Welcome to Million Dollar Journey! If you're new here, you can learn about me and even follow my net worth updates. A great place to start reading is with the popular articles located in the right side bar. If you would like to join thousands of others and keep up with the free daily updates, you can subscribe to the RSS feed via reader or E-mail.
Evicting a Tenant
So you did all your tenant due diligence, everything checked out, but now your tenant is 2 months behind in paying the rent. You've tried contacting them to work something out, but promised payments are not paying the mortgage. What now? It's time to get serious and start the eviction process.
Let me tell you, it's really no fun evicting someone. It takes time, patience, and to make matters worse, the whole rental legal system leans on the side of the tenant. You'll have to check the "landlord tenancies act" in your province/state, but around here, you have to give them several notices after which point you register your eviction with the government landlord tenancies division.
Within the tenant notice of eviction, I usually provide an extra letter stating an alternate solution that would work for both the landlord and tenant. Basically, I give the tenant the option of moving out within the next week with the apartment in move in condition. If they do this, as a reward I'll forget about the money owing. Most of the time, the threat of eviction is enough to get a non-paying tenant to move on.
Some of you are probably thinking that I'm crazy for letting the tenant get away with not paying the rent. However, the way I see it is that it's a quick way to get a non-paying tenant out of the property quickly instead of dragging out the eviction process which can take months. Even after going through the eviction process to get the rent owing, there is still no guarantee that it will be paid back.
Not only are you missing rent payments DURING the eviction process, the actual proceedings cost a fair bit of money also. Below is a list of some of the costs involved, note that I didn't include the actual price as it will vary from province to province.
- Cost to register the eviction.
- Cost of getting sheriffs dept involved.
- Cost to change the locks.
- Collections agency cut if you decide to go this route.
- Cost of cleaning up the place in case the tenant decides to trash the place on their way out.
- Cost of lost rent during the eviction process.
In conclusion, evicting a tenant is definitely in the bottom of my fun list however a necessary procedure to get a non-paying tenant out. This is why I'm a stickler when it comes to tenant screening which helps in weeding out the bad ones. Also, as a landlord, it is your duty to know all the landlord/tenant rules in your region. I suggest that you read over and learn the rules/regulations as it will help you tremendously in case you run into trouble.
23 Comments, Comment or Ping
1. The Financial Blogger
I like the idea of the threat of eviction and forget about the money owing. In many cases, you will not get your money back anyway! Do you really think that someones who is late for 3 months will really pay you back? I don’t think so.
You are better off trying to find a way with the tenant instead of going into war. The reason is simple. You have everything to loose (the apartment overall conditions, unpaid rent, legal problems) while you tenant has nothing to loose and maybe a couple of months free to win ;-)
Dec 4th, 2007 @ 10:10 am
2. FrugalTrader
FB, I agree with you 100%. Being a landlord takes a lot of patience and people skills. It’s definitely not easy money.
Dec 4th, 2007 @ 10:45 am
3. Mike
FT, have you had to evict someone in the past?
Dec 4th, 2007 @ 11:46 am
4. FrugalTrader
Yes sir, the post speaks from experience.
Dec 4th, 2007 @ 11:48 am
5. Telly
Good idea FT and I would definitely agree that it is worth it to try that route.
One thing my husband and I have begun doing is serving eviction notice papers just one day after their 1st late payment (although we do let them know it is a formality for now). As you mentioned, the process is so long that if you wait for a tenant to be late for two months, you’re already behind two months in the process.
Dec 4th, 2007 @ 12:02 pm
6. FourPillars
I’d like to see some $ figures for the process, even if they aren’t relevant for every province.
Mike
Dec 4th, 2007 @ 1:28 pm
7. Gates VP
I once worked with a guy who was one of those “tenant low-lifes” who would drink a lot of beer and then fail to pay the rent. He was aided by our boss at the time who felt for him and would draft paycheques such that he would duck garnishing orders.
Suffice to say that I’m not working for the boss any more, and I’m completely with you and Telly on this one. 1 day late = eviction notice and “get out now”.
FB’s got the rub, you can’t get blood from a stone, so sometimes you just have to cut your losses.
Dec 4th, 2007 @ 1:55 pm
8. Warren
I’ve had one tenant I had to evict, I think every landlord has gone through it. Two things I learned:
1. As others have said, initiate the required paperwork on day 1. Lots of times they will pay up, which is fine. But repeat as soon as they are one day late again, etc.
2. Being a landlord is not free money. In fact I wouldn’t even consider it passive income, and I own an apartment suite that is in a relatively new building, typically the lowest maintenance.
Dec 4th, 2007 @ 2:39 pm
9. FrugalTrader
FP, your wish is my command:
Dec 4th, 2007 @ 3:06 pm
10. Mikel
Having gone thru this recently I can attest to the “professional tenant”. This last one was so bad that he cut a hole i nthe side of my wall to install a window for his “grow op”. By the time i started the paperwork, the smell came from below. It was only the threat of police action that casued him to finally leave in the middle of the night. Left me with Water damage throughout warped doors, ruined floors. This was a brand new unit renoed in 2004, ended up redoing in 2007. Total cost is over $15,000 and I’ll never see a penny of it.
The police more more interested in this being a “civil matter” and offered no help. Needless to say all of my tenants are now screened much more thoroughly and all referneces called.
