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Evictions and Abandonment

Tightening The Ratchet

July 20, 2020 by Kevin

Headlines around the world are currently predicting another covid related crisis. This time it is an evictions crisis. As courts reopen and landlords are once again allowed to enforce their leases and property rights, evictions, it is said are going to throw hundreds of thousands into the streets. The homeless will be everywhere, from New York and across America, to London and Toronto.

Will hundreds of thousands of evictions be filed? Maybe. Will every single one of them proceed to an actual set out? Doubtful. In our company’s experience, most eviction cases are worked out before they ever get to court. Tenants start paying again work outs are made or tenants move on to somewhere else.

Yes, some folks are having a hard time paying the rent these days, we have seen it in our business. We have had to work with some tenants and let others move on because they simply could not afford their apartment after a job loss. But most tenants are keeping up with their side of the deal. In fact, stats from around the country show that above 85% are paying their rent and that number is only slightly below what was collected a year ago before all of this covid mess began. These states and my own anecdotal evidence make an eviction crisis appear to be far from imminent.

Nevertheless, the press is touting that a crisis of evictions is looming. As a result, my guess is that politicians are going to use this as an opportunity to respond. How? They will respond in two ways. First, where they can they will extend eviction moratoriums. Just keep the courts closed and problem solved.

Landlords, knowing that they do not have the courts to aid them, will in response elevate their screening methods and techniques. Landlords will work harder to keep potential deadbeat tenants out so that the need to go to eviction court declines.

This increased scrutiny by landlords toward potential tenants will lead the politicians to their second response, they will go after screening techniques. They will make the connection between lack of court enforcement and the increased screening done as a result. Politicians will then claim that landlords are denying people adequate housing. They will move to solve a problem which they created in the first place by closing the courts. They will make it harder for you to screen by expanding the scope of protected classes for example. Or they will work to ban screening techniques such as criminal background checks with “Ban the Box” initiatives.

The covid crisis has and will allow politicians to turn the ratchet tighter on landlords. Even when the crisis subsides, do not expect things to be completely loosened and returned to where they were. History shows that once tightened, things are never again loosened completely.

Kevin Perk is the founder and publisher of Smarterlandlording.com. He is the author of Advice From Experience To New Real Estate Investors.  Subscribe to Smarterlandlording here. Contact Kevin here.

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Filed Under: Dealing With Tenants, Everything, Evictions and Abandonment, Real Estate News, The Business of Landlording

Unintended Consequences

June 30, 2020 by Kevin

Couple Pays Mortgage On Home They Can’t Move Into As Tenant Stays Under Eviction Moratorium

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Filed Under: Everything, Evictions and Abandonment

Good Tenant Screening Can Prevent Evictions

June 1, 2020 by Kevin

Jurisdictions across the United States have halted or severely restricted evictions.. Only now, as I write this in late May 2020 are some states like Texas beginning to reopen the courts. How long will other jurisdictions remain closed? Will new laws be passed to make evictions, especially no fault evictions, more difficult? What if they decide to shut everything down again? What if, what if?

One thing we do know for sure, things will never be the same as they were before. We landlords can likely rest assured that courts will make the eviction process more difficult, that local governments will pass laws to restrict the types of evictions that can be done or institute new hurdles to do so. Some jurisdictions are even setting up systems (with tax dollars) to help tenants fight evictions.

The covid pandemic and the government response of closing the courts has emphasized the importance of one vital aspect of landlording, tenant screening. Tenant screening, especially now without the hammer of the courts, is perhaps the most important thing a landlord can do. It is more important that finding properties, repairing them, or even acquiring funding. Having a deadbeat tenant, especially one you cannot remove by the eviction process, will ruin you and your business.

