to get much for it at auction.

Remind them that it will affect their credit and ability to get another lease in the future but I doubt it will make a lot of difference if they are in dire straights.

I have a buy out option in my leases which says they can buy out of a lease for 1 months rent penalty. I have had it used twice with great results. Better than nothing I feel. A winner for both parties. Maybe offer them that option?
You can sue and would win. But collecting a judgement can be more difficult than winning one.

If you take their stuff without a judgment, you could get in serious trouble. I had a friend who had a landlord throw away some of his stuff. The landlord had to pay triple statutory damages - that is, he only had to prove the landlord threw the stuff out which the landlord admitted. After that the damages were automatic.

It's not clear to me how you could affect their credit. If you file a derogatory action against them you could find yourself defending it in court. Even if true, if your action is vindictive then you could get in serious trouble for filing it.

Collections are often about 10 cents on the dollar. Even in an ideal situation you probably would get very little. I would move on and let them break the lease.
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Old 10-15-2010, 02:17 PM   #9
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Here in NC, once you win a judgment the Sheriff will go after their stuff for you, you don't do it yourself, then it is sold at auction in about 30 days. As stated, most of it goes for pennies on the dollars. Also, there is a lot of stuff that you can't go after and they have I think $3000 that they can automatically exempt plus other stuff.

I am not sure how putting a negative mark on a deadbeat renters credit report would be considered vindictive
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Old 10-15-2010, 02:26 PM   #10
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For starters, you're screwed.....

I think it's far more productive to focus your energy on finding a new rent-paying tenant ....

You could also hope that someday you'll be able to extract your karmic vengeance when you're contacted by their prospective new landlord to provide a reference. ...
I'm a bad person and have to admit that it has done me guilty good to read of a past tenant who did me dirty going bankrupt.

Have also heard of sending a tenant who doesn't pay rent a 1099 form for the amount they didn't pay you in rent. Idea is that they received value and should pay tax on it. You don't get any $$, but Uncle Sammy's IRS boys are tougher than Vinnie Bent Nose for collections of any tax they feel due them.
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Old 10-15-2010, 03:12 PM   #11
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The most important thing is that you keep us posted as to what happens.
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Old 10-15-2010, 03:36 PM   #12
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BE HAPPY THEY MOVED !!

They could have STAYED and not paid the rent for a few months ... never answered you calls .... forced an eviction. (Been there, done that).

Then you're out a few grand before having the vacancy in the WINTER.

Finally, an old saying about "blood from a stone " comes to mind.
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Old 10-15-2010, 04:55 PM   #13
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I would consider myself lucky that they are willingly moving out instead of squatting without paying your rent. After all, it's 2010 and everybody and their brother seems to be living in houses they can't afford while stiffing the lenders out of any mortgage payments. Without knowing a lick about the landlord/tenant laws in your state, I'm guessing there are plenty of protections for people who (like owners) can't afford to pay their monthly housing nut anymore.

Consider it a cost of doing business as a landlord, focus on keeping their exit peaceful and calm (i.e. no damage or drama) and on finding new tenants.
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Old 10-17-2010, 11:15 AM   #14
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If you are going to have a rental property, that is part of the gig...keeping tenants and avoiding damage to the property. Once you have a bad tenant, you want to encourage them to get out. You have their security/damage deposit (presumably a 1-month buffer). If you have to evict them, believe me, it is much more difficult than just taking your lumps and letting them out of the lease.
Once they are out of the property, you get it ready to re-lease, drop the rent to entice new renters, and move on. If you can't stomach this routine, you should get out of the business of rental properties.
Yes, you are lucky they are telling you they will be moving out!
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Old 11-02-2010, 10:12 AM   #15
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Update: My tenants left yesterday which is earlier than I expected but I'm glad to be rid of them. I've decided to not pursue any legal action. I'll just move on. I've been showing the townhouse regularly and yesterday, the same day my tenants moved out, I heard back from a prospective tenant that they'd like to rent it. So, assuming their background and credit checks are OK, I should have new tenants in by Dec 1st.
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