Tenant bounced check for rent

[brownnugen]

Hi, I have a situation and looking for some advice on what to do. My tenant was late with the August rent (due on the first, late charges assessed after the fifth). On the Fifth, I noticed the rent had not been deposited in the mail. I tried to call and email him reminding him of the late charges if the rent is late. I get an email reply on the 7th, saying that he is sorry but his grandmother died and he's in out of state with his parents taking care of the funeral arrangements and will pay the rent ASAP when he gets back in town in a few days. Well, I didn't see the rent deposited until the 11th. I email him acknowledging the rent deposited and let him know that unless he sets up an automatic monthly bill pay service (to avoid another similar situation), I will charge him the late fee.

Well, I have not gotten any kind of communications from him since the 7th and today I get something in the mail from my bank saying that the check for the August rent has been returned due to insufficient funds. :mad:

I've had it!!! I am new to landlording, but I don't want to give him any more benefits of the doubt or chances. I'm on the East Coast and my house is on the Gulf coast, so I'm am not physically able to be there, conveniently. I basically want the tenant out and move on to somebody more reliable. I called a friend and was trying to weigh my options:

1) Call a local attorney (to where the house is) and have them take care of all the things that need to be done. Hopefully (when I win), that will ensure that I get all the $ that I'm entitled to including, but not limited to; back rent, late charges, future rent lost, court and attorney fees, and money spent to get the house re-occupied.

2) Call a property management company and see if they'll take care of the process of eviction and getting me money and I would use them in the future to manage the house. As I didn't have a property management at the time, I kind of doubt that I could call a property management company would accept this situation.

I'm sure there are a ton of things I'm neglecting. If you can provide advise, I would appreciate it and I can hopefully fill in any holes I've left.

Thanks in advance....:praise:

[Debbie]

Hi, I have a situation and looking for some advice on what to do. My tenant was late with the August rent (due on the first, late charges assessed after the fifth). On the Fifth, I noticed the rent had not been deposited in the mail. I tried to call and email him reminding him of the late charges if the rent is late. I get an email reply on the 7th, saying that he is sorry but his grandmother died and he's in out of state with his parents taking care of the funeral arrangements and will pay the rent ASAP when he gets back in town in a few days. Well, I didn't see the rent deposited until the 11th. I email him acknowledging the rent deposited and let him know that unless he sets up an automatic monthly bill pay service (to avoid another similar situation), I will charge him the late fee.
That is good.
Well, I have not gotten any kind of communications from him since the 7th and today I get something in the mail from my bank saying that the check for the August rent has been returned due to insufficient funds. :mad:
Definitely not good.

I've had it!!! I am new to landlording, but I don't want to give him any more benefits of the doubt or chances. I'm on the East Coast and my house is on the Gulf coast, so I'm am not physically able to be there, conveniently. I basically want the tenant out and move on to somebody more reliable. I called a friend and was trying to weigh my options:

1) Call a local attorney (to where the house is) and have them take care of all the things that need to be done. Hopefully (when I win), that will ensure that I get all the $ that I'm entitled to including, but not limited to; back rent, late charges, future rent lost, court and attorney fees, and money spent to get the house re-occupied.
Do you have an attorney in your primary resident's town? If I were in your shoes, I would first contact my local attorney. This attorney can contact the other attorney (where your rental property is located) to get the legal aspect started.

2) Call a property management company and see if they'll take care of the process of eviction and getting me money and I would use them in the future to manage the house. As I didn't have a property management at the time, I kind of doubt that I could call a property management company would accept this situation.
I seriously doubt that they'll want to get involved without first having a contract with you. Not to say that you would not find one who would be happy to help out but I seriously doubt it.

I'm sure there are a ton of things I'm neglecting. If you can provide advise, I would appreciate it and I can hopefully fill in any holes I've left.

Thanks in advance....:praise:


I would be happy to provide more help/information for you but your profile does not where your rental property(ies) are located. Let me/us know and at the very least, I can look up the landlord/tenant laws in that area for you.

Debbie

P.S. - I moved your thread from "General Discussion" forum to the "Landlord of the house" forum so that you'll get better response.

[Aldo]

I seriously hope that moving your question to a different forum doesn't prevent you from seeing my reply.

I don't care how you do it; but you need to immedialtely serve a Notice to Quit or Pay Rent. I'd really like to think that you've done that by now.

.....grandmother died and he's in out of state..... (or some variation)
Geez, where did I hear that before? Wait! I remember. It was from 13 of my last 15 late-paying tenants. Do yourself a favor and don't fall for that, or any other, excuse. I took a hard look at my bank's deposit slips and found that there is no provision for depositing excuses. That brings me to the next issue.

.....unless he sets up an automatic monthly bill pay service (to avoid another similar situation), I will charge him the late fee.
Exactly how do you plan to legally pull that off, especially if there is a lease? If the rent is paid on time, you cannot charge a late fee due to the method of payment. Afterall, it wasn't late and you can't charge a fee because the tenant failed to pay by an 'unapproved' method unless there was a cost to you for which there would be an admninistrative fee rather than a late fee. You can require a tenant to pay by EFT, but proper notice is required.

