Once you have evicted a tenant and have your property returned to you, you are confronted with the decision of whether to invest the time and money to pursue the ex-tenant for money damages or not.
Some of my landlord clients always pursue the ex-tenant for money judgments. Of that segment of landlords, some will obtain their judgment, docket the judgment, and then sit on it hoping that the tenant will eventually pay it off (plus 12% interest) when they need to obtain a loan to purchase a home. Other landlords that I work with will not only obtain the judgment against the tenant but they will also proactively attempt to collect on that judgment via garnishment actions.
On the opposite end of the spectrum, are landlords that never seek a money judgment against a tenant as they consider it to be a waste of time and would merely result in “throwing good money after bad” because the tenant is not collectible. Still other landlords opt to try and collect from past tenants via alternative means such as using the service of Rent Recovery Services — which allows you to report the ex-tenant’s debt to the 3 credit bureas without the need to obtain a judgment.
There are many options for a landlord to choose from when it comes to collecting against an ex-tenant. There is not one correct option for all situations and for all landlords. The correct option depends on many factors. I will sift through all of the information (or the lack thereof) that my client has about the tenant that could assist in the collection process. Sometimes a discussion regarding the client’s financial situation is needed. Determining my client’s ultimate goal is a must.
It is my personal opinion that time should be taken up front to discuss these matters with a client so that there are no false illusions going forward. Many landlords are astonished to learn that once they obtain a judgment tht they must spend more time and money to collect on that judgment. It is important to remember that a judgment is merely a piece of paper saying that your ex-tenant owes you money, it does not mean that you will get paid. Collecting on a judgment is a whole different ballgame . . . . and a different blog post.
#1 by John Coons on April 15th, 2011
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I look very forward to that next blog post. Great info Tristan!
#2 by John (Dr Rent) Fischer on April 15th, 2011
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Speaking of collections… an except from my blog post from November 12th, 2008….
Sometimes you just have to know when you are beat.
When it comes to collecting past due accounts, I am actually better than most and have a success rate around 65%. (Many landlords would be happy with a 25% collection rate.) However, one of my secrets is knowing when to pursue and when not to; knowing when it is worth making an effort to be a not-very-nice person, and when no effort in the world will help as there is just nothing to collect.
A few years ago I made a severe mistake in judgment. We had a lease with two individuals, and the parent of one of them was a co-signer. The whole reason we obtained a co-signer is because based on the applications, we had concerns about the long-term financial stability of the tenants. (So, if you are asked to co-sign, whether it be for an apartment lease or some type of loan, don’t be surprised if one day you get a call saying you owe the money because the other party defaulted – the whole reason they wanted the co-signer was because of a reasonably high probability of default.)
Well, as things would have it, one of the parties (the one who provided the co-signer) had to vacate before lease end. By the end of the lease term, the remaining tenant had managed to owe a couple of thousand dollars in damages. That tenant was completely uncollectible so I went after the other tenant and their co-signer and got my money. So, where was this error in judgment I mentioned? Well… when getting payment from the co-signer, I did mention to them that I would be willing to help them through the legal process if they wanted to pursue a collection action against the person who actually caused the damage.
That was nearly three years ago and the saga continues. The person who ended up paying off the account now lives out of state, and the person who did the damage is in state, but hours away from the Wausau area. The person who ended up paying off the account has an “abrasive” personality to put it mildly. So, in helping them obtain a court judgment, I made every effort to tell them how the process worked. He wanted the judge (or in this case the court commissioner) to do certain things. I tried to tell him that is way outside of what they do. He wanted to ask, I advised him not to… stay on the court’s good side. Well.. that didn’t happen. To this day when I go to the small claims window and if I have time for small talk with the person who you do the small claims filing with, if I mention his name, she rolls her eyes at me and I feel that thick glass there might be for my protection.
Nearly three years have gone by. The person who the judgment is against has finally obtained a low-paying job, but also has a child support garnishment coming out of his wage. With a civil judgment you can only garnish up to 25% of take home pay, the garnishment levels for child support go well beyond that, and (rightfully) take priority to civil judgments.
If this were my case, this is when I would admit defeat. That child support will be there for a long time and will always take priority. The most that I could hope for is that during the 20 year life of the judgment, is that this person buys a house, and this person sells that house. A docketed judgment is a lien on real estate in the county it is docketed. That lien would need to be paid to get clear title. Other than that… this would be a lost cause. (Of course, this being a lost cause doesn’t surprise me, that’s why I got the co-signer in the first place.) In the mean time, the person with the judgment feels that piece of paper from the court should be as good as a command from god and doesn’t understand why he just isn’t getting satisfaction… so the daily (and sometime hourly) calls continue to come in…. asking of me what more he can do.