With the courts closed tenant screening simply has become much more important. As a landlord, you just cannot let potential deadbeat tenants into your property. You have to learn and hone the skills to spot potential problems before they become your problem. I can tell you after over 15 years in this business, almost every tenant problem I have had, from evictions down to the complainers, has been because a red flag was ignored or an issue overlooked during the screening process. Yes, every problem tenant ultimately reflected back to me. In other words, I have had to learn the hard way no to ignore the signs or my screening criteria.

During this pandemic, several of our tenants have had problems. How could they not? Large sections of the economy have after all been shut off and their jobs have evaporated. Of course some people are going to have problems meeting their obligations when they cannot generate an income. But everyone has worked with us so far. Why? One, because we worked hard at screening and bringing in decent people. Second, we worked with them when they hit a problem.

Over the years and after screening hundred of tenants, we have learned to recognize the subtle signs of deeper problems such as a lack of interest, a sense of urgency or answers that seem just a bit too rehearsed. We have found that people are good at lying and you have to be better at detecting the lies. Deep down most of us want to trust and believe what others say. But you simply cannot. The reality of the situation is that as a landlord, you cannot accept anything you are told at face value. In fact, I guess I would go so far to say that we have to assume that we are being lied to until we find out that we are not.

Recognizing red flags and conducting thorough tenant screening are skills that can be learned. To help you, I wrote about 21 major red flags that every landlord should look for when screening tenants which you can get for free by clicking here.

Will you still have to learn some things that hard way like I did? Yes, most likely. But by educating yourself now and by starting to hold folks to a higher standard you can keep many of the headaches out and avoid the problems of closed eviction courts altogether.

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Filed Under: Dealing With Tenants, Everything, Evictions and Abandonment, Tenant Screening

Eviction Court Closed? Cash Can Persuade

May 25, 2020 by Kevin

Eviction courts in many states are closed right now. Here in Tennessee the State Supreme Court has halted evictions until the end of May. This hold was deemed necessary because so many have lost their jobs or been otherwise impacted by the great supression. However, the closing eviction courts has also provided an incentive for some to simply not pay the rent and forced landlords into a bit of a corner.

But without the courts behind you, what can you do?

You do have options. You cannot use force, but you can certainly try to persuade. Evictions are costly and confrontational anyway. They create animosity and leave a potentially very angry person in control of a vary valuable and easily damaged asset. In over 15 years in the landlording business we have only been to eviction court three times. Instead, we prefer to use the power of persuasion and the power of cash. Sure, force may feel better at the moment the judge rules in your favor, but trust me, the hidden costs are always there and will make themselves known before you actually do get that tenant out.

The persuasive method I am referring to here is of course cash for keys and since I have written about that before I will not get into too much detail about it here. Suffice it to say that instead of using force, you pay your deadbeat tenant cash to leave and hand you the keys. We have successfully used this technique many times over the years and it is a very good option to use in these evictionless times.

Yes, I understand that it hurts the pride a bit to actually pay a deadbeat tenant, but that hit to the pride is a lot less painful in my experience than the expense and stress of an eviction and setout. Plus, what other option do you have right now? None.

How much cash should you pay for the keys? Depends on your situation, market and circumstances. You need to ask yourself how valuable it is to you to get the tenant out. How much rent are you losing? How behind are they? What will they take to leave? How stressful is it to you? There are many factors to consider but a few hundred dollars often does the trick.

Make your tenant an offer and see where it goes. Start low. Consider making an all cash offer or perhaps including a moving van or something else they want. It is up to you to be creative in these interesting times.

When pursuing the cash for keys option there are two “should haves” and one absolute “must have” for the landlord.

First, there has to be a certain date when the tenant agrees that they will be out. Of course you can always give a day or two leeway if you see that effort is being made but you have to have a set date. If they do not move by that date, they do not get paid.

Second, we insist that every piece of furniture, belonging and trash, down to the wire hangers in the closet and the Taco Bell sauce packets in the kitchen drawers, are removed and the place is broom swept clean. The last thing you want is to pay a tenant to leave and then have to pay someone else to remove their unwanted, stained sleeper sofa and other garbage.

