Dealing with Problem Tenants

That unavoidable rite of passage for every property owner in this business: The problem tenant. You try to do everything you possibly can to avoid having issues with your tenants but no matter how many precautions you take or accommodations you make, you ultimately face some problem with at least one or two over the course of your experience as a property owner.
How you deal with that problem (and any others that may arise) can have a significant impact on your long-term success as a landlord. Failing to act in a timely manner or being perceived as too overbearing and inflexible can be equally as damaging to the relationships with your tenants. The best plan of action in every instance is to maintain an open line of communication and always remain professional regardless of the situation.
The goal is to provide a suitable rental property that meets the needs of all your tenants. When they feel that you offer a safe and reliable living space, they are more likely to remain in that space. But when bad tenants are wreaking havoc by damaging your property, conducting illegal activities on site, disturbing the peace, and becoming an all around nuisance, that forces the good ones out.
All it takes is one. Empty units don’t generate income. When the landlord is unable to curb these behaviors, the rental property suffers as it gains a poor reputation in the community.
You don’t have to let this happen. Dealing with a problem tenant can have a positive outcome. Evictions aren’t always the answer and you want to avoid that option until all other avenues have failed.

Weeding out the Bad Apples

In this current economy, the fear of having even one rental unit empty for any length of time can be enough for a landlord to move quickly on having it occupied. But that rush to judgment can be a huge mistake as allowing the wrong individual into your property can make it very difficult to keep the right ones there.
First and foremost, every landlord must comply with all Fair Housing Laws. Discriminating against any prospective tenant on the basis of race, color, ethnicity, sexual orientation, and immigration status is expressly prohibited and should not be tolerated. Doing so can get a landlord in serious legal trouble.
A bad tenant will raise all kinds of red flags before he or she even has the keys to your place in hand. It’s up to the landlord to be diligent about recognizing those red flags well in advance of the execution of a lease agreement. This is also where you can establish that all-important line of open communication.
If you are interviewing prospective tenants for your property, be sure to really sit down and talk to them about the important aspects of their current employment and past rental history. You don’t necessarily have to interrogate the prospective tenant with deep probing questions that run the risk of invading his or her privacy, but some information is acceptable with regards to employment, current living situation, reasons for moving, credit and criminal histories. This is where you need to pay close attention and ask follow up questions when answers are unclear or somewhat vague.
Most prospective tenants will be honest and up front with you about their answers. But you should also trust your gut. If the individual can’t or won’t expand on an answer after you’ve asked for more information, that could be a red flag. If the prospective tenant refuses to provide other pertinent data about his or her background, that could be another red flag.
The bottom line here is simple: Avoid dealing with bad tenants from the start by preventing any troublemakers from taking occupancy in your property and causing trouble. Taking these steps before any lease is signed will be extremely helpful:

Tenant Applications

Every prospective tenant must absolutely fill out an application. If the applicant leaves large portions of requested information blank, you can bet that is a red flag. Rental applications are designed to give the landlord a basic accounting of the applicant’s suitability for occupying the property. You want to know if the applicant can afford to pay the rent on time and won’t be a danger to you or your other tenants. That’s at a minimum. If the application is incomplete, you can follow up with the applicant to ask for the missing information and in the event he or she refuses or ultimately provides false information, then it’s obvious this person should not be renting from you.

The Screening Process

Once the prospective tenant has submitted the application, the onus is on you to gather all of the information available through a rigorous screening process. A good rental application will ask for the applicant’s personal information, current address, employment history, credit cards or loan balances, and other information including references.
Now here is where the landlord or property owner must be thorough. Conduct all of the necessary credit and background checks. Call those references listed on the application and ask questions about the applicant. Find out every detail you can as to whether or not the applicant is a good fit for your property.
Cutting corners and ignoring simple steps are invitations for bad tenants to walk right in and make themselves at home, often without paying rent and causing headaches for you and your other tenants.
The tenant screening process is only as effective as you want it to be. You either go the extra mile to confirm that your applicant is the reliable, gainfully-employed, individual he or she claims to be or you play it fast and quick and risk having a bad tenant occupy your property.

