I Have A Family That Has Been Leasing My Single-Family Rental Home.
We provide here a few questions that have been posted in the Community Forums and our answers to them.
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Q1
I have a family that has been leasing my single-family rental home now for almost two years, and they still have another year on the lease. Unfortunately, for reasons I won’t go into, the wife has asked her husband to leave the house. She has changed the locks on the doors (at her expense), and wants to have his name removed from the lease. I guess her concern is that he has a legal right to live there if he’s on the lease. She has, and will continue, to make the monthly payments. My questions are: (1) can I legally remove his name from the lease or do I need his consent (and signature), (2) Should I cancel her previous lease and draw up a new one, and (3) should I just keep the remaining lease in effect?
A1
You need to be careful what you do. I am not an attorney, but will give you my opinion based on a lot of experience as a landlord and property manager as well as having some knowledge of other legal issues.
First, your current lease is with both husband and wife. Absent a Court order, you cannot legally remove the husband from the lease without his agreement. Doing so would put you in the position of breaking the lease as far as he (or she) is concerned, possibly reducing your chances of recovering future rents owed under the lease, even potentially making you liable for damages.
Second, if there are marital problems and a possible legal separation and/or divorce, you could get yourself into a major hassle by siding with one of the parties against the other.
Third, it is to your potential disadvantage to allow removal of the husband from liability on the lease to begin with unless you are certain that the wife is in fact capable of paying the rent herself.
You could consider refusing to allow removal of the husband from the lease during the remainder of the lease term. Consider that many divorces result in the wife’s financial position becoming significantly reduced. It is more likely that she might not be able to pay the rent for the remaining year of the lease than that both together would be able to pay it. You could also consider telling her that she should get a Court order against the husband trying to live there if she is concerned about him claiming that right.
You should have no obligation to release one party from the lease even if there is a divorce. Both parties usually remain legally responsible for all liabilities following a divorce even though the Judge might assign liabilities between the parties when dividing the community assets and liabilities. For example, if the Judge awards a particular jointly held Visa credit card to one of the parties, Visa can still collect from the other party if the first party fails to pay and failure to maintain credit accounts by one party after a divorce will often damage the credit record of both parties. The same principles would usually apply to a lease or any other contract.
If, however, you are willing to release the husband from the lease because (1) you are certain that she will have the ability to pay the rent no matter what happens regarding her life, including if there are significant legal costs from a protracted divorce action or (2) you wish to provide charity, then you could tell the wife that you cannot remove the husband from the lease without his written agreement that it be done. She could point out to him that removing him will eliminate his liability for the lease, perhaps providing incentive for his cooperation.
If he consents to removal and you agree to do so, then you will need to think about documentation. Whether you have the wife execute a new lease or adequately amend the existing one is probably not significantly critical. However, keep in mind that either way, you should (1) have the wife execute the required document(s) prior to accepting removal of the husband, (2) consider this an opportunity to make any other changes to the lease that you might consider desirable, and (3) make sure documentation makes it clear who is responsible for any damages to the premises as of the date of amendment or new lease – that is, any changes in condition of the property from the move-in condition at original possession date. Related to those issues, if you haven’t recently done a comprehensive inspection of the unit, I suggest that an inspection prior to document execution be part of the deal and that any serious problems be paid for by one or both parties prior to execution.
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Q2
I know that the site is income real estate from a landlord’s side of the fence, but, since I’m a new member, I thought I’d ask my question anyway. I’m considering opening a small sandwich shop business, something my wife has long wanted to do, so that she can have her own business. Can anyone give me any pointers about picking a location?
A2
As with everything related to real estate, the key is the often stated term “location, location, location.” Unfortunately, if you’re in the midst of creating a spectacular menu for your dream sandwich shop, that might not be the most important thing on your mind. However, you need to put location at the top of your task list. Prior to looking for a location you should have a business plan and you must keep your business plan in mind at all times while looking for your location. The right location is often the principal factor for success of a retail business of any kind. You, of course, need good products, food in your case, but no one will know how great your wife’s sandwiches are if no one comes in the door. Obviously, the key question is “how does one determine a good location?” This can be as simple or as complex as you make it. You need to get a demographic overview of the area you’re looking at – age, income, households, etc. You should also look at neighborhood traffic generators, such as other retailers that draw people to the area, industrial or office parks, schools, colleges, and medical facilities. You’ll also want to look at both motor vehicle and foot traffic.