On the “must have” side, you must get a signed release of the rights of possession form. Download one here. This form is a must because your tenant has to return legal possession of the property to you. You need something to show a judge, if it ever comes to that, that you have received legal possession from the tenant and that they have removed all of their belongings. DO NOT hand them the cash or take the keys until you have that signed form in your hands. If they will not sign, then no deal.

The courts will reopen someday. In fact, as I write this, Texas already has. You can make that known to your tenant and tell them that your offer will be much better than the one the receive in eviction court. Cash for keys might just therefore solve your problem.

Kevin Perk is the founder and publisher of Smarterlandlording.com. He is the author of Advice From Experience To New Real Estate Investors.  Subscribe to Smarterlandlording here. Contact Kevin here.

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Filed Under: Dealing With Tenants, Everything, Evictions and Abandonment, The Business of Landlording

The Voluntary Landlord/Tenant Relationship?

March 9, 2020 by Kevin

The landlord/tenant relationship is generally a voluntary one. Person A, the landlord, has a vacant property they wish to rent. Person B, the tenant, needs a place to live. The marketplace brings persons A and B together. They examine what each other has to offer, negotiate a price and decide to make an exchange. Person A agrees to let Person B live in their property for a certain amount time and amount of money. Everyone walks away from this voluntary transaction in a more favorable position, otherwise they would not do it.

Most voluntary business relationships are easy to end. One simply has to stop gong to a particular restaurant or store and that ends it. Or, the owner of the restaurant or store can refuse you service. With residential real estate rentals, it gets a bit more complicated. The landlord/tenant relationship has evolved over the years to remove this ease and actually penalize it. In doing so however, each side generally benefits.

Nearly all businesses, and landlording is no exception, desire stability and continuity. Businesses want to be able to determine the income that will be coming in and for how long. On the flip side, they do not want to lock themselves into a disadvantage if market conditions change. Tenants want some security. They want to know they they will have a place to live. After all, I would hate to have to move every month. These wants from both sides have evolved into the long term lease. Most residential landlords now use a long term lease of at least a year that bind both parties to location and price. Thus creating stability and continuity. Neither party can simply pull the plug on this agreement without some kind of penalty or compensation.

When the lease term expires, either party can usually end the landlord/tenant relationship just as easily as it was started. The tenant can simply move or the landlord can choose not to renew, thus requiring the tenant to move. But what if the tenant does not want to move? What if they really like your property and want to stay? Can they? Can they force the relationship to continue?

The answer is usually no. But, if they refuse to leave after you have asked them to do so, you may be faced with filing what is called a “no-fault eviction.”  In other words, you are filing to force the end of the relationship for no other reason than that is what you want to do. The tenant may be paying you rent. The tenant may otherwise be a model tenant but you want possession of your property. Perhaps you want to remodel. Perhaps you want to sell. Whatever the reason, your wish is to regain control of your property.

As rents continue to rise and the number of rental units continue to decrease in some areas, more and more tenants are starting to balk at being asked to move. They do not want to pay more rent somewhere else and their selection of properties to move to has decreased. In turn, tenants begin to ask politicians for help and politicians offer it by enacting bans or restrictions on no-fault evictions. Such events are happening in California and in Washington State and are forcing landlords into relationships that were once voluntary. Will this trend increase? Stay tuned and stay informed as to what your local politicians are doing.

Any readers try to conduct a no-fault eviction recently and hit problems? Let me and other readers know with your comments.

Kevin Perk is the founder and publisher of Smarterlandlording.com. He is the author of Advice From Experience To New Real Estate Investors.  Subscribe to Smarterlandlording here. Contact Kevin here.

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Filed Under: Dealing With Tenants, Everything, Evictions and Abandonment

No Fault Evictions Rise Ahead Of Rent Controls

November 16, 2019 by Kevin

The new law, championed by Democratic Gov. Gavin Newsom as the strongest statewide renter protection in the country, caps annual rent increases at 5% plus inflation, while also forcing landlords to specify a legitimate reason for evicting tenants and to offer relocation assistance for no-fault evictions.

