What to Do About Non-Paying Tenants

What to Do About Non-Paying TenantsAs landlords, we hope we’ll never have to be in the position of dealing with a non-paying tenant. Unfortunately, the longer you’re in this business, the more likely it is that you’ll encounter a tenant who won’t pay rent on time, or at all. There are any number of reasons for it, from job loss to medical expenses, or even simple mismanagement of funds and living outside one’s means. At the end of the day, you’re operating a business, and while some situations may leave you inclined to offer more leeway than others, you still need to get paid. So, what can you do?

Talk to your tenant

Ask them what’s going on, if there’s anything you can do to help them pay rent on time, and their reasons for not paying rent. Sometimes this is all that needs to happen — perhaps an otherwise on-the-ball tenant got sidetracked this month, or they’re withholding rent until you fix an issue with the property. Other situations may be more difficult to navigate — they just don’t have the money, or an emergency arose that diverted funds and they had to make a hard choice. Whatever their reason, use your best judgment to make a call on how you’d like to proceed. You may want to gently (or sternly) remind them of the rental agreement they signed. You can discuss next steps if they’re willing to work with you, or you may decide that the non-payment is too big an issue to let slide, especially if it’s a pattern.

You should be well-versed on your state and city laws at this point, but if you need a refresher, now’s a good time to do so. Make sure you’re aware of a landlord’s rights and what you can and can’t do, legally, about a non-paying tenant. Always, always, always be sure you’re following the letter of the law. Tenants who won’t pay rent can cause a great deal of grief and frustration, but don’t let emotions rule your decisions.

When in doubt, consult a knowledgeable attorney. You should already have one on retainer for business and legal issues, but if you don’t, speak to your property management firm or other local landlords for a recommendation. If a tenant is unwilling to work with you and you need to consider legal action, a lawyer will help guide you and protect your assets.

Be proactive

You should be screening all of your tenants using a tenant screening service and reviewing the reports for any spotty credit history or a history of non-payment. Eviction history can tell you a lot about a prospective renter, as well. While this process can help you avoid a lot of headaches, it’s not a guarantee that a non-paying tenant won’t slip through, since it can’t predict the future. You should prepare for the possibility ahead of time. Keep an emergency fund ready to go at all times so that you’re not strapped for money if you don’t receive all your rent payments. Retain a lawyer early and consult them when necessary. Decide ahead of time what your plan of action is and be familiar with your local laws.

We recommend our RentalConnect program as an added tool for selection the right tenants for your property. RentalConnect offers property owners and landlords a great alternative to the expense of full tenant screening. This service requires no on-site visit, sign-up, or membership fees, making it extra convenient. The service fee is paid by the applicant. Available 24/7, RentalConnect is fast, easy, secure, and delivers reports needed to make an informed decision, including a credit report, a national criminal search, and a national eviction search. Reach out to us for more details!

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