What Are You Going to Do When Your Tenant Stops Paying?

What Are You Going to Do When Your Tenant Stops Paying?

Does checking your tenants FICO or credit history really do you any good when your tenant calls you in tears telling you they cant pay and they have nowhere to move?

Does telling your tenant that you’ve got a mortgage payment that is due now really help getting blood out of a turnip? Does threatening eviction help where there is a moratorium on evictions?

Does it make sense to insist on enforcing a valid signed lease when your tenant has used all their resources and is getting ready to file bankruptcy? Does it help to get an attorney to file for you to become a creditor or even to get a judgement to pay from a tenant who has no way to pay the judgement?

Bottom line is, you can do your due diligence by getting references, insist on a good FICO score, get the maximum security deposit, and research to know the tenant has resources. That however, gives you no guarantees. If the tenant refuses to move, and cannot pay, the security deposit will be absorbed quickly leaving no money for physical damages, legal fees, and losses sustained by the property becoming vacant far before the lease termination date.

How often might this happen in succession after you reestablish possession of your property and invest thousands of dollars to get it back to good condition?

Of course, there are plenty of benefits to owning an income property when everything is running smoothly. The recent unprecedented world pandemic has taken all the stops out, to show us what can happen when people who one minute are sitting well, with a good job and a steady income to loosing their jobs, their businesses, their credit and their health.

Although we like to think it wont happen to me, it is not realistic to even make that statement. Also everyone will have scars, some smaller than others from the aftermath of the Coronavirus pandemic. Unfortunately many of us have leaned that the domino effect of our tenants setbacks will become yet another burden that we did not anticipate in addition to the personal other burdens that we are all facing.

If you are trying to sort out your options and looking at what should be your next move, please call me to discuss. Regardless to your lease terms and the legal obligation your tenant has to pay you, you will more than likely be best off taking possession of your property at the first opportunity if your tenant is refusing to make a realistic agreement with you that they can without question perform on.