Q: My tenant moved out, but they left owing me money for back rent and damages. I went to court and got a judgment. Do you have any suggestions on how I can collect the money they owe me on this judgment?
A: The simplest way to collect on a judgment is to turn it over to a collection agency. It is worth the commission you pay them to have them do the work. Most collection agencies don’t get paid unless they collect, so they seem to work very diligently to collect the money.
One asset that landlords often overlook is the tenant’s security deposit at their new residence. This is an asset that can be seized.
You can make their job easier by supplying them with the information that you have gathered on your rental application. The first thing that the collection agency will need to do is find the tenant. If you know where they have moved this will be easy. Otherwise, the information about where they work (if they have a job), their personal references and their credit references from their application will help with this. You can also help by giving the collection agency information about the tenant’s assets, such as savings accounts and checking accounts.
One asset that landlords often overlook is the tenant’s security deposit at their new residence. This is an asset that can be seized. In most parts of the country, the law states that this money is indisputably the tenants. It is being held by the landlord. If this is true in your area, you may be able to recoup your money from the new landlord who supposedly has the tenant’s money in a separate account, earmarked as the tenant’s money. The landlord may be forced to relinquish it under court order.
WARNING: Now that I’ve shared this secret with you and thousands of other landlords, you will need to be extra cautious that it doesn’t backfire with someone coming after the money that you are holding as a security deposit.
I’ve heard a number of landlords say, yes this tenant had an eviction, but I got a big security deposit, so I’m safe. Think again, this is not your money! It is the tenant’s money that the tenant owes to their previous landlord, and that landlord may just come and collect it.
P.S. Remember, an ounce of screening is worth a pound of judgment. Try to keep yourself out of this position by doing your homework before renting to tenants. Do the screening, run the credit check [with AOA], and take a security deposit. Once you have chosen a tenant, make sure that you never get in a position where they owe you money.
Q: Does it make sense to run a credit check on people on public assistance who have no credit established? Are there other things I should be doing to screen these tenants?
A: Yes, it does make sense to do a credit check. Here is the reason why. Credit reporting agencies such as TRW, Equifax and TransUnion also record judgment claims. Many times utility companies, phone companies, furniture rental companies, finance companies and rental agencies will report non-payments and judgments. You also will find the occasional tenant that has decided not to tell you about the bankruptcy or other bad credit they do have. Therefore, credit checks are an important part of the screening process, even for low income applicants.
Follow the rest of your rental screening procedures to see if these folks are clean, responsible tenants. But perhaps the most important part of the screening process with low income tenants is checking the person’s rental history. You can do this by calling the previous landlords and checking to see if there is a history of evictions. By checking eviction records, you will be able to find the names of previous landlords that the tenant may have omitted from their application. These landlords are a source of valuable information (the understatement of the century). [AOA’s National Eviction Search is the best and most thoroughly tested report currently available to you. ] http://www.aoausa.com/tenant_screen/
Nick Sidoti, R.A.M. is a registered apartment manager, licensed real estate agent, investor, lecturer, author of Highly Effective Property Management and Highly Successful Property Management, a regular columnist in several national publications, and President of the Western New York Real Estate Investors. Come and hear Nick speak at the AOA Trade Show and Landlording Conference on Thursday, April 25th at the Long Beach Convention Center. You can preregister at http://www.aoausa.com/trade_show.html