There are sophisticated location analysis tools available that include traffic pattern information, demographic and lifestyle data, and competitive analyses. For a price, a retailer can get useful answers to almost any question he can think of. You will find a lot of services using a search engine. Many experts will tell you that the best place to be is as close to your biggest competitor as possible because you can benefit from their marketing efforts. They probably chose their locations based on the ideal demographics of a particular area and may have already spent significant percentages of their advertising budgets toward driving traffic to their locations. Why spend your money for this task if not necessary? Competition usually generates more business, more traffic, and that’s a good thing. Being located near your competition can be a plus for your business, provided you’re confident enough in your product to compete.
However, you still want to do your own due diligence regarding a particular property, even if your competitors appear to be thriving in the area. Finally, you should consider utilizing a real estate agent who has long experience specializing in leasing in the area of interest in addition to looking around yourself. You shouldn’t necessarily commit to an agency agreement, but agents often know of available properties that not publicly known to be available and properties that will soon be available. Of course, once you find an available space for lease in a good location, you need to negotiate a lease that works for you and your business and this can be just as important as location itself. However, that’s a topic requiring a lot of consideration in itself.
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Q3
I’m evicting a tenant who has until Wednesday to be out. I have not seen the tenant in over two weeks, most likely because he has no power. We had an arrangement for him to pay half his rent on the 16th and half on the 23rd. He never showed up on the 16th, nor 17th nor 18th. On the 18th, I hung the eviction notice.
I went thru the Texas eviction law on this site and didn’t find anything on abandonment of property, as the tenant still has property in the apartment. Therefore, I don’t know when I can remove this property in order to lease out the apartment. I also don’t know what happens if the tenant doesn’t show up to even read the eviction notice before the 3 days expire. Any direction would be most helpful.
A3
Your posting is somewhat confusing. You claim that you are evicting a tenant, but then state that you “hung the eviction” notice. First, an eviction is a formal court action that requires a default notice (usually a “pay or quit” notice if an unpaid rent issue) being served in accordance with the requirements of state law. If the tenant does not correct the default within the time allowed by state law, the landlord may then begin the eviction process, again as provided by state law. Some states, including Texas I believe, allow Unconditional Quit notices, meaning that the tenant needn’t be allowed to cure the default if served with an “Unconditional Quit” notice instead of a “Pay or Quit” or a notice regarding some other default. Actual eviction can take place only after the court issues a ruling on the matter in favor of the landlord.
“Hanging a notice” does not constitute legal service of notice in many states, although it does in some. Some states require regular, mail, certified mail, or personal service on the tenant or specific other persons found on the premises or more than one of those ways I’ve listed. Texas landlord-tenant statutes should specify what constitutes legal service.
Whatever is required regarding notices, if the tenant fails to leave, a formal eviction must be done through the court. Although it is often obvious that a tenant has abandoned the premises, taking possession when the tenant can claim possession, whether or not in default of the lease, can result in problems if the tenant chooses to claim he had not relinquished possession.
Whether or not there is an issue regarding possession, there can still be an issue regarding personal property left on the premises. The rules vary greatly among the states. At one extreme, the landlord can do whatever he wants. At the other extreme, the landlord must secure and hold the property secure for months while going though specific notice requirements and holding a formal sale of the property, with the proceeds being applied to debt of the tenant and the landlord providing a detailed accounting to the tenant, perhaps even being required to pay the tenant any amount received that is higher than the amount owed.
Even after evicting a tenant who owed thousands of dollars in rent and did thousands of dollars in damages, the landlord is often required to follow procedures. Failure to follow the procedures of the state can make the landlord liable for the value of the tenant’s property and tenant property sometimes becomes very valuable after the landlord has hauled it to the dump. Some states require formal liens be filed against the tenant property, followed by publishing of notices before the proceeds of a sale can belong to the landlord. Some states require return of items necessary for basic living no matter what the tenant owes the landlord. The procedures in some states depend on why the tenant left.
In all states, landlords must be concerned about property that belongs to someone other than the tenant – e.g., rented furniture, TVs, or computers.
The above issues are some of those that can be a concern anytime that a tenant leaves without formally “checking out.”
I cannot advise on the specific requirements of Texas law. I would guess that they are less onerous than some states, but the only way to know is to track down the current abandoned property statutes of Texas. It should be relatively easy to do this, but doing so may require a little time to both find current statutes and to interpret them. If you don’t want to do the research on your own, consider consulting a competent attorney specializing in landlord-tenant law, preferably one who usually represents landlords.
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Additional Information
Most of the issues discussed in these Q&A’s are covered in considerably more detail in our eCourses and/or in our Mini Training Guides.