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. [AOA’s exclusive collection agency only charges 38%. Keep in mind that 100% of nothing is still nothing, so 38% is a great deal!]
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 landlord’s 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, 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.
[Editor’s Note: Hold your tenant’s accountable! Be sure to check out AOA’s new and improved Debt Reporting and Collection Service, designed to recover more of your money! We allow the tenant an opportunity to pay the debt directly to you in full during the first 120 days. Your ex-tenant will be forced to pay the debt or continue to be reported to the top three credit bureaus – Experian, TransUnion and Equifax. Call AOA for more details at (800) 827-4262.]
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. If you would like more information about Nick’s courses, or you have property management questions you would like Nick to address in his column, please send them to Nick Sidoti, c/o Creative Investment Advisor P.O. Box 495 Glen Ellyn, IL 60138.