My tenant that just signed a 2-year lease 30 days ago suddenly moved out, no notice given.
It is a lease/option contract and she has given me a non refundable $2000 option payment.
I talked to her and she claims to be “unhappy” with the house (she bought it sight unseen) and found another one that she likes better that she moved into. She claims to have no money to pay me even for October’s rent.
I’ve been told I can file a lein against her, in the amount of the remainder of the lease.
Any advice? If I can just get this month’s rent payment from her I will drop the whole thing.
Posted by ken in sc on October 04, 2005 at 07:22:53:
This is just natural in the lease/option world. The Gurus tell you that you will rent it out for positive cash flow then sell it above market for a huge profit. In the real world you often have 3 or 4 tenants not pay and usually leave the house a little damaged whil you make payments and fix the place back up for sale/lease. The good thing about ls/options is you pay no commissions when you sell andoften get a hefty price. But the positive cash flow in my experience can easily get eaten up with the damage and vacancy created by the tenants that don’t pay. As with all types of RE investing, one must take the good with the bad and decide which method suits your fancy.
I use to have those types of tenant problems too. Was so sick of them that I got rid of all my residential rental properties and moved onto Professional Long term Tenants instead. So now each of the properties that I buy have guaranteed rents paid (no NOT Section 8) by AAA credit tenants and leases run at least 10 yrs. Now I have no tenant headaches, no management problems, no expenses each month, only guaranteed cashflow.
J mygenesis@hotmail.com
Posted by randyOH on October 03, 2005 at 13:37:21:
I have a lease-option tenant who has not paid the Sept rent yet. They have been late paying their rent for most of the past year and have not paid their late fees.
The husband just had an angioplasty and they will most likely not be able to pay any rent in the near future.
I offered to pay them $500 to move out within one week. I also stated that I would forget about the Sept rent ($500) and the unpaid late charges (about $500).
He was outraged at my offer. He asked me what happened to their $2,000. I told him that it was supposed to be applied to the price of the house when they bought it, otherwise it is nonrefundable. He accused me of misleading them about the $2,000 and called me a huckster. He said he was going to talk to a lawyer about suing me for causing his heart problems. He said he had his heart problem because I was harrassing them about their rent.
For the record, all I did about the late rent was give them a 10-day notice to pay or move out around the 10th of the month. They usually paid around the 20th and then I would send a bill for the late fees. I never called them.
So you think you have problems? You gotta be kidding me.
Re: tenant moved out, broke lease- what to do? - Posted by Natalie-VA
Posted by Natalie-VA on October 03, 2005 at 12:44:56:
Kevin,
You can’t file a lien against her for the remainder of the lease. Generally speaking, landlords must mitigate their damages. This means that you have to get the place re-rented. Once it’s rented, you can figure out how much rent you lost in addition to the expenses you incurred for advertising, cleaning, utility bills, etc.
If the damages exceed her security deposit, you can decide if it’s worth it to go to court and get a judgement against her. Even if her damages don’t exceed the security deposit, you can argue that you are entitled to keep the entire deposit since she broke her lease.
The $2000 option payment is yours. Hopefully this was in addition to her security deposit.
Re: tenant moved out, broke lease- what to do? - Posted by Brian (UT)
Posted by Brian (UT) on October 03, 2005 at 12:40:47:
Kevin
Rich makes a good point and I would find a new tenant as quick as possible in order to perform the needed mitagation of damages.
But I don’t think it is getting blood out of a turnip in this case because she is apparently intending to buy another house and getting a small claims court judgement is cheap and when she wants to buy the next property, your judgement will be sitting there.
Re: tenant moved out, broke lease- what to do? - Posted by Rich[FL]
Posted by Rich[FL] on October 03, 2005 at 11:40:37:
Good luck trying to get “blood out of a turnip”. It’ll probably cost you more in legal fees than you would collect - if you can get it in the first place. Just take the money you already have and find another tenant. You’ll be money and time ahead - not to mention you’ll keep your sanity.
Re: Trade places with you any day - Posted by Brian (UT)
Posted by Brian (UT) on October 04, 2005 at 14:53:09:
Randy
Yes your tenants are having problems but they are not your problems, His heart procedure is a one day simple outpatient thing and the cause of the blockage is a long term cause and his threat is just that an empty threat. No attorney with an IQ above 12 would take this case and he isn’t going to front the money for any lawyer so forget him.
Start an eviction, you tried to play fair and now the guy only hopes to milk as much out of you as he can.
I am talking from experience, if he want to play it as a tenant, then give him his $2,ooo back after deducting all monies due, and clean-up costs after he is out, It won’t be much more than you already offered.