… here it is a few years after that blog post, and he still calls me every couple of months wanting to know what more he can do to collect
#3 by Katherine Norton Malek on August 2nd, 2011
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A landlord started eviction proceedings against my daughter because he moved and received 1 month rent 3 wks late. She was served with a court date. We went, he dis not show up. The case was dismissed. We moved her out immediately, now the landlord wants the rent for the month she was gone and claims he can report it to a credit reporting agency and ruin her credit. How can he do this if the case was dismissed?
#4 by Tristan R. Pettit, Esq. on August 2nd, 2011
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Katherine — Under certain circumstances a tenant can be responsible for rent even after they have vacated a rental unit — such as if they were under a lease and the term of the lease has not been completed and the landlord was not able to re-rent the unit to a new tenant — in that case the tenant may be responsible for rent until either the unit is re-rented or the lease term expires, whichever comes first.
Additionally, debts owed can be reported to the credit bureaus without having to have obtained a judgment. Just becasue your daughter’s landlord did not appear in court and thus the collection lawsuit was dismissed does not mean that your daughter is not liable for the rent. It just means that the landlord did not appear — for whatever reason — and the case was dismissed. The fact that that has occurred does not prevent the landlord from pursuing collections against your daughter without obtaining a judgment. It also does not prevent the landlord from refiling the lawsuit to obtain a judgment.
Please note that I am not saying that the landlord is entitled to pursue a judgment against your daughter, as that would require an analysis of the specific facts, my comments are general and only address the options available to landlords in pursuing a ex-tenant for money.
Thanks for your question.
T
#5 by Stan Z. on August 29th, 2011
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Tristan,
In regards to Katherine’s situation. Should the landlord proceed with a collection agency and report the debt to the credit bureaus without getting a judgement, could she not ask for validation of the debt. This would then require a court date to file for the judgement. At which time she would be able to defend her action to leave prior to the end of the lease term. (Assuming there is a vaild reason) If he did not file for the judgement or if it were not granted, there would be no validation and the credit bureaus would have to remove the negative report from her daughter’s credit history. Correct? I’m thinking that only in the case where the landlord does proceed with judgment after engaging in collection, notifying the credit bureaus, and having it granted is she actually liable to pay. In my experience, court fees to appear and get the judgement can be expensive and, to the original point of the blog, are often not worth it given the collect-ability of the debt. Additionally, I’ve been warned that the liability associated with collections actions and negative credit reporting, when found to be unjustified in the course of subsequently attempting to obtain the judgement, is far too risky for most small landlords to manage. Thoughts?
S
#6 by Tristan R. Pettit, Esq. on August 29th, 2011
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Stan – Yes, there are drawbacks to using a collection agency solely and not obtaining a civil court money judgement. It depends on the facts, the client, the tenant, and what the client wants. There is not a specific answer for all landlords – the case needs to be evaluated with the client and then the client can decide what avenue to pursue after being advised of the risks and exposure.
#7 by Beth Brown on August 31st, 2011
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received a judgement and no payment from the people -they now own a home and I need to lean the home -how do I do this in WA state?
#8 by Tristan R. Pettit, Esq. on September 1st, 2011
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Beth — the laws may be different in each state so you need to consult with a Washington lawyer that has knowledge in collection law. Here is Wisconsin by paying $5 and docketing a judgment, that judgment becomes a lien on any property owned by the defendants in the same county in which the judgment was taken or acquired by them within the next 10 years. So if they ever tried to refinance or sell their home they would need to pay off the judgment plus interest.
#9 by Jamie on October 5th, 2011
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Hello! I live in PA. I consulted with a lawyer about an issue with my last apt complex. They never sent my itemized list of damages within the 30 days. They have a copy of a letter dated august 10th 2011. I moved out July 31st by the way. But I never recieved that letter. I called them and emailed them on August 25th after recieving a later of monies owed.I called every week, emailed them twice and called coroprate and didnt get a call back. It took them til SEpt 22nd to email the letter dated august 10th. and the itemized letter was dated 9/22/11. I told them since I contacted them within the 30 days and they did not get back to me that I would not pay and also because I had disputes about some charges. I asked them to verify the charges and never got an answer back. They are now threatening to put the charges on my credit. I spoke with a lawyer who said that in the state of PA they can not legally put the money they claim I owe on my credit without taking me to court and getting judgement against me. So I have 2 questions. Even though they have a letter dated august 10th to my correct address I left them, can they still collect the money from me even though I never received the letter? And do I have a leg up in court since I contacted them within the 30 days letting them know I never received the itemized letter and requesting it and then it taking them a month to email me a copy? Or just because they have copy of a letter dated august 10th does that screw me basically even though i didnt get a letter til august 25th? Also Is it true that they can not report the money they claim I owe to the credit bureaus without taking me to court first in the state of PA?
