Eviction Court is Not Cool (No Matter How Much You Like Legal TV)

“Settle matters quickly with your adversary who is taking you to court.  Do it while you are still together on the way, or your adversary may hand you over to the judge, and the judge may hand you over to the officer, and you may be thrown in prison.”

Jesus Christ (Matthew 5:25)

 

My wife and I have been watching the old legal TV show, The Practice, lately.  What an exciting show!  Bobby Donnell thundering at witnesses in court, Jimmy “The Grunt” Berlutti bumbling through cases, and Eugene Young intimidating opposing counsel makes for some entertaining television.  It almost makes being in court a “cool” experience where justice can be cajoled and won- a battle of righteous gladiators!

 

But in reality, going to court for an eviction is not that cool.  It’s a last resort.  Most of the time, it is a result of poor tenant screening, poor management of expectations, and poor management of life circumstances.  It’s a property management failure.  It’s costly, time and energy consuming, and an overall negative experience.  It’s a game of losers, played by losers; no one is a “winner” (besides the attorneys).

 

How can it be avoided? 

 

Let me preface this by saying that players in the rental game will have to evict a tenant and go to court at some point.  No matter how well the items below are managed, there will be some life event (job loss / illness / etc.), some expectation not met (“the air coming out of the AC is giving me headaches- replace it!”), or some sudden personality change that will necessitate it.  But I believe it can be avoided most of the time.

 

Here are four quick tips on avoiding tenant-related court visits:

 

1. Good tenant screening: I’d especially focus on the tenant’s ability to afford the rental by drilling down on their income (monthly cash flow) and the credit report (especially debt level and other current commitments).  We all want to fill properties quickly, but cutting corners on the money part puts everyone in a bad position when the numbers have little possibility of netting out.  Don’t be set out for failure at the beginning.

 

2. Set expectations upfront: Use a good lease and explain what the landlord is going to do and what is expected from the tenant, especially regarding the condition of the house and future repairs.

 

3. Manage life circumstances: Avoid setting eviction criteria in stone.  People have bad months.  Work with the tenant (within reason), but never go past 1 month due.  I’ve rarely seen tenants be able to get caught up being that behind.

 

4. Be nice: In my experience, no one wants to get kicked out of the house they are living in if it is not their idea; getting evicted is failure and life-altering.  However, if they want to exit, help them.  Someone else will want the house.  The first priority is getting the house back vacant; the money can be worked out at a later time.  Once the house is vacant, a new and better tenant can be found to get back to cash-flow positive.

 

Winning in court can feel “cool” in the moment, but cleaning up afterwards is definitely “not cool”.  Let the TV lawyers get the glory and try to stay out of court in real life.  Losing, especially at the hands of a sympathetic judge on some loophole, is even more “not cool”!

 

Happy Landlording!

“When To Evict Or Not To Evict”, That Is The Question

"I'll gladly pay you Tuesday for a hamburger today…"

Wimpy

“I will have the rent for you next week- guaranteed!”

Late Tenants

As a property manager in Charlotte, collecting rent is obviously one of our main functions (in my opinion, the most important function!).  Our primary job is to create the most favorable ROI for our clients; we need to be taking rent in for this to be a reality.  When we are collecting rent on time and in full, all things are typically good with our owner clients.  If a tenant is not paying, things aren’t so grand.  And we like things to be grand with our clients!

When a tenant doesn’t pay, eviction is always a last resort.  It’s costly, time-consuming, and stressful.  And, to boot, the tenant will usually tell you they are going to have the money for you next week!  The mind games begin.  You can surely hold out until next week to get paid!

But then next week comes and there is a new excuse.  “My paycheck was shorted!”  That’s one when you don’t feel that badly about going the eviction route.  But when the tenants pull out the big guns like, “My mother is dying and I had to use the money for the rent to fly out to see her one last time (the last time I saw her 2 years ago, we said things we both regret- I couldn’t leave it like that).  I had no choice…  But I get a bonus next week from work and will pay you then!”  That’s tougher.

We get calls from home owners who have tenants who haven’t paid for 6 months.  Once they get that behind, they’re never going to get caught up. 

So what’s the answer?  At what point should eviction be filed?

First of all, bad things occur and many tenants are going paycheck to paycheck.  When a big expense (aka major car repair) happens, the money just isn’t there for that and the rent. 

But most people get paid twice a month (the 1^st and the 15^th).  Filing for eviction prior to the 16^th day of the month doesn’t allow you to get those funds.  So I believe filing for eviction on the 16^th is the earliest point in which it makes sense to do so.

If they aren’t able to make good by the 16^th, the next factor to look at is the tenant’s income from when you did the original tenant screening.  How much money do they make?  Is it even possible for them to come back from being a month overdue (their next paycheck)?  For some people, it’s just not possible. 

Note:  This is something I would strongly recommend paying strong attention to in the tenant screening process.  Watch the income to rent ratio- when it is too high, it makes you highly susceptible to negative events happening in a tenant’s life.  You ideally need to be less than 33% (examples: $3,000 monthly income and $1,000/month rent = 33% ratio.  $4,000 monthly income and $1,000/month rent = 25% ratio.  25% ratio would be much better!) 

    

If their income is too low, eviction should be filed right away.  However, if they make enough money to pay the rent by the 1^st of the following month and then get caught up sometime later that month (and express an earnest willingness to do so), then I’d wait.  It could be worth the gamble. 

But set hard, no-excuse deadlines at this point.  If you don’t have all of the money by the 1^st, you need to file for eviction to protect yourself.  After a month goes by with no rent, you can’t wait any longer (no matter how good the excuse is).

If the tenant really is going to have the money in another week like they claim, they can bring it to court and stop the eviction.  If not, you need to move on and take the loss.  There is really no excuse to go multiple months without full rental payments.

Timing evictions for maximum ROI is a judgment call.  But going past 30 days is a dangerous and usually unfruitful proposition!    

 

Brett Furniss is the President & Owner of BDF Realty (Charlotte Residential Property Management), the trusted real estate advisor for Charlotte landlords & Home of $100 Flat Fee Property Management.   BDF Realty utilizes their innovative Pod System for exceptional customer service in residential property management, home repairs, and home sales for single-family homes, condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!