Inside T&H: Handling Evictions and Collections
In the grand scheme of being a Landlord, there are few things more painful than an eviction.
No Landlord wants them.
But, if you do this long enough, you’ll almost certainly have to evict a Tenant.
At T&H Realty, we evict less than 1% of the Tenants we place.
Unfortunately, in spite of our best efforts and in spite of extreme Tenant screening, evictions are a harsh reality of being a Landlord.
Because, as we all know, life happens: Divorce, job loss, illness ,etc.
Evictions, as you might guess, require significant care from our team, and we are prepared to communicate with you heavily until the situation is resolved.
Rest assured that we’re here to expedite the process and get your property re-rented as quickly as possible.
Below is a basic guide to how we handle evictions for our Clients.
Failure to Pay Rent
While there are several reasons an eviction may be necessary, the most common scenario is non-payment of rent.
We discussed our rent collection process in detail in a previous blog, and we encourage you to review that process.
In almost all cases, Tenants will respond to our collection efforts, make their payment and avoid an eviction filing.
However, when we’ve exhausted all reasonable efforts to collect rent, filing eviction is imperative. As we tell our Clients, filing an eviction will force an action.
The first order of business is to gain possession of your real estate and, as you should well know, there’s a legal process in order to do that.
The typical cost for filing an eviction, and for an attorney to attend the hearing, is around $500.
Once the eviction has been filed, the attorney will inform us when the court date has been scheduled. It usually takes 3-4 weeks for this date to be determined.
Collection by Eviction
In a high percentage of cases, the Tenant will pay in full before the court date.
So, that $1,200 that couldn’t be paid until the 25th, mysteriously ends up in our Office three days after the Tenant is served the eviction notice.
This collection by eviction method works.
It works really well.
Once the Tenant knows we’re serious, their priorities change and our squeaky wheel gets the grease.
Tenants Vacate before Court Date
In some cases, the Tenant will vacate the property once an eviction is filed, which can save you the expense of our Attorney attending the possession hearing and expedites us getting the home re-rented.
If the Tenant vacates prior to a hearing, you will jump directly to the Damages portion of the process.
In order to determine if the Tenant is still residing in the home, we will reach out 7 days prior to the hearing. If we cannot make contact with them, we will send out a Property Manager to do a “5-Day Occupancy Check”.
If the Tenants are still occupying the home within 5 days of the hearing, we generally request $250 contribution for the attorney to attend.
*Please note that actual Attorney fees may vary, depending on the time required and the complexity of the case.*
The Court Date
In a small percentage of the evictions we file, we will have to go through with the hearing. Sometimes the Tenant shows up, most of the time they don’t.
These hearings are basically “admit or deny” scenarios and it’s extremely rare if we aren’t granted possession.
Assuming all goes well at the hearing, you should be granted possession of the real estate within an additional week.
What if the Tenant Refuses to Leave?
In some rare cases, the Tenants do not vacate the home in spite of the court order. If this occurs, we will have to do a Forced Move-Out.
Even evicted Tenants have rights, so it’s a little more complicated than just throwing their stuff on the curb and changing the locks.
There is a systemic and legal process that must be followed in order to remove them from your property, and unfortunately, it’s more expensive, too.
If we must proceed with a forced move-out, we will need an additional $1,000 contribution from you.
But as I said before, this is not common.
When we have possession of the property, the next step is to determine damages to the home. Obviously, lost rent, until we re-rent the home (or the evicted Tenant’s lease ends) are figured into your damages.
We will also walk the home and provide you a detailed list of items needed to get the home in rent-ready shape. It’s important to note what is Tenant damage and what is considered normal wear and tear. All Tenant damage items will be added to the Tenant’s lease ledger.
T&H Realty’s Collections Process
When all damages are calculated, we are required to send the Tenant a 45-day letter, noting all charges. The letter provides the Tenant 10 days to pay the outstanding balance.
If the Tenant fails to pay the balance, and we feel like you have a good chance to collect the debt, we will encourage you to proceed with a damages hearing and obtain a judgment. We require an additional $500 contribution from you in order to pay our Attorney to prepare and attend the damages hearing.
Keep in mind that most judges allow Attorney fees to be added to judgments.
There are a couple of key questions that should be answered prior to proceeding with a damages hearing:
- Is the amount owed worth pursuing? A claim will generally cost around $500, which includes the filing fees and having an attorney represent you. Also keep in mind that, after a judgment is obtained, a collection company will likely keep 40% of the funds collected as their fee.
- Is the Tenant collectible? If the Tenant currently isn’t working, for example, receiving any payment on a judgment might be difficult.
We will advise you accordingly…
- Under $250 – No action.
- Greater than $250 but less than $3,000 – Proceed with 3-letter package from a collection company we utilize and, if necessary, transfer to contingency-based collection.
- Greater than $3,000 – We recommend proceeding with the damages hearing and getting the judgment.
Once a judgment is awarded, we will send the judgment to our local collection company. This company offers very competitive rates and works on a contingency basis, meaning there is no cost unless money is collected.
We will manage the entire collection process for you, retaining 10% of whatever money is collected, and depositing the balance into your account.
Eviction Protection Plan
Since evictions are obviously such a pain point for so many investors, we offer an Eviction Protection Plan (EPP) to all our Clients. This plan is an added service we offer our Clients as a means of mitigating some of the financial burden in case of an eviction.
The goal is to provide Owners with peace of mind knowing they don’t have to stress about the costs of an unexpected eviction.
Any Client is eligible for this added service as long as the Tenant in question is one that T&H has placed. Inherited Tenants are not covered under this program.
Of course, we all hope that you never have to deal with an eviction, and with our rates being so low, you more than likely won’t have to. But hopefully it gives you comfort to know that we have the experience and protocols in place to protect you and your assets should it come to that.
In addition, if we ever have to evict any Tenant that we placed, during the first six month’s of residency, we will re-lease the home at no charge. This is a guarantee we offer all Clients.