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Property Management Blog

How to deal with a nonpaying tenant?

The most common question we hear from self-managing rental owners is: "How do I handle a nonpaying tenant?"

Even the most seasoned professional property manager will tell you an eviction is a lengthy, complicated and expensive procedure. To the self-managing landlord, the thought must be terrifying.

The key throughout is to remember that you are conducting business and a non paying tenant attacks your profits.

First, you have to ensure all your legal ducks are in a item; the lease in place with copies in triplicate and correct notices posted at the property, including the exact dates specified, detailed summary of amount owed, and the specific verbiage required in the county where the property is located. You need to visit the county courthouse, pay the required fees to the court and then additional fees to a sheriff or process server. A minor mistake at any of these steps will result in further costs and delays.

Assuming everything goes okay, the best result you can expect at this point is for the tenant to be served in a timely manner, they decide to leave without any fuss and leave the property in a reasonable condition. Likely time-frame for this would be two weeks from initial petition.

In terms of out-of-pocket expenses this process will cost you $300 in court costs, plus plenty more in lost rent, inconvenience and stress. Use an attorney and you can double or triple the amount.

Unfortunately, savvy tenants have learned how to 'work the system'. They use tactics such as claiming you, the landlord, did not adhere to requirements prescribed in the Florida Landlord Tenant Act. The now aggrieved tenant claims you ignored his requests for maintenance; that she actually did pay but you have kept the cash; reneged on verbal agreements or anything else they can think of. Therefore, you must keep excellent records so that when you encounter a nonpaying tenant you have the correct evidence available to dismiss any claims. Keep a detailed record of applications, move in inspections, maintenance requests, and bank account statements then you will invariably win the case and be granted the eviction and possession a few days later.

Unfortunately, this delaying tactic will have stalled the eventual eviction by four to six weeks, during which you have been going without rent and who knows what condition the property will be in once you are eventually allowed back inside. If you do not win the case, then the tenant will be awarded damages and you will be back to square one, except you now owe the tenant money.

My advice to landlords is to avoid court action whenever possible. Communicate with nonpaying tenants. Demonstrate that you are in control of the situation and if court action is required you will prevail, but you are willing to compromise.

Remember, this is business, not personal. Consider offering a small inducement for the tenant to leave early. Alternatively, agree to refunding the security deposit if the tenant returns the keys and leaves the property in perfect condition. I understand these actions will stick in many landlords' throats but remember this isn't personal. You could spend hundreds or even thousands of dollars on legal fees only to find you have no way of collecting the damages.

Tenants are not perfect, and we have encountered many nonpaying tenants over our 12 years in business. I am pleased to say that over this period we have only been required to evict 5 tenants. Most defaulting tenants have taken the easier road which has saved our clients thousands of dollars in lost revenues and damages.

Remember your goal is to gain possession of your property quickly and in the best possible condition.

Hungry for more? Check out the two blogs below or visit our Owner Resource Center here to find answers to all of your questions. Or give us a call at (941) 782-1559, we'd be happy to answer any questions you may have.

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