But in the interim months until the law kicks in, tenant rights groups are scrambling to combat what they say is a wave of landlords exploiting a temporary loophole that allows them to get rid of tenants now. That way they can raise rents beyond the rent cap, avoid having to pay any relocation help to displaced tenants, and simply remove tenants they view as problems without going through additional legal hurdles introduced by the new law. 

Read the rest here.

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Filed Under: Everything, Evictions and Abandonment, Landlord Law, Real Estate News

Landlords, Understand No Fault Evictions

October 21, 2019 by Kevin

No fault evictions are making headlines .  Laws are being considered or enacted recently that either ban or restrict the practice in California, Oregon and New York.  Therefore now would be a good time for landlords to understand no fault evictions, why they might be used and offer some suggestions before doing so.

Understanding No Fault Evictions

A no fault eviction is a legal proceeding during which the landlord attempts to regain legal possession of a property from a tenant.  The tenant is being asked to move, due to no fault of their own.  Most tenants facing no fault eviction are often current on their rent and may otherwise be a good steward of the property where they reside.  In lay terms one party to the lease contract, the landlord, is deciding to end the relationship.  The legal process for a nor fault eviction is however generally the same as if the tenant had not paid the rent.  There are legal notices, court dates, judges and judgments.

Why Use A No Fault Eviction?

A landlord might use a no fault eviction for many reasons.  First, upon purchasing a property, a landlord may want to have a clean slate. Inherited tenants will not have been through the new landlord’s screening process and that may cause some unease on their part.

Second, a landlord may want to rehab and upgrade a property.  I can tell you from experience that a major rehab is impossible to do with a tenant living in the property.  Having a vacant property allows for the gutting of kitchens, bathrooms and the replacement of walls, windows, etc.

Third, a property owner may want to move into the property.  I myself moved into one of the first properties I purchased.

Why The Backlash?

In short, there is a backlash because people are being kicked out of their homes even if they have diligently paid the rent and otherwise done nothing wrong.  Some simply do not like that.  They may have lived in the same place for years and developed an attachment to the neighborhood.  Their rent may be under market and they worry about finding a new place of similar quality to live for the same price.  They may not have the money to move.  They may be older or even sick and moving will be difficult.

Taken together, these reasons have produced a backlash resulting in various w or proposed new laws across the country.

What Know About No Fault Evictions

I myself have purchased buildings with existing tenants which I intend to gut, fully rehab and bring back on the market.  Believe me, they needed it and unfortunately the tenants had to go.  Understanding that this can upset the inherited tenants, I strove to ensure that I was in compliance with existing laws, understood existing leases and was as accommodating as I could be.  A bit of tactfulness can go a long way in these situations.

The first thing that any landlord, and tenant for that matter, must understand is that a lease is a contract.  That contract specifies who is a part of the contract, what property the contract applies to, the consideration between the two contract parties aka rent, and the duration of the contract.  Either party can end the contract by providing appropriate notice.  Tenants can move of their own volition and landlords can ask tenants to move.  When tenants refuse, then the landlord is forced to evict.

Secondly, landlords cannot just cannot arbitrarily kick people out of their homes.  Even if they are a new owner and have recently purchased the property proper steps must be taken.  Tenants have rights to the property they live in and their lease runs with the property, not the owner.  Not having a written lease does not matter, tenant rights will still apply.  You as a party to that lease contract have to uphold those rights.  If a year long lease was signed two months before your property purchase, it means you will have to wait another ten months before you can file to regain possession of the property.

People Need Time

Most folks cannot just up and move tomorrow.  They need time to find a new place to live and get their stuff together.  If you intend to empty a property of its existing tenants, you can soften the blow with time.  Give as much time as you can give.  At a minimum, there will likely be contractual time obligations contained in the lease, or there may be legal time requirements.

