When Tenants Stop Paying Rent: Here’s What to Do
More people in the U.S. are renting their living space than any time within the last 50 years. As a landlord, whether you’re looking to rent out a small personal space or you’re overseeing an entire building, this is good news for your revenue…most of the time. Sometimes you may run into a problem with a tenant that, for some reason, has stopped paying their rent. Of course, this is a financial loss, and if tenants can’t or won’t pay their outstanding balance and maintain timely payments, you may need to take further action. There are things you can and can’t do in your efforts to remedy the situation, so always stay within your rights for the quickest resolution.
Issue a Pay or Quit Notice
Before you begin with involving the court system, start by issuing a notice to the tenants in default, often referred to as a ‘pay or quit notice’. This will state that they have until a specified date to either pay their past due amount or vacate the premises. The time limits for this varies from state to state, so be sure you’re following your local guidelines. Confirm receipt of the notice by requiring a signature for delivery of the notice, and retain a copy of both the notice and the signature confirmation for your records. The situation can be quite time sensitive, especially if the non-payment is more significantly impacting your finances, but it’s important to take this step- don’t rush past it. If you’re in charge of a large number of properties, you can mediate the loss of non-paying tenants with rent guarantee insurance. This type of service can protect you against non-payment for a yearly fee, which may be well worth it if you’re managing a large number of units or properties.
File for Eviction
After issuing a pay or quit notice, if the tenants do not comply, the next step is to legally file for an eviction after the date specified in the notice. This is typically done through the local Department of Justice. At this point, please note that you can not yet repossess the property; the court will oversee the process, after which you will be told when you can do so. Even if the property has been vacated by the time of the hearing, you should still attend. If you don’t, the case is dismissed, and the tenants will not legally be evicted.
What You Can’t Do
While there is a course of action consisting of things within your right, there are some things that you simply can’t do, no matter the situation. These things include: shutting off utilities, locking the tenants out, and physically removing them. Yes, the situation is frustrating, especially when you are experiencing a significant loss, but these actions will do more harm than good, so be patient with the legal process.
Dealing with non-paying tenants is stressful, but when you take the right legal recourse, the law will likely side in your favor.