Handling Tenants Who Break Their Lease & Other Tenant Issues

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The laws are different in every province and every state, so you have to look up your specific area but this will be a good general guide for most landlords.

Handing Tenant Troubles as a Landlord“Well, we’ll just give him a few more minutes to show up,” the judge on the telephone line said.

We were waiting for our tenant to come onto our scheduled dispute resolution hearing (a conference call with the “judge”, the tenant, and the landlord) so he could defend his side of the story. We’d asked for an order of possession for our property because he was a month behind in his rent payments and had been paying a month late for a couple of months now.

To get this far, we had to issue several notices, provide multiple documents to the residential tenancy branch to prove he was behind on rent, and we had to prove that we had served him all the documents. This can be done in several ways, but in our case we’d chosen to send the final notice of the hearing by registered mail after posting several documents on his door.

It’s a lot of work to file all of this paperwork. There is also a filing fee of $50.

The judge put us on hold, to presumably call the tenant. If we had not showed up, the ruling would have been in favour of the tenant but it doesn’t work that way when the tenant doesn’t show. They make every effort to get him on the phone and look for ANY evidence that the tenant didn’t know or wants to dispute the notice.

Our tenant clearly did not answer his phone as the judge came back on and said “Ok well I guess we’ll begin.”

The judge then reviewed in detail whether we had given the tenant proper notification of the hearing. He went through the facts of the case next. It felt like he was asking us questions purposely designed to trip us up. For example, we had dated the receipt of rent payment but not noted what MONTH that rent was for. The judge questioned repeatedly why we did it that way and whether it was for the current month or the past month’s rent because it was clearly paid in time if it was for this month. We started to worry that the little mistake of omitting the month of rent that payment was for on the receipt was going to cost us the judgement.

All onus is on you Mr. or Mrs. Landlord.

If you’ve never had to take an issue to a hearing or a court – just know that you must prove everything and, in BC anyway, the judge looks for any reason to rule in the tenant’s favour.  In the end, the judge reluctantly admitted our case was pretty clear and gave us the right to ask for an order of possession. Now we had to wait two weeks so we can issue an eviction notice. It hardly felt like a victory, but it was what we wanted.

It was a  better result than the last time we had a hearing. Our tenants broke their lease and we lost several thousand dollars as we had to do some work to the property to repair their damage and we lost rental revenue. Despite the fact that they were breaking their lease and had a rent cheque that bounced, we weren’t allowed to keep a penny of their rental deposit. I’ll tell you more about that in a minute.

Bottom line, prevention is the best way to handle tenant troubles.

I’ve written a lot of articles to help you find the best tenants for your properties and below is a video on one of the ways we screen our tenants, but today I want to help you by informing you as to some of the most important things you can do to cover your butt in case you ever do have to try to win a judgement.

If a tenant is moving out – ALWAYS get notice in writing.

Verbal or text message is not enough. Get it handwritten on a piece of paper with their signature or at the very least in an email. Ideally, use the forms provided by the landlord tenant board for your area.

Which brings me to an important second point:

Use the Proper Notification Forms for Your Province (or State) AND Get Proof

If you have ANY issues with a tenant regarding violations in their lease, communicate this violation over the phone or in person and follow up with the EXACT notification that you are supposed to give (the notices vary by province and state and what notice to give for what violation). Make sure you have reviewed when you give what notice. Timing of notice is very important.

If you deliver a notification to a tenant and they are not home, in many cases you can leave it taped to their door. HOWEVER, you MUST have proof that you did this. Proof can be a witness who will sign off saying they were there with you or a time stamped photograph. It wouldn’t hurt to have both.

Finally, if you are dealing with a broken lease, the onus is on you to minimize your damages.

Begin advertising the property AS SOON as you get notice. PDF and save copies of any online ads. Take time stamped photos of any signs you put up or any flyers you put out. And if you put ads in the paper, keep copies of the paper. You have to prove that you made EVERY effort to rent the property.

It doesn’t matter if a tenant violates the lease six different ways – it’s 100% your responsibility to prove that you did everything you could to reduce the damages. And, it’s 100% your responsibility to follow the residential tenancy act rules. The tenants aren’t really expected to know the law, but you are.

It’s not fair, but there is no point getting upset about that fact. It is what it is. Just be prepared!

Keep records of every communication in a tenant file.

Note calls (times and dates and subject). Save text messages (take screen shot photos of your text messages). Give receipts for rent paid, if it’s paid in cash. If it’s not paid in cash, be able to show where it was deposited (here’s where it’s really helpful to have one bank account per property). If you have two units in the same property that collect the same amount of rent you’ll need additional proof to show who paid what rent – so keep receipts of e-transfers or pictures of the cheques or issue receipts.

If you think something will be important to note, then make the effort to note it with proof.

Here’s the good news. In almost 13 years of being rental property owners and having close to 300 different tenants, we’ve had 3 issues that led us to a hearing of some kind. That’s not that bad. Think about it … that is 1% of the time!

So don’t let this freak you out … but do let it inform you to know your local laws and if there are any issues (noise complaints, pets not approved, added occupants, late rent, bounced cheques …) make sure you document the issue and serve the appropriate notices just in case it ever gets to the point where you have to fight for cash or defend yourself in court. Also find out what you can and can’t add to your lease.

The Case We Lost

In that case we lost that I mentioned above, our biggest problem was because Dave was trying to be compassionate for the tenants’ situation. He tried to work with them too much and didn’t follow the actual letter of the law until we saw there was a big problem.

The two biggest issues were in not forcing them to put their notice in writing (they text messaged us their notice but it had ambiguity) AND we didn’t use proper notification forms from the beginning when the rent bounced, the lease was being broken and other issues arose. Because we didn’t follow the rules on little things, we were unable to win a judgement for the big things. Plus, we didn’t have a clause in our lease saying we were entitled to claim liquidated damages for a broken lease. We’ve since added it to every single lease and you might want to as well if you’re allowed in your area. Basically put it in your Lease or Tenancy Agreement that if they break the lease (by moving out earlier than the term states), that you have to right to charge Liquidated Damages. The amount has to be reasonable  – probably somewhere around $300-500. It won’t guarantee you will get it, but have it in the lease so you can argue for it if they break the lease. The judge won’t give it to you if you didn’t put it in writing to begin with!

Hope you never have to find out how important this is -but if you do – at least you’re ready!

Here’s some advice on the prevention side of things … simple strategy for screening and picking the best possible tenants.


More Than Cashflow BookIf you want more help on picking great tenants for your property, grab a copy of More than Cashflow. There’s an entire chapter dedicated to finding great tenants – plus the whole book will help you understand why you get bad tenants and how to prevent them.

 

Julie Broad