When purchasing a property, be sure you understand the time constraints you will be under.  Carefully review existing leases.  Use an estoppel agreement to further clarify your new landlord/tenant relationship.

Cash For Keys

Another possibility to soften the blow is to offer some type of incentive for tenants to move.  A little cash or help with a move might go a long way towards getting you the keys.  It sure can be easier and less confrontational than eviction court.

If They Will Not Go

If tenants refuse to go, or drag their feet too long, you have no other option than an eviction.  Evictions can be ugly in the first place, but add an angry tenant who feels that they have been wronged and it can get nasty.  So nasty that it leads to calls for bans on no fault evictions.  And while I can understand and sympathize with tenants, it is wrong to force one side to stay in a contract they no longer wish to be a part of. Landlords can hopefully minimize the issue by understanding what they are getting into and using some of the advice outlined above.

Kevin Perk is the founder and publisher of Smarterlandlording.com.  He is the author of Advice From Experience To New Real Estate Investors.  Subscribe to Smarterlandlording here.  Contact Kevin here.

Subscribe to Smarterlandlording and receive a Free Report: 21 Tenant Screening Red Flags

 

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Filed Under: Buying and Financing Properties, Dealing With Tenants, Everything, Evictions and Abandonment

Tenant Abandonment – Part 2

April 10, 2018 by Kevin

You think your tenant has abandoned you.  The utilities to their home have been turned off.  You have not heard from your tenant in a few days after repeated tries to contact them.  Plus, you have entered your tenant’s place and nearly everything is gone.  You have followed all of the steps I outlined in my previous post, Tenant Abandonment and you are 99.9 percent sure they have abandoned you.  You are now ready for Part 2.

Which Way To Go?

You now have a choice to make.  Remember that the property is still legally in the tenant’s possession.  You can go one of two ways.  You can either follow the eviction process or you can follow the legal process for abandonment.

Personally, we try our best to avoid the eviction process.  Eviction is costly and takes time.  You can’t even represent yourself if you hold your properties in an LLC as we do.  Sometimes though, as I will discuss, it may be the way to go.  Whichever way you decide to go, get competent advice for your particular location and situation as laws are going to vary from place to place.  Here in Memphis, Tennessee the abandonment process is pretty simple.  It will get you possession your property faster, without going in front of a judge and much of the time, without all of the expense.

The Tenant Abandonment Route

When going the tenant abandonment route, the first thing you have to do is wait a little.  You have to wait until the tenant is 15 days late with their rent payment.  Then, you post a notice stating that you intend to reclaim possession of the property due to abandonment on their front door.  You also send the same notice to their last known address.  What is their last known address?  It is your property.  I know, I know, your tenant is likely to never see it since they are not picking up the mail anymore but you have to go through the motions because that is what the law requires.

This notice must include three items.  One, your (landlord’s) name, address and telephone number where you can be reached.  Two, A statement indicating that you believe the tenant has abandoned the property and that you intend to retake possession within ten days of posting the notice.  Three, if the tenant does not contact you then everything will be removed from the property and the property will be re-rented.

That’s it.  No courts.  No Lawyers.  No legal fees.  Just a little bit of your time, a few sheets of paper and a stamp.

During this 10 day wait period, you should be advertising the property and lining prospective tenants up.  Can you show the property to these perspective tenants?  Perhaps.  We have a clause in our lease allowing us to do this anyway, but I might tread carefully and ask what an attorney in your area thinks.

Regaining Possession

Once you have waited the required 10 days, you can then go in and remove anything the tenant left behind and prepare your property to be re-rented.

Here is where it might get a bit tricky and push your decision towards the eviction route.  Yes, after 10 days you can go in and remove anything the tenant left behind, but you can’t just throw it away or place it on the curb.  You have to store it for thirty days and allow the tenant to recollect the stuff if they return and want it.  The amount of stuff left and your ability to move and store things (we have a little space to do this) will affect which route you decide to take.  Hopefully, your tenant has only left behind a few broken pieces of easily movable furniture and an old box of cereal or two.  Otherwise you may have to hire some folks to move everything, rent a truck and storage space.  After all of that, it may just make more sense to evict and throw the stuff on the curb.

