Have you been struggling with a tenant who can’t, or who refuses to pay rent? No one likes to be the bad guy, but sometimes you have no choice but to evict a tenant.
Commercial real estate investment is a business and, in order to remain solvent, you need to treat it that way (even if it’s difficult).
Before you decide to evict a tenant, take a few minutes to consider whether or not this is the best business decision you can make.
Is there a way to work out a payment schedule so they can catch up with what they owe? Is there inability to pay a temporary situation that is likely to improve? And finally, should you evict them immediately, or wait until you find a new tenant?
If reasonable efforts to solve the issue don’t work with your tenants, then there are certain steps you need to take in order to legally evict a tenant.
Determine Whether Or Not You Can Legally Evict
Once you’ve decided that eviction is the best business decision, you’ll need to make sure you can legally evict your tenant.
The laws of eviction differ depending on the state in which the property is located, so the first step should be to check with your lawyer and see whether or not you have legal cause to evict.
Hopefully, your lawyer was the one who crafted the lease, ensuring that the escape clauses were included which allows you to terminate a lease in the case of non-payment or of failure to comply with the terms of the lease. If not, do a search for “Landlord and Tenant Acts + your state,” or go to your local court office for a hard copy of the code.
Review The Lease
Take a good look at your lease, and write down the reasons listed in your lease that give grounds for eviction.
In most states, these are the legal cases in which you may evict a tenant:
- failure to pay rent
- staying on the property after lease expiration
- drug-related or other illegal activity
- major property damage that can be proven
- using the property as a business when it is zoned and rented for residential purposes, or vice-versa
- health or safety violations
- the unit is being taken off the market
- if you, the landlord plan to move into the unit (there are numerous caveats that apply; check your state laws first)
- Refusing to pay a legal rent increase
- Tenants not named on the lease living in the apartment
- Keeping pets when the lease specifies a no-pet policy
Note any warnings that need to be given before eviction proceedings begin. Most states require that you not only give warning before you take a tenant to court, but also that you give written notice before any action is taken.
In the notice, you must state what actions the tenant took (or didn’t take) that warrant eviction, how much time they have to correct the problem and warn them that eviction proceedings will begin if the problem has not been corrected in the period of time that they are given. Also, you’ll need to include the names of all the tenants on the lease.
For some states that time period may be 30 days – for others, just 3 – and the period may also differ depending on the offense. Make sure to write the date the letter is delivered on the notice, and hand-deliver it to the tenant or post it on the front door of the property.
An important note – In many states, accepting partial payment for a delayed rent payment resets the clock and prevents you from evicting a tenant until after the waiting period has passed. In the same vein, if you accept the keys from a tenant who has evacuated the premises, you could be precluded from accepting rent owed at a later date.
Get A Lawyer On Board
If you haven’t hired a lawyer yet, then now is the time to retain one. Aside from the necessity of following the law so you unlawfully wrong your tenant, or harm yourself, every step you take from now on will reflect on you as an investor and as a person.
Private lenders, future tenants, and others will all understand a business decision, but if you step outside of the law, you will have a hard time rebuilding your reputation. And that could have a definite impact on your future as an investor.
Tenant evictions are far from fun, but they can sometimes be part of being an investor. Even with strong tenant screening in place, tenants can sometimes be unpredictable. Your best bet is to move on and make sure you have procedures in place to make sure it doesn’t happen again in the near future.
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