Sunday, November 7, 2010

How to Keep From Getting Beat By Your Tenants

As a landlord you can never completely guard yourself against a tenant owing you money, there are simply too many laws in the tenant's favor, however you can take steps to level the playing field.

Tenant Selection

The first step to avoid ending up with a tenant owing you money is to carefully choose that tenant. The single most important tool for finding a responsible tenant is check your prospective tenant's credit score. Job history is good, prior landlords may not be trustworthy, or possibly may not even be prior landlords at all, but credit scores are pretty objective. If you wish to accept a tenant whose score is lower than you would normally accept make sure that you get a co-signer. The better practice is to have objective criteria such as at least a credit score of 660. If you base your decision on who you rent to on objective criteria it will make it much more difficult for anyone to win a fair housing lawsuit against you.

Security Deposit

The next step is to always require the maximum security deposit that the law, and the market, will allow. In North Carolina the maximum security deposit a residential landlord can require is: (a) If the term of the tenancy is week to week, the landlord can require two weeks rent; (b) If the term of the tenancy is month to month, the landlord can require one and one-half month’s rent; or (c) If the term of the tenancy exceeds one month, the landlord can charge two months rent. See N.C.G.S. 42-51.You must require this security to be paid prior to giving your new tenant keys. I have seen kind hearted landlords get beat for unpaid rent many times by tenants who were going to send the security deposit "next week."

A Good Lease
The third step is to make sure you include necessary lease provisions allowing you to bring an eviction action immediately upon a breach of the lease, such as non-payment of rent. Evictions in the best of circumstances take several weeks from when you file. There is no reason to get stuck waiting an extra ten days because you do not have a properly drafted lease.

Lease Enforcement
You did not go through the trouble and expense of getting a good lease just to hide it in a folder. File on you tenant as soon as they are late, and make sure if they are going to stay they reimburse you for your fees and costs surrounding the filing. Also, make sure you require that late fees be paid. Make it in the tenant's best interest that they pay you timely.

The Paperwork
Keep a file on each tenant with their application and require that they update the application when any information changes. Additionally, if your tenant pays by check keep copies of the checks at regular intervals so that you know where your tenant banks. This information will be invaluable if you have to sue your tenant for unpaid rent, and you wish to collect on the judgment.

The Human Touch
Finally, you or your property manager should try to keep on friendly terms with your tenant(s) so that you will know when there are any changes in their lives that might render them unable to pay rent. Problems with tenants are much easier to deal with if you catch them early.


As always, if any of the readers have suggestions I am always open to new ideas. Feel free to comment or send me a personal e-mail.
Happy Landlording!

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The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Nothing in this blog shall create an attorney-client relationship. The opinions expressed herein are those of the blogger and not of the PRAET LAW FIRM, PLLC.