#10 by Tristan R. Pettit, Esq. on October 7th, 2011
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Jamie — I cannot give legal advice via this blog. I also am not licensed to practice law in Pennsylvania and do not know Penn. laws. Your questions are questiosn that you need to ask a Pennsylvania lawyer — Sorry
T
#11 by Luke McCann on November 22nd, 2011
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As a owner of rental properties and someone who has hired collection agencies to collect on past due debts, I would always suggest trying to recover the debt. When you are referring to $600-$1500 or more amount, it only takes maybe an hour to hire a rental collection agency which could be able to recover that money. If it was a small debt, I wouldn’t suggest it but I think the average rental amount (especially including late fee’s and interest) is worth going after it.
#12 by Dorothy on March 30th, 2012
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I owe my landlord some rent, however I have paid him tow checks and he cashed them. Now he is garnishing my wages for the same amount and did not subtract the amount I had giving him. Can he do that. I live in new york.
#13 by Tristan R. Pettit, Esq. on April 2nd, 2012
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Dorothy – I cant give legal advice via this blog and I even if I could I am not licensed to practice law in NY (i.e. – I dont know NY law). You should consult with a lawyer in NY.
#14 by TL1 Properties LLC on August 22nd, 2012
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Does anyone know if a landlord could take an ex tenant to small claims court if they laft town? We have their socials, but aren’t sure where they moved to. They owe for damages to the house such as adding a pond in the back yard etc.
#15 by Tristan R. Pettit, Esq. on August 24th, 2012
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Yes, you can still sue them and even get a money judgment against them even if you cannot personally serve them (instead you serve them via publication notice after reasonable efforts to personally serve and an affidavit of not found is filed with the court) but chances of collection are slim to none unless you learn where they moved to (so you can docket judgment there) and/or where they work (so you can garnish wages).
#16 by Suzanne on November 9th, 2012
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Hello, I have some questions regarding my situation. I just left the Justice Court with a Judgment stating that my tenant owes me the rent that she has refused to pay me since August 2012. A Writ of Restitution goes into effect on Tuesday, November 13th. She is still residing in the residence and told me that she plans to be out by Monday, November 12th, at the latest.
My tenant is angry that I’m making her pay. Her Lease Agreement is not up until March 31, 2013. I decided to do a Deed in Lieu of Foreclosure at the end of August because she’s always late paying her rent. This condo has been a money pit since 2009, and I don’t want to hold on to it anymore. At the beginning of September, I told her I’m losing the condo to the bank. She willingly told me that she’d be out by the end of September. She’s continued to make excuses, however, and has not moved out. When I asked her the last week of September when I was getting my rent and when was she going to be moved out, she told me that she’s talked to a lawyer at her church who told her that she should sue me for moving costs. At that time she also told me that she was not going to pay me any rent because she needs the money to move into a new place.
She continued making excuses as to why she continued to live there through October, so on October 22nd, I decided to start the eviction process. In court today, she told the judge that I knew that I was going to lose the place when I signed the Rental Agreement with her way back in March. He told her that she may have a strong case against me. What she said, however, is not the case. I had no intentions of foreclosing last March. I was relieved that I finally had a tenant in there. The first month that I did not pay my mortgage was August. Do you think she has a civil case against me?
In addition, I plan to get the $2,750 she owes me for late rent and court fees. That sounds like a laborious process!
#17 by Tristan R. Pettit, Esq. on November 11th, 2012
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Suzanne — Please understand that I can not give legal advice via this blog.
I also do not know what state you are in .. You mention “Justice Court” — we call it eviction court in WI where I am located. So I cannot even adivse you on the basic law if you are in another state other than WI as I do not know the law in other states. You should consult a lawyer that is licensed to practice law in whatever state you are dealing with.
If you are in WI. You got a writ that was stayed until Nov. 13th. If your tenant isn’t out on Nov. 14th then you are entitled to go to the Sheriff and have the writ executed — they will forcibly remove your tenant.
Obtaining a money judgment is a separate beast. In WI the money claims are not dealt with until after the tenant has vacated the unit. Your comment that you got a judgment fore the money she owes you indicates to me that you are not in WI. If your tenant is not collectible (i.e. has no job from which to garnish wages) it may not even be worth pursuing a money judgment. If you get a money judgment it is just a piece of paper saying the tenant owes you the money. It doesn’t mean you will ever see that money as I explained in the blog post. Yes, it can be a difficult and time consuming process. And yes, a tenant can file a counterclaim (suing you back).
#18 by Josh on January 22nd, 2013
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Tristan-
Did you ever write another post on how to collect once you have a judgement? I didn’t see one here. I am specifically wondering about wage garnishment (procedure, cost etc). This is regarding a property in MKE. Thanks!
#19 by Tristan R. Pettit, Esq. on January 23rd, 2013
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Hi Josh — No I have not written a post re: garnishment. The requirements are very technical and make for really boring reading . . . and most tenants are not “collectible” so for those reasons I have not touched on those subjects in detail. If you are interested you can find the mechanics on a wage garnishment at sec. 812.30 – sec. 812.44 of the Wisconsin Statutes — which can be found online.