I also collect the rent in person now each month at their home, this way i get a free inspection and can detect smells…..
Dec 4th, 2007 @ 3:16 pm
11. Mun-Economics
Since a bad tenant is so damaging. Shouldn’t the landloard lower rent each month that is directly off setting the variable costs of finding another tenant?
Kinda like what is good for the goose is good for the gander. You keep the good tenant and still make money off them.
The question comes now what is the cut off price if you did this?
Dec 4th, 2007 @ 3:39 pm
12. Mikel
In some way this already happens. if your landlord let you pass a year with no rental increase for inflation, you just recieved a gift.
For my good tenents i do just this. Unfortunately most good tenants are free to move where they like and are more mobile. I have had great ones that only stay for a year or two. The “lifers” are almost always bad and last forever….
I think a rule of thumb as to how bad any given tenant will be is how much junk they have in their moving truck multiplied by the number of pets.
Dec 4th, 2007 @ 3:46 pm
13. ThickenMyWallet
They don’t call it the “Tenant Protection Act” for nothing!
FT- the costs you quoted are probably for the province you live in right? In Ontario, a bailiff costs a lot more than that (I think its $250 but don’t quote m).
Dec 4th, 2007 @ 3:49 pm
14. FrugalTrader
Mun: I do the same as Mikel. If I have a good long term tenant, I will not raise rents.
TMW: Yes, my numbers are based on province (NL). However, it’s been a while since I evicted someone, so the bailiff charge could have been higher.
Dec 4th, 2007 @ 3:52 pm
15. Mun-Economics
I agree with the rent freeze stuff but doesn’t the government already take care of this pretty much already.
I will use my brother apartment in Calgary as an example. It costs him 200 dollars to put a weekend add in the paper. Plus the rent per day cost is like 40 dollars + heat cost + agravation. With this all added up the cost of getting someone new is expensive.
Why not give rebates to your tentant for every year that they stay in your place with good behavour. Or promised maintence for longer stays.
Just an idea to split the savings that them sticking around is giving you. Say them staying a year saves you 300 dollars why not give them a check for 100 dollars?
Dec 4th, 2007 @ 4:35 pm
16. canadian dollars
FT,
Yikes. Sounds like a nightmare to deal with evicting a non-paying tenant. I hope that the money you’ve made from the rental since has offset any negatives associated with the eviction! :)
Dec 4th, 2007 @ 4:36 pm
17. Hollie
Boy I am a renter who needs a good landlord!
But I am NoT working so most landlords wont even touch me. So I am stuck with a landlord who wont do repairs, because at one time I did own property with my now ex I know ho to fix things so for the last 14 months that is what I have done.
Now if you know a good landlord in Toronto who doesnt charge an arm and a leg let me know. I am in the market for an apt for $750 or less.
Yes the tenants act benefits the tenant in an eviction case but in the case of repairs it goes the other way often and costs the tenant.
Dec 4th, 2007 @ 4:45 pm
18. FrugalTrader
Hollie, here in NL, tenants can withhold rent if necessary repairs aren’t made. You should call your local residential tenancies division for more info.
Dec 4th, 2007 @ 4:53 pm
19. Cross the river
Interesting discussion so I’ll add two small comments.
Provincial aspect is important to keep in mind. You might not be allowed to “officially” offer a deal to your tenant. And if you can, you might be stuck with rent price control issues.
I also wonder if the fees for evicting a tenant are tax deductible.
Dec 5th, 2007 @ 3:36 pm
20. Mun-Economics
Why wouldn’t the government allow you to give cash back to a tenant for ticking around and not causing trouble? I don’t understand that.
Does anyone think that giving a tenant a part of the cost of finding a new tenant responible if there is no law against it?
Dec 5th, 2007 @ 4:13 pm
21. FrugalTrader
CTRiver, yes landlords will have to double check their provincial regulations, but I highly doubt that there is anything wrong with offering a tenant an incentive to leave.
Eviction fees are a rental business expense, thus tax deductible.
Dec 5th, 2007 @ 4:41 pm
22. Cross the river
What I’m saying is that in provinces where rents are controlled, any monetary benefit could have an impact on the rent you charge the next your tenant.
For exemple, you have a good tenant and you decide to give, let’s say (hypothetical figures) 10$ a month on a 500$ rent. In essence, you are charging him 490$ a month (for good conduct).
Change of tenant, provincial rent control says you cannot charge more than a certain % higher than the rent for the last tenant. If you do, the new tenant would be entitled to refuse to pay the full price. You could lose a certain amount before even knowing if the new tenant is a good one.
I mention this because some provincial regulations permit a new tenant to get information on the previous tenant and if he’s wise, he’ll try to figure out if you are a good lanlord or not (as this is a 2 ways process.)
In other words, if you practice this method (which I must says is a good idea), you need to be carefull and knowledgable of your provincial “Tenant Protection Act”.
ANyways, if you are a landlord, YOU MUST be knowledgable of your provincial “Tenant Protection Act”.
Makes sense?
Dec 5th, 2007 @ 4:48 pm
23. Mun-Economics
Yeah its makes a lot of since for sure.
I will stop eating up this discussion with my topic.
Keep up the blog posts. The quality and quantity is excellent.
Dec 5th, 2007 @ 10:54 pm
Trackbacks
Reply to “Evicting a Tenant”