Entrepreneur: “Don’t Underestimate the Importance of Thorough Tenant Screening”

Moving In

Once you’ve completed every step of the screening process, you’ve run all the checks, interviewed the applicant, and confirmed all of the information they have supplied to you, they will sign the lease and move into the property. Hopefully it’s the start of a tenant-landlord relationship that runs smoothly for years to come.
The best way to ensure there are no misunderstandings about the condition of the property when your new tenant moves out, it’s best to perform a walk-through of the property with your new renter. This way, both parties are well-aware of the condition of the unit on the day the tenant has taken occupancy and any damage that might be caused during the term of the lease is the responsibility of the tenant.
Once that walk-through has been completed and both parties can agree on the condition of the property, hopefully there will be no problems with the tenant for the life of the lease.

The Most Common Problems

The problem tenant will find all kinds of ways to disrupt the peace and quiet of your property and cause multiple headaches that can jeopardize your financial situation and even put your rental property business in legal hot water. From paying the rent late to renting out your property to AirBnB’ers, these and other problems must be dealt with in a timely manner.
A well-written lease can help to manage many of these issues so the tenant is fully-apprised of what’s acceptable and what is not when occupying your property. In the end, an eviction may be necessary but it should always be considered as a last resort. Evictions can be costly and messy. Good communication with your tenants can help to quell a problem before it arises or, at the very least, enable both parties to work out a sensible solution.
The following are some of the most common problems that every landlord is likely to encounter at some point in time:

Late or Missing Rent Payments

The most common problem that landlords face with their tenants usually happens around the first of the month, when the rent is due. A late payment once or twice on infrequent occasions is to be expected but when the tenant continues to demonstrate a pattern of late payments well beyond any grace period that might exist in the rental agreement can be a serious problem.
The late or partial payments are a pain in the neck but a good landlord will show some flexibility and work with the tenant in the event they come up a little short…as long as it doesn’t become a habit. It’s the tenant who gets three or four months behind in his or her rent who poses a significant issue that needs to be addressed immediately.
The best way to do that is by talking with the tenant about the problem, openly and honestly. Confrontations never help, but discussing the issue in a calm but firm manner can help you better understand why the tenant is paying late or missing payments and find a solution for getting the rent in on time.
Payment plans can be effective if the tenant’s income has become interrupted and cash flow problems are preventing the rent from being paid on time. A weekly installment arrangement or rent paid in two parts before the end of the month can make a big difference.
Should the issue continue, the next step may be negotiating with the tenant to move out of the unit. Landlords who offer multiple buildings may have a more affordable alternative available that keeps the tenant housed in your rental property but at a lower monthly payment.
If the rent continues to be in arrears, the tenant will have to leave the unit and if they refuse to do so after multiple efforts on your part to solve the matter in an amicable way, a three-day notice to pay up or quit can get the point across in no uncertain terms that you are giving the tenant one last chance to set things right. It often works. The tenant doesn’t want that eviction on his or her record for the better half of the next decade and you want to avoid proceeding with that eviction in a court of law.

Subletting your Property

The popularity of websites like AirBnB and Vrbo has given people the opportunity to make some extra income by offering strangers short-term rental opportunities in their homes. But when a tenant is renting out space to people they don’t know in a unit they don’t own, that could cause a potential headache for you, the property owner.

Since these websites have become so well-known and tenants have offered the units they are renting to third parties, most lease agreements include some specific language prohibiting the tenant from listing the unit or dwelling where they rent on AirBnB. If your lease agreement does not have this clause, talk to your attorney and have it included asap.
A sublet arrangement can be reached between you and your tenant in which a third party is allowed to take over the lease for a temporary period, if that is something you are open to allowing. But that new individual must undergo the same screening process as any other prospective tenant, even if it’s for a short time.
Tenants will sometimes be required to travel for extended periods and they would prefer to have someone take over the rent payments instead of paying for an apartment or home they aren’t using. However, it must always be done with the landlord’s permission and never without advance notice. This is typically agreed to in writing so the landlord and the tenant each has a copy and the details set forth as to how long the sublet will be allowed and to whom.
Some states have specific laws that govern the tenant’s ability to sublet their unit. You should always consult with an attorney to review the laws that apply in your state, so everyone involved is in full compliance.

