Money and contracts are always tricky subjects. People often find themselves getting really uncomfortable whenever a potential financial or legal disagreement seems to be rearing up. And when you’re in the business of collecting rent, problems of getting paid and ending leases are bound to happen sooner or later.
If you haven’t yet had any issues with any of your renters make sure you find a really big piece of wood to knock on as soon as you can, and then make sure you’re good and ready.
Here are just a few of the ways landlords get themselves into trouble when dealing with payment issues and evictions. And of course, a little of how you can manage your way through them.
Being Inconsistent with the Rules.
When you set up your lease with a tenant you are entering into a legal contract. You are making an agreement to hold up your end of the bargain and the tenant is promising to take reasonable care of your asset and pay their bills on time. And likely, in the event of a late payment, an additional late fee. In BC, so long as it’s included in the lease, a landlord is able to charge an administrative fee of no more than $25 if the rent is received late. You want to apply this fee the moment a payment is late and if it happens more than once, every time the payment is late. While it can be very tempting to waive this fee if your tenant is just a couple of days behind, it sets a bad precedent. First and foremost it starts to eat away at the business nature of your relationship. While it’s great to be on good terms with your tenant, you never want to lose sight of the fact that a rental property is an investment for the long-term benefit of your family and not a way of making new pals. And even though it’s only a small fee, waiving it starts to make the late payment seem like ‘no big deal’ and forgets the fact that it’s likely going to have a cascading effect on your cashflow as you try to make sure your mortgage payments are covered. If you waive it once, get ready to feel pressured to waive it again and again. Is that how you’d like to deal with rent & eviction?
Delaying the Eviction Process.
If your tenant is late paying their rent you may want to send them a reminder. If it goes past two days you will want to get them on the phone. If they don’t make an e-payment while you’re on the call you want to immediately move to issuing a 10-Day Notice to End Tenancy. You can even mention that you are filing the notice and that as long as they pay the rent in full within five days, the notice becomes void and their tenancy continues as normal. There are a couple of import reasons for issuing the 10-Day Notice right away. First, as mentioned above, it maintains a strictly professional relationship between you and your tenant. They know that this is a business arrangement and they can’t take advantage of your good nature. And, of course, it creates a paper trail. Evictions have the potential to drag on and cause you all sorts of stress if the tenant decides to dig in. Having a documented paper trail of past instances of 10-Day Notices may prove extremely helpful if and when you have to discuss the matter with a judge. Also, don’t forget to include that $25 administration fee, be strict with your rules around rent & eviction.
Attempting ‘Constructive’ Evictions.
If you have a tenant who has fallen behind on the rent, and then failed to pay in the first five days of the 10 Day Notice, it may be tempting to find ways to make their stay less comfortable. At this point you just want them to move out so you can get a new tenant in place and have them paying the bills. I mean, they’ve made your life difficult, why not just have the power turned off and make them a touch uncomfortable? After all, you have that tool, why not use it? However, if your eviction drags out and you end up before a judge you want to make sure you did everything by the book. This small bit of retaliation can go a long way to creating sympathy for the tenant and could wind up causing you a whole lot more legal troubles. Not to mention it reduces the sympathy the judge may have for you which, can be important as you try to get that back rent owed to you.
Accepting Partial Payments
Ok, there may be one small exception. If a long-standing, good, tenant has approached you in advance and needs to make a partial payment due to a delayed payment of their own and comes with a schedule of when they can be caught up, you may wish to consider it. Once. However, partial payments are almost always a bad idea. Often they simply lead to a series of partial payments and a continuous trend of you not getting the rent on time. Which, again, can cause you those aforementioned cash flow issues as you manage through ensuring the mortgage is paid. If a tenant makes a partial payment you can still issue the 10 Day Notice. The tenant then has five days to pay the rest of what is owed to prevent the eviction process from beginning. If a 10 Day Notice is issued for late rent and then the tenant makes a partial payment in the first five days, this actually does nothing to halt the eviction process. BC laws are very clear that Rent must be paid in full and on time – by midnight on the day it’s due, and in the case of a 10 Day Notice in full before the end of the fifth day.
Accepting Sob Stories
As a landlord, you will usually experience this when a partial payment is being offered. The tenant has a really good ‘down on their luck’ story of why they only have some of the rent this month. And of course, as a landlord you are human, and you can’t help but feel for people in a tough spot. But, this is also your investment and a business. If you start accepting sob stories, instead of rent, you are very quickly going to have a sob story of your own. As mentioned above, if a good long-time tenant comes to you in advance with a problem and a schedule to a solution you may want to consider it – once. However, in all other situations, it has to be a solid no and move directly to issuing the 10 Day Notice. Sob stories are for family and friends, they don’t work in business and you should turn them down flat.
Attempting to Enforce a Payment Yourself
This is a big one. If you have a tenant who doesn’t want to pay and doesn’t want to leave you may be very tempted to take matters into your own hands and confront them. You may be tempted to sneak in and change the locks or move their stuff to the curb and with good reason. Resist the urge. Even though the property is your asset, because you have entered into a contract to have a tenant it is important that the judge see that you continued to act in good faith and in respect of that contract even while your tenant is letting down their side. The other, possibly more important, factor is that the tenant is likely going to be under stress. You showing up, to collect the rent in person, could be seen as a threat and has the potential to provoke them. At no time is the money worth the risk of a physical altercation. Allow the court and the bailiffs to do their jobs and keep yourself safe.
It’s always important that as a landlord, you are firm with your rules around rent & eviction, also, you maintain a professional relationship with your tenants. You can do all sorts of modifications to make their lives better and encourage them to stay if they’re good tenants. However, you must resist the urge to allow the relationship to transition from professional to personal. And you must always be prepared to act in the best interests of the business because that is ultimately in the best interest of you and your family.