Today’s topic is what to do when tenants stop paying rent. I get a lot of phone calls from Santa Cruz owners asking for help with this all the time. The first thing I recommend is that you pick up the phone and have a conversation with your tenant. Find out why they have stopped paying rent. Maybe they lost their job or had a medical emergency. Try to have a conversation and see if you can work something out to ensure you get paid.
If you are unable to work out what the tenant expects to do to get caught up, you will have to explain the consequences of nonpayment to your tenant. When it does not look like your tenants have any hope of paying rent, you want to get them out of the property quickly. Legally, you are not supposed to use the security deposit to pay the last month’s rent. But if they lost their job and can get out immediately, then you can use part of the security deposit to cover a portion of the rent that has not been paid. By working with the tenants, you can get them out of the home, hopefully with no damage, and you can move ahead with finding a new tenant. Tenants who refuse to leave immediately when they cannot pay rent will have to be educated on the alternative. If they cannot pay rent or move right out, you will have to hand things over to an attorney and pursue eviction. When your tenants are evicted, they will have that eviction on their credit reports, which is not a road they often want to go down.
Know the law and follow your lease. You can and must enforce the lease that you and your tenants signed prior to them moving in. If they have not paid rent, post a 3 Day notice to pay rent. Do not continue to accept rent late every month. When you do that, you change the terms and conditions of the lease. If the lease requires payment on the first of the month, and you continue to accept rent on the 10th of every month, you have effectively changed your lease and rent is now due on the 10th.
If you need some help dealing with a tenant who has not paid rent, or this is something you want to avoid entirely, please give us a call at Portola Property Management. We’d be happy to help.