Collection Rates, Deadbeat, Escrow, Renewal

Print
PDF

Q: Is there anything I can do to increase my collection rate after I've evicted someone? Seems like after the Sheriff gives them the boot, these characters just disappear into the wind never to be heard from again. I know you see this every day, so/ thought you might be able to share some thoughts that will help me get my money back from these deadbeats?

A: Of course. Start thinking collection before you even create the tenancy. It seems counter intuitive, sure, but your tenant screening process lays the groundwork for firms like ours to go after and collect the monies due you after the tenant vacates. A complete and verified application is the best start. Those crazy questions asking for references and emergency contact information is where a good collector will start to find that former tenant. A legible copy of a valid government issued iden­tification is important as well. Make a photocopy of the first rent check you receive from your brand new tenant, then each month compare the bank information to see if it changes. Copy any new check the tenant tenders and put it in your file.

You should ask your tenants for emergency contact information, i.e., cell phone, email, work phone, etc., on a regular basis, at least once every year. Phone numbers, cell and work change throughout the course of the tenancy, the best information is the most current. Generally, tenants fully cooperate at the inception of the tenancy and during the term prior to any dispute, Rarely do tenants refuse to provide such contact information as most rec­ognize that it is needed in the event it's necessary to contact the tenant during the tenancy in case of emergency. In the event of an eviction, make sure your attorney proceeds to get the money judgment for rent, costs and attorney fees. If the tenant skips, small claims court is generally the place to go to reduce the amount due to a judgment. A judgment, coupled with the information stated above, in the hands of an aggressive collection attorney will dramatically increase the likelihood of securing a full recovery.

Q: Just opened up the mail and what do you suppose was in it? A notice from my bank informing me that one of my tenant's rent checks was returned unpaid because he placed a stop payment on it. Imagine that, it's now mid­-month, no warning, no phone call, the deadbeat didn't even have the courtesy of letting me know he was going to stop payment on his check. It kind of makes sense though as a couple of weeks ago he asked if I'd let him out of his lease early; guess his girlfriend has a nicer place and he wanted to move in with her. I called his phone number and got a recording saying that it had been disconnected. His cell phone works, got his voice mail, and left a message. I'm guessing that when I swing by later today, it'll be empty. What do I do now? I don't want to make any mistakes. Can I just change the locks if he's out?

A: You have a couple of issues that you need to resolve. First the issue of return of possession of the premises; and then, of course, getting you paid. If the tenant appears to have vacated when you visit the unit later today, then you must follow certain procedural rules before you simply change the locks. Ideally, you will be able to contact the tenant on his cell or at work. If you make contact, ask that the tenant confirm that he is out by faxing or emailing you written confirmation. If you are able to confirm that he has moved out, you will not have to follow the abandoned real property notice require­ments and will be able to retake possession immediately.

If when you visit the unit, and find that it is vacant, and if the rent is due and unpaid for 14 days, and the tenant has not voluntarily surrendered posses­sion, then you must serve a written Notice of Belief of Aban­donment of Real Property. The notice can be posted on the premises and mailed by regular mail to the tenant's last known address, your property. You must wait 18 days before you retake possession. If the tenant does not reply, in writing, by informing you of his address for service of an unlawful detainer within 18 days, then you may retake possession and change the locks. Once you regain possession, prepare the security deposit disposition form. If he skipped mid-lease, he will owe the balance of the term, or until you mitigate your damages by reletting the unit, whichever occurs first. Hang on to the tenant's check that was returned by the bank. Stop payment orders are only effective for six months, unless renewed by the maker, which rarely happens. That means, in six months and a day, you can redeposit the check, and if there are sufficient funds, the check will clear.

Q: I just closed escrow on a small building and I'm trying to figure out who's who. I received the rental agreements, but the tenant information seems incomplete. The applications, the few that I've found so far, are old and outdated. I can't seem to find any telephone numbers for the residents, and I'm not real sure that the names on the agreements are the same people who actually live in the units. I've read your articles before and I know the importance of reviewing the files and doing thorough due diligence before closing escrow, but this deal just happened too fast. Now that I've closed escrow, what can I do to clean up the records?

A: First things first, figure out what you know and what you don't. Establish individual tenancy files, one per unit. Based on the limited information you have, write down the names and ages of the occupants, the terms of the rental agreement, written or oral, lease or month-to-month, rental rate, deposit on file, and date paid through. Compile whatever contact information you have: home phone number, and work and cell numbers. Design a "tenant emergency information sheet" that includes spaces for the following: names of all occupants, home and cell phone numbers for each occupant, work phone numbers, email addresses and detailed vehicle information.

Visit the building about dinner time as most resi­dents will be home, and go door to door and meet briefly with the occupants of each apartment. Spend a few minutes confirming the information in your files and gather any missing information. Ask the residents to complete the "tenant emergency information sheet," for use in case of an emergency, while you are there. You will find that the vast majority of your residents will cooperate fully and provide the requested information. Residents are generally eager to please, and since the relationship is still new, there should be no animosity or distrust.


This is also a good opportunity to find out the condition of each unit; simply ask the residents if there are any issues that need addressing. Better to find out now and have an opportunity to address the needed issues than to allow conditions to worsen, as well as your relationship with the residents. This is also an opportune time to prepare new month-to ­month rental agreements for signatures. You don't know the players yet, so you certainly don't want to do fixed term leases. The few residents who are less than cooperative will be quickly identified as your "problem residents" and can be handled individually. Names and contact information of the uncooperative ones can generally be gathered from the other residents, or from public records. If the property is not rent control, and a month-to-month tenancy, the rental rate and term can be set with either a 30- or a 60-day notice of change of terms, depending on the extent of the change.

Q: Some of my leases are coming up for renewal in the next few months. One of these leases is for a resident who has been a thorn in my side since the day he moved in. If I don't want to renew him, do I need to provide him a reason? Also, do I need to serve any particular type of notice?

A: Provided your property is not located in a rent or just cause eviction controlled area, then you do not have to provide a "reason" for non-renewal. Provided your desire is not based upon illegal discrimination and is not in retaliation for the resident exercising a protected right, then you are free to "not renew" the lease. Generally, a fixed-term lease expires on a certain day. Provided there is no language in the lease that "automatically" converts the lease to a month-to-month tenancy, then the resident is required to vacate on or before the lease expiration date. Neither the tenant nor the landlord is required to serve any prior notice. However, most industry lease agreements used by landlords include an automatic conversion provision that states that the tenancy automatically converts to a month-to-month tenancy unless a written notice of termination was served by either the landlord or the tenant. In this event, a written notice of termination would have to be served to terminate the resident's tenancy.


This article is presented in a general nature to address typical landlord tenant legal issues. Specific inquiries regarding a particular situation should be addressed to your attorney. Stephen C. Duringer is the founder of The Duringer Law Group, PLC, one of the largest and most experienced landlord tenant law firms in the country. The firm has successfully handled over 255,000 landlord tenant matters throughout California, and has collected over $155,000,000.00 in debt since 1988. The firm may be reached at 714-279-1100 or 800-829-6994. Please visit www.DuringerLaw.com for more information.

Contact AACSC

Apartment Association,

California Southern Cities
333 W. Broadway St., Suite 101
Long Beach, CA 90802
(562) 426-8341

This e-mail address is being protected from spambots. You need JavaScript enabled to view it