However, leaving lots of stuff behind, at least in our experience, is not typical.   Most of the time, what is left is just junk and I have never found anything of value as they always take the alcohol and the TV.  Whatever is left and whatever you do, it is best to take a video of your abandonment process in case you need to defend your actions later on.

The Sum Up

That is the process to regain possession after tenant abandonment.  It is fairly quick and simple. Every tenant and every situation is different though, you will have to weigh the costs and your time factor in each case.  But the abandonment procedure is often the way to go.

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Filed Under: Dealing With Tenants, Everything, Evictions and Abandonment, Landlord Law, The Business of Landlording

Tenant Abandonment

March 29, 2018 by Kevin

Tenants are the lifeblood of the landlording business and proper tenant screening usually goes a long way towards avoiding most tenant problems.  Notice I said most, not all.  No matter what you do, tenants are going to cause you problems some of the time.  One of those problems is tenant abandonment.

What is tenant abandonment?  Its when your tenant voluntarily leaves your property, without telling you, with no intent to return or fulfill the terms of the lease.  Your tenant just up and goes, often in the middle of the night and often leaving a pile of stuff behind.

Why do tenants abandon their homes?  There are many reasons for abandonment and most of them are reasons that neither you nor your screening process could have seen coming.  They may have lost their job and are too embarrassed to face you.  They may have broken up with their girlfriend and become depressed.  They may have fallen off the wagon and gone on a bender.  Whatever the reason, you are faced with a vacant unit, lost rent, a mess to clean up and you need to get the cash flowing again.

What are the steps a smarter landlord should take?

There are many, too many for just one post actually.  So the next few posts will deal with tenant abandonment.  How you as the landlord should determine if your tenant has actually abandoned you.  What the legal steps are that you must take once a tenant has abandoned you.  And finally, some things you can do to prevent abandonment from happening to you.

How do you determine if your tenant has abandoned you?

First, landlords need to understand that tenant abandonment is a legal issue.  This is because your tenant technically still has legal possession of the property.  Thus, there is a legal process that all landlords have to follow to stay out of hot water.  I’m in Tennessee so I’ll be speaking with regard to the rules in my state.  Your state may be similar, but it may not.  So use this post as a general guide and then seek competent legal advice.

Second, you have to verify and document that your tenant has truly abandoned the property.  In other words, make sure they did not just leave in a hurry to go take care of their ailing mother in another state for an extended period of time.  This process may take a little time and investigation.  Begin to keep a written file of everything you suspect.  Document everything!  It could prove extremely helpful later on.

How do you verify that your tenant is truly gone?  It can be harder than you think and you have to be somewhat of a detective to add up the clues.  This is because some people are (or can become) unkempt, unorganized and perhaps having a rough go.  While conditions can point towards abandonment, they may not completely confirm it.  You have to build your case by putting the clues together to legally protect yourself.

What are the clues to tenant abandonment?

One obvious clue is unpaid rent.  If the first of the month comes and an otherwise timely tenant is late, that is a good sign.  Another clue is the inability to contact them.  If they do not respond to your calls, texts and e-mails, they may be gone.  The utility connection is a major clue.  If the utilities have been turned off, or have been placed back in your name (either way you should be notified by the utility company), your tenant has likely left the building.

However, these clues alone do not prove abandonment.  A bit more investigation is required.  It is time for step three, to grab the keys and go to check out the property.

When you get to the property, look for more clues.  An overflowing mailbox is a pretty good clue no one is there to check it.  Piled up newspapers and packages are also part of the story.  Look for the tenant’s vehicle.  As part of your tenant screening and lease signing process you should have gotten the tenant’s vehicle information.  Is the vehicle on the property?  If the property is a multi-unit property, knock on some of the neighbor’s doors and inquire about the tenant.  Even of your tenant sneaks out in the middle of the night, other tenant’s may have seen or heard them leave or perhaps can tell you that they have not seen them in a long time.

