My Tenant has not Paid the Rent . . . Now What? (Part 1)

It is not uncommon for owners who are self-managing rental property to eventually encounter some problem with a tenant or tenants who do not pay their rent.  One such self-manager recently contacted our office.  They owned a local, single family home rented for $2,500 per month.  The tenant was four months behind in his rent but the owner had no idea how to go about collecting the rent or how to remove the tenant from the property.  Quick to claim he could not afford a professional property manager or pay for legal counsel, this owner was now in a position if mishandled or inadvertently prolonged, would easily cost thousands and likely tens of thousands of dollars.  This owner was stuck in the “penny wise, pound foolish” approach to self-managing his own investment.

Thorough screening of potential tenants can drastically reduce the likelihood of non-payment changing circumstances due to employment issues, health problems and changes in familial make up can lead to non-payment of rent and become one of the most challenging scenarios for any landlord.  Should this situation arise, the final outcome and the landlord’s decision about how to proceed depend upon several factors:  the relationship to tenant(s), economic hardship, fear of vacancy, costs to rehabilitate the property and the likelihood of future payment problems.

When faced with the issue of non-payment of rent it is always best to initiate immediate contact with the tenant(s) to ascertain the reason for non-payment. Depending on what is discovered and/or if direct, personal communication is not effective; a written Three Day Notice to Pay Rent or Quit notice should be delivered as soon as practicable.

Once this notice has been delivered and receipt acknowledged one must then assess the likelihood of collecting the rent within a reasonable time frame.  Depending, a business decision must now be made; should the tenant(s) be accommodated and delinquent payment(s) accepted or should the tenant be removed from the property?

Establishing clear and pragmatic communication with the tenant is critical.  If direct communication is ineffectual, it is likely best to begin the eviction process to remove the tenant from the property.  This process CAN be halted once begun.  Conversely, it is impossible to regain possession of the property until the process has been initiated.  Any delay in initiating this process can be detrimental and costly.

A great deal of time, energy and money can be spent removing a non-paying tenant from a property.  If the decision has been made to remove a tenant there are guidelines that can significantly mitigate this cost.