Destruction of Property

A bad tenant may not demonstrate his or her behavior as being negative until you go to inspect the unit they have been renting from you, only to find major damage done throughout. There is a big difference between typical wear and tear and abusing the space. That security deposit is intended to cover any excessive wear and tear that might have been caused by the tenant during his or her occupancy of the property. But if you are seeing large holes in walls, fixtures broken or removed, a door off its hinges, or a cracked window, these are all the tenant’s responsibility. The security deposit will go towards fixing these issues but if the damage caused is really significant, the tenant will need to pay out of pocket to fix them.
How the work is done is also very important. You can have the tenant hire someone to take care of smaller problems but for those bigger jobs that require a deft hand with specific skills to address certain types of damage, you may want to do the hiring yourself. Some landlords may have the ability to do the work, if that sounds like you, then you can save money by doing it yourself and knowing the work will be done properly.
Should the tenant refuse to pay for the work to fix the damage he or she has caused, you can review the part of the lease that explains how they are responsible for the damage. If that still doesn’t work, you may have to insist the tenant vacate the premises. That could require eviction.

Illegal Activities

Every tenant has a right to privacy in his or her home and a landlord who is snooping into business that doesn’t concern them could find that landlord being sued in small claims court. But if a tenant is conducting or participating in illegal activity on the property, the landlord has every right to contact the police.
If you or some of the other tenants in your building have evidence of a tenant breaking the law while on your property, it’s best to gather all of that information and contact the authorities. Sales or consumption of narcotics, theft, harboring wanted individuals, and human trafficking are just some of the extremely dangerous and illegal activities that must be reported immediately. Should this result in an arrest, the landlord may have limited options as per the lease agreement.
An eviction may be appropriate but you want to be sure you aren’t opening yourself up to legal consequences of your own should you violate the terms (or lack thereof for these types of situations) contained in the lease agreement.

Neighbor Disputes

When two tenants have a disagreement and it turns into a larger dispute, it’s best to stay out of the conflict and allow the neighbors to deal with it and work it out amongst themselves. Getting involved in the dispute could make one tenant think you are favoring the other side. Most of the time, the tenants will figure out how to resolve the matter on their own and that will be the end of it. Hard feelings or animosity towards one another is not ideal but you would rather the tenants learn to behave appropriately like adults than turn that animosity towards you as the landlord.
Intervention is only recommended should the disputes continue or increase in their severity. From there, you may need to talk to both parties as a mediator and warn them of the consequences which could result in eviction for one or both of the tenants should they keep aggravating each other and bothering the peace and quiet of the property.

Evictions

It’s never the ideal option and you should always attempt to exhaust every other alternative before making this decision, but an eviction may be necessary for the good of your property, your other tenants, your business, and your reputation. A problem tenant can be a real drain on your bank account and your mental health. But if you are planning on putting an eviction in motion, you need to do it by the book or the tenant could name you in a countersuit. You’re already going to be spending money to file the eviction and prep the unit for the next tenant, you don’t want to be spending more than necessary to fight a countersuit from a problem tenant.
By law, you are unable to take matters in your own hands by changing locks, cutting off water or electricity, or take any other actions on your own to force the tenant to leave the property. Making threats, removing items, anything outside of legal filing for eviction is out of bounds and you are opening yourself up to a lawsuit.
Remain courteous and professional to the problem tenant throughout the eviction process. You can try to convince the tenant to move out of his or her own accord, but if that fails, you should file an eviction as soon as possible and serve the tenant with official notice.

The Notice

The eviction notice must have specific information that explains what a tenant must do next. If the rent is in arrears and you want the tenant to pay what is owed, if you want the tenant to repair damage, or whatever the problem may be, the notice should outline the request being made and the number of days by which to do it. If the tenant fails to meet that deadline, the eviction will move forward. At this point, the tenant is ordered to move out of the property and leave the premises.
Serving that notice could be an awkward situation. Always make sure you are assured of your safety when serving notice to the problem tenant. There’s no suitable scenario where putting you or anyone around you at risk of harm or injury is worth the risk. You may wish to hire a professional service to do the work or call the police so an officer is present when the notice is served.
But do make sure you serve the notice lawfully and have a record of the notice and when the tenant was served. Once the tenant is out, prep the unit or property as quickly as possible so it may be put back on the market and a new tenant is able to move in.
You don’t want that unit left empty for long because, remember, an empty unit doesn’t generate income.