You will need an attorney local to the property which is a part of the price you have to pay for long-distance landlording. You could spend a bunch of hours seeking local (to the property) referrals or pay your home-town attorney to do that for you. There's little chance that your attorney, if you have one, will know an attorney in the county where your property is located.

The best decision you could make is to hire a property management company to run your property. That will cost about 10% of your gross income for routine matters. Evictions, re-renting, etc. will result in added charges. It's not likely that you'll find a management company willing to tackle your current problem. Having a friend or relative local to the property would be helpful.

With due respect to you and a real concern for your investment future, allow me to say this. I've been a RE investor for over 30 years and, to this day, I will not even consider owning a property that I can't get to within 20 minutes.

I wish you well and please keep us updated.

[brownnugen]

Thank you for the replies so far. The rental property is in downtown Houston, TX and I am living in near the DC area.

For some clarification, when I mentioned the late charge being assessed, I meant for the month of August (not a future month).
-Nick

[TommyOH]

Well, like Aldo said, you need to serve a 3 day notice to pay rent or quit. Contact an attorney near the property. And why own one so far away? Seems that the best idea is to offload that one. You can't even inspect it from time to time without taking a vacation.

[Terry CA]

I believe some other TX LL's replied to you (elsewhere) that in TX it is not a pay or quit notice but a quit notice period. You need to verify that.

TX is a funny state..you can just about get away with anything as a LL there LOL.

That being said...you can either send a "demand" for payment in full immediately via certified funds plus late fees per your written agreement plus bad check charge if also listed in your agreement.

OR you should call an attorney in the city the property is in to handle the eviction for you. In some states re: a bad check you must first issue the DEMAND and then proceed with eviction for non payment (supposedly to advise them that the check bounced).

As I replied to you "elsewhere", if you choose to evict, BE SURE you use an attorney firm that SPECIALIZES IN TX EVICTIONS not just a generic attorney or RE attorney.

A "local" attorney to where you live does no good at all since LL/Tenant law and eviction procedures are state driven and must be handled by attorneys licensed in THAT state to be "proper". And of course they must be filed in THAT court house.

Most EVICTION attorneys will handle the entire matter via FAX and telephone so you CAN do this long distance.

I also suggested that once this is handled you consider selling the property OR trying to find a QUALIFIED property manager (not just a realtor who professes to be one LOL) to handle the day to day matters for you.

This is an example why in my LL Tips I suggest NOT owning property out of state.

[Debbie]

Sorry about not getting back to you sooner.

I just now checked Texas' Landlord/tenant law---it is three days notice.

I just read Terry, Aldo and Tommy's responses. I concur with them.

May I advise that you sell the property and do a 1031 to another property that is much, much closer to your home? I noticed that you're a novice landlord. We all started out as a novice. Until you gain experience as a landlord (at least 5 years, preferably more years experienced) you can then consider the possibility of long distance landlording.

Hubby and I definitely do not want to be long distant landlording. We feel that it's out of our control. But that is just us.

Let us know the outcome. Feel free to let us know if you have additional questions.

[brownnugen]

Thanks for the advice. About the long distance landlording, I'm in the military, so I get moved around every 3 to 4 years, which makes it hard for me to live close to a property for very long. I am trying to make both a military career and real estate "investment" work out. Any advice on making that work?

I just got an email that the tenant cash deposited August and September rent into my account. Verified that online, just gotta make sure nothing bounces. So, I think my immediate "panic mode" has just passed.

So, what I've learned from this experience is:
1. Immediately file the eviction paperwork as soon as things are late.
2. Get a property manager.

I was thinking of modifying the lease to reflect that rent is due on the first and anything after the first is late and charges are assessed immediately. Also, how would you word that rent payment will only be accepted if it is "certified funds" (cash, bank check, etc) and I won't accept checks?

[Terry CA]

Did you read the LL Tips posted here? If not, please do - they are in this same forum - another thread.

You can't change a FIXED TERM lease until it expires.

I would check to be sure you are using a lease (I STRONGLY recommend MTM rental agreements however not leases) that was written by/reviewed by a qualified LL attorney in your state/local.

As stated, if you insist on owing out of state property, you really need to find a QUALIFIED PM (not a realtor that just has a side line as acting like a PM LOL).

Please read the tips if you haven't already - I think they will help.

[Debbie]

You can modify the lease if it is M2M, not current lease....

Now it makes sense about you being in the military. There is someone who's been there, done that....His name is Dan Auito, the creator of this website.

Go send a private mail to Dan---he'll help you out!

As far as the funds----we have it in our "Auto-Renewal Month to Month Lease" that if we received non-sufficient funds once (only one time or you're out!), all future payments are to be paid via Cashier's Check. No money order (potential fake). Actually, what we have is ClearNow that automatically debits rent money into your account. ClearNow gives you email every month, notifying you in details. It saves us headache and worth the little money we pay each month to ClearNow.