Handling Problem Tenants
Landlord rental policies that are firm, fair, legally compliant, and consistently applied help to protect the landlord’s business investment, rental property, and tenants. Screening standards are strong risk prevention measures to identify red flag issues in the application process. Applicants selected for tenancy are qualified to the landlord’s business standards and contracted to the lease agreement terms and conditions for tenancy. Neither landlord nor the newly installed tenant anticipates any problems during the lease term.
However, eventually, problems can surface. The tenants that qualified as good tenants, interviewed well, and caused no problems at move-in can suddenly change behaviors and become a problem for the landlord or neighboring tenants. The challenge in property management is to stay actively involved in day-to-day management in order to take appropriate and timely response to problems and issues that can negatively affect the property operations.
Problems can be many and varied but commonly include late rents, missed rents, violation of lease agreement terms and conditions such as policies for pets, smoking, parking, guests, trash/garbage removal; complaints from neighbors and tenants for noise, disturbances, suspicious or illegal activity; or concerns for safety of persons or damage to property. Material violations of lease agreement terms and conditions that pose a direct threat to others or damage to property are priority matters that must be dealt with immediately through appropriate actions and/or outside agencies.
Problem tenant behaviors can quickly threaten business operations and impact the bottom line if not addressed in a timely manner. A landlord must have a plan of action to deal with a problem tenant that details what steps should be taken to resolve problems and minimize the potential harm to the business.
Analyzing the Situation
Fact Finding
The first step in any problem solving process involves identification of the issues involved. A landlord must be clear in his understanding of the problem and aware that multiple parties and conflicting interests could be involved that might complicate the situation and impact possible outcomes.
In determining the underlying issues and extent of the problem, a landlord should be aware that his/her own behaviors can directly affect the situation and the solution. Keeping personal emotion in check is important in the initial assessment of the problem. By removing emotion from the situation and remaining calm and businesslike, a landlord can determine the facts of the matter and make an informed decision that is in the best interest of his business. Emotional responses lead to discussions of what is “right” which may only delay resolution. Landlords and tenants often want to stand on “principle” which can lead to confrontation not resolution. Standing on principle may not be the wise or prudent course of action in solving issues with problem tenants.
Fact finding must be conducted to determine the true nature of the problem. In matters of conflict between individuals, accusations can be made that upon investigation have no factual basis. A landlord must be careful in his investigations to respect the rights of others and not jump to conclusions.
Lease Terms and Conditions
A landlord’s lease agreement is a legal document that details the contractual agreement between landlord and tenant. The lease agreement sets out the terms and conditions of tenancy and the remedies for violations of the lease terms and conditions. The lease agreement is the landlord’s enforcer for the tenant’s expected behavior. When problems occur a landlord should refer to the appropriate lease agreement terms and conditions in determining the corrective action that will be taken.
Evaluation of Options
In considering possible options to resolve a problem, a primary determination is “can this problem be solved in a satisfactory yet cost effective manner?” If it is within the ability of the landlord to affect a solution, what option presents the better business decision? In the analysis of the problem a landlord must determine the severity of the problem and what remedies by statutes and lease agreement would cure the problem. What tenant notifications will be required to remedy the default? A landlord may issue a written warning as a reminder of tenant obligations and responsibilities under the lease agreement. A Cure or Quit notice may be sent for material violations of the lease agreement. Other options that may be considered depending on the circumstances may be an early release of the tenant from his lease agreement. Legal action for eviction proceedings may need to be started. When the problem/conflict cannot be satisfactorily resolved through correction or compromise, the final option may be to voluntarily or involuntarily end the tenancy.
Communication
Problem tenants or problems in general do not go away on their own. Without a timely response, problems can escalate into much bigger issues with possible legal actions. There is an inherent expectation of good faith and fair dealing in a landlord-tenant relationship that trusts each party to acknowledge and resolve issues. Communication with a problem tenant at an early stage of recognition of a problem can forestall serious issues at a future date. A problem may simply be a tenant misunderstanding or misremembering a rental policy which can be remedied with communication and instructions. However in the matter of late rents, as soon as the grace period (as applicable by statute) has expired, a landlord should enforce his lease terms and conditions by issuing the appropriate pay or quit notice. Allowing a tenant to continue rent defaults is bad business and when action is finally taken it will be more costly to the business than just the past due amounts.
Negotiation of problem issues should be a primary consideration before threatening a problem tenant with legal actions. There is little room left to maneuver if the first communication to the tenant by the landlord is a threat. That is not to say that legal action should not be considered. A landlord must protect his property and the other tenants. When necessary, as directed by the circumstances, a landlord should not hesitate to begin legal action to remove a problem tenant from the property and legally regain possession of his property. Consultation and/or engagement with a legal professional may be advisable or necessary in some circumstances.
Documentation
A landlord is best served by keeping written documentation of tenant records, tenant correspondence, and tenant warnings and notices. This is particularly important in problem tenant situations and tenant conflicts. Landlords should document everything including the time, date, the problem/issue, source of complaint, witness statement, or other relevant information regarding the tenant and his behaviors as well as landlord or other actions taken to date for resolution. A landlord will want a complete, detailed record of events and actions from the first notification of a problem or conflict through the final resolution of the issue. Keeping good records will help to defend against possible tenant claims of discrimination, landlord negligence, or other potential liability issues.
Ending
Problem tenants can create a hostile environment that will often drive away good tenants. Good tenants observe how problem tenants are handled and make renewal decisions accordingly.
While dealing with problem tenants can be stressful, the landlord has control over his actions in resolving the situation. Despite a tenant failing to uphold his responsibilities, a landlord must keep to his standards and meet his landlord obligations and responsibilities.
When handling problem tenants, a landlord should review the actions taken and the resultant outcome to evaluate his policies, rental standards, and his handling of the problem to determine what could be/should have been done to prevent problems or reduce risk.