Finally, enter your tenant’s apartment

At this point, it is time to enter you tenant’s apartment.  Do not have any reservations about doing this.  You have tried to contact them and they have not responded.  Every sign you look at is telling you there is something wrong.  Hopefully they have just left, but what if they passed away inside?  You have every right to check and make sure your property is secure.  If you can, take a witness with you and better yet, take a video upon entering with your smart phone.  Protect yourself legally.  You do not have possession, document everything!

Upon entering it should be pretty obvious if your tenant has flown the coop.   Is most of the furniture missing?  If there is still furniture, are the valuable items such as the television gone?  Are the clothes gone?  Check the fridge.  Is there any fresh food in it or is it all rotten?  Is there any sign at all that someone has been coming or going?

If it definitely looks as if your suspicions have been confirmed and your tenant has abandoned you, leave everything alone for now.  Make sure the property is secure and will remain so.  Lock up and head back to the office.  It is time to either file for eviction of begin the legal abandonment procedure.  That tenant abandonment procedure is what I will discuss in my next post.  Stay tuned.

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Filed Under: Dealing With Tenants, Everything, Evictions and Abandonment, Landlord Law, The Business of Landlording

Are Your Properties In An LLC? Evicting A Tenant? Read This First

March 11, 2018 by Kevin

Many of us landlords hold their rental properties in a Limited Liability Company (LLC). Doing so can make very good business sense as a landlord can separate their business property (rentals) from their personal property (home, cash, stocks, cars, etc). This separation can significantly reduce a landlord’s personal risk if you get sued by a tenant. Plus it can be a great estate planning tool.

How?

An LLC is legally a separate entity from you. You can actually think of your LLC as separate person from you. It has (or it should) have separate bank accounts, separate credit cards, separate loans and even a separate address. The LLC therefore actually owns your rental properties, you do not. You just control and direct the LLC. Thus, if a tenant or anyone else for that matter falls on a property owned by an LLC you control, they can only sue the LLC, not you. This is what is known as the “corporate shield” between you and the LLC (This shield can get pierced if you are not careful, but that is a post for another day).

Unfortunately, even the best landlords with the best screening techniques will have to evict one of their tenants at some point. Tenants sometimes just go bad for reasons beyond your control. If you happen to hold your rental properties in an LLC, you personally cannot represent your LLC in court during the eviction process. You must have a lawyer represent your LLC during the eviction process.

Why?

It is not because it is difficult or complicated to file an eviction or to go in front of a judge.   In fact, with a little coaching, almost anyone can do it. The problem stems from the fact that the LLC is legally a separate entity from you. It is legally another person. So if you file for eviction and go to court to represent “your” LLC, you are technically representing someone else in court. By representing someone else, you are practicing law without a license.

Judges generally do not like folks in their courtrooms practicing law without a license. When they realize that you are, they will throw your case out. That may have been just an honest mistake on your part, but if you thought you were going to save money you were wrong. You are now actually even deeper in the hole because you have lost even more rent. Plus you have lost time. And as they say, time is money.

I know, I know, all of this may seem like splitting hairs and technicalities. Lawyers are also costly and evictions are generally pretty easy to do. But lawyers live for technicalities and this component of the Lawyer Employment Protection Act is just something you have to follow if you hold your properties in an LLC.

Kevin Perk is the founder and publisher of Smarterlandlording.com.  He is the author of Advice From Experience To New Real Estate Investors.  Contact Kevin here.

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Filed Under: Dealing With Tenants, Everything, Evictions and Abandonment, Landlord Law, The Business of Landlording

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Kevin Perk has been investing in real estate in the Memphis, TN area for over 20 years. Read More…

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