Author Topic: Tenant vacated without notice  (Read 3714 times)

jnc

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Tenant vacated without notice
« on: January 21, 2016, 06:25:55 AM »
I've got a tenant who has vacated without notice owing 2 months of rent (around $1500) and have left the place in bad shape, costing me another $2500 to repair the damages.

I've asked my property management company the following:
- Can this be claimed back from the insurance, and whether that's recommended?
- They mentioned that a collection agency will be going after this tenant for the due rents? I am presuming they should be able to go after them for the damages exceeding the security deposit. Unfortunately this is in a blue collar neighborhood so security deposit is only 300$.
- I want them to inspect the properties at least once a year to make sure damages do not pile up.

What else would you do? Your thoughts would be appreciated.

Papa bear

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Re: Tenant vacated without notice
« Reply #1 on: January 21, 2016, 06:39:27 AM »
Good luck collecting anything from them.  My family has been down that road, won lawsuits greater than 10k for rent and damages, etc, but you can't get blood out of a turnip.

Going forward, enact changes.  Why was there 1500$ unpaid rent and no eviction?  The security deposit seems very small compared to the rent owed.   Consider increasing the deposit. Upon collection of rent, can you collect the checks in person on site and check the property yourself (or management to check?)

I don't have experience with insurance and collecting anything that way.

Other than that, enjoy your tax loss on the property for the year!




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Jack

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Re: Tenant vacated without notice
« Reply #2 on: January 21, 2016, 06:46:44 AM »
It sounds like your property management company is incompetent:
  • They should have required a larger security deposit in the first place. (Plus last month's rent up front, if allowed in your jurisdiction.)
  • They should not have let the rent get so far behind.
  • They should have kept a better eye on the condition of the property.
I don't know if you have any recourse against them, but you should at least shop around for a better one.
« Last Edit: January 21, 2016, 06:49:24 AM by Jack »

Bearded Man

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Re: Tenant vacated without notice
« Reply #3 on: January 21, 2016, 08:37:17 AM »
This is why I am uncomfortable with property managers. Any moron from Taco Bell can get into it and they have no vested interest in the property. Also, I keep tenants on a MTM lease so I can get rid of them quicker.

I'm also at the point where I try to stop by at least twice a year to make sure inside looks good. While I don't want to hover over my tenants, I don't consider it hovering when I have hundreds of thousands of dollars at stake and they have a few hundred dollars at stake. They can deal with me keeping an eye on my property...

Side story, I had a tenant recently that was down to the last few hours of the grace period to pay rent (rent due on the 1st, grace period until the 5th). She said she could not make it to the bank in time that day and was wondering if I would drive 3 hours round trip to collect rent in person. I told her no, especially not late at night, and that there is a $10 a day late fee if not paid by COB on the 5Th. Somehow she managed to deposit the money on time all of a sudden.

Tenants: either you manage them or they manage you...

Bobberth

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Re: Tenant vacated without notice
« Reply #4 on: January 21, 2016, 09:11:09 AM »
I generally 1099 tenants like this. You can pay to sue them but they have to be served papers to be sued so you have to find them, pay for the service and pay a lawyer and court fees. You will win but what is the chance you receive a dime from the tenants while you will pay out of pocket for all of that? I file a 1099C for the forgiveness of debt. That forgiven debt is now a taxable event for the tenant. You will file the form with the IRS and you will send one to the tenant at their last known address-your apartment (unless you know an updated address which then must be used). When they file their taxes and leave off this income, the IRS' computers will find it and they will then be hit with the tax, interest and penalties. Depending on your tenants, they may also be disqualified from certain aid or benefits (EEIC) because of this extra income ($4k in your case). You don't get any money back but you weren't going to anyway. And it feels good to screw them over and the government always gets paid.

Like others have said, in the future get a bigger deposit and the only time a tenant should be 2 months behind is if the eviction process is working through the courts from the first month being late. Try to keep an eye on things. It sucks but it's part of the business of landlording. This happened to me last January.

Bearded Man

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Re: Tenant vacated without notice
« Reply #5 on: January 21, 2016, 12:17:48 PM »
I generally 1099 tenants like this. You can pay to sue them but they have to be served papers to be sued so you have to find them, pay for the service and pay a lawyer and court fees. You will win but what is the chance you receive a dime from the tenants while you will pay out of pocket for all of that? I file a 1099C for the forgiveness of debt. That forgiven debt is now a taxable event for the tenant. You will file the form with the IRS and you will send one to the tenant at their last known address-your apartment (unless you know an updated address which then must be used). When they file their taxes and leave off this income, the IRS' computers will find it and they will then be hit with the tax, interest and penalties. Depending on your tenants, they may also be disqualified from certain aid or benefits (EEIC) because of this extra income ($4k in your case). You don't get any money back but you weren't going to anyway. And it feels good to screw them over and the government always gets paid.

Like others have said, in the future get a bigger deposit and the only time a tenant should be 2 months behind is if the eviction process is working through the courts from the first month being late. Try to keep an eye on things. It sucks but it's part of the business of landlording. This happened to me last January.


That is quite brilliant. Is that legit? Have you done this yourself?

Cathy

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Re: Tenant vacated without notice
« Reply #6 on: January 21, 2016, 02:16:23 PM »
That is quite brilliant. Is that legit?

The IRS Office of Professional Responsibility ("OPR") has considered whether this use of Form 1099-C is "legit". Although the OPR ultimately did not express a view on the issue, they noted that (a) the form is intended for situations where a creditor lends somebody money and then forgives the debt, and that (b) the form is only intended to be filed by an "applicable entity", which does not include individuals. I express no view on the OPR's comments.
« Last Edit: January 21, 2016, 02:21:36 PM by Cathy »

protossZerg

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Re: Tenant vacated without notice
« Reply #7 on: January 21, 2016, 09:33:38 PM »
Property management company clearly dropped the ball, its so hard to find a good one.

Keep in mind, depending on your state, tenant is responsible for honoring the lease while you find another tenant.  The landlord must make "reasonable" effort to re-rent the property, but your tenant is obligated to pay rent until you have re-rented it out.  So I would tack that on to any amount you go after them for.

If you want to try to find your skipped tenant, you can try this trick:
http://absoluteca.websitetoolbox.com/post/an-easy-way-to-possibly-find-missing-tenants-1967131

This only works if they have registered with the post office.

In my opinion, I have found its better just to move on and take the loss......and you also need to find a new property manager.


YoungRetire

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Re: Tenant vacated without notice
« Reply #8 on: January 21, 2016, 10:15:42 PM »
Believe it or not this is a blessing in disguise. The other alternative is the son of a bitch renter dragging it out in eviction court whir staying in your place for free. You actually made out great because they didn't tie you up in court.

jnc

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Re: Tenant vacated without notice
« Reply #9 on: January 25, 2016, 07:14:50 AM »
Thanks everyone for the very helpful replies!

I've had a good experience with the management company so far and they have an interest in keeping me happy because their main business is selling rehabbed properties and I am a repeat buyers of theirs. I do agree however they've been too lenient with the tenants; they usually prefer to work with them as opposed to evicting them but obviously in this case ,it did not work.

I've been hands off with this, too hands off, that's why I am looking to implement some changes.

I had not heard of the 1099C before, will look into that.

I do agree that this is not the worst outcome but was looking for suggestions. Thank you again for your perspective!