Sunday, May 31, 2009

First Court Eviction...Not As Bad As You'd Think

Well my friends, I finally had to file a Forcible Detainer (eviction) with the Justice court to rid myself of tenants who failed to pay their rent and wanted to remain in the home. I've never had to evict a tenant before and took great pride in that fact. You see, if you screen your tenants properly, eviction will be a rarity and not the norm. "What went wrong with these tenants?", you may be asking. Well, a big heart often makes for a big target and in this rare instance, I let my heart make the wrong decision of accepting these tenants instead of my usual method of using hard core numbers and prerequisites.

The tenants were in their late 50's early 60's and owned their own business. What struck me as unusual was their lack of reserves in their checking and savings account. They only had enough to cover 2 months rent if they had to stop working for whatever reason. This was a major red flag to me, but those close to me thought that their reserves were more in line with the average family than not, and thought that I was being a bit harsh when I was preparing to reject their application. The tenants promised they would not have a problem paying the rent, and that they were getting ready to start on a major contract that would bring their reserves up to 6 months worth of rent. They were so sure they would be fine, they entered into a lease with option to buy and paid a small non refundable lease option fee. Against my better judgment, I accepted their application and let them move in.

About 8 months into the lease, they were late on their rent. A few days later, they paid the rent plus the late fee. The following month, they were late again only this time they were 4 days late. This late paying behavior now became the norm and the delinquency in payment grew longer and longer to the point that I was now posting a "5 Day Notice" on the premises almost every month while waiting for payment. Then in May of this year, I was not paid the rent after serving the tenants with the procedural 5 Day Notice. After several attempts to rectify the delinquency with the tenants failed, it was clear to me what the next step would be...EVICTION!

Eviction can be a long, arduous, time consuming process depending on the state your property is located in. Certain states also tend to be somewhat biased on the side of the tenant. Arizona, where this eviction took place, is just the opposite. Arizona, in my opinion , is very pro-landlord and has a very expeditious procedure to evict non paying tenants. The process in Arizona is so fast, as a matter of fact, that it only takes about 17 days from start to finish to regain control of your property.

I made the decision to file the Forcible Detainer Complaint and Summons myself rather than use an attorney. I found the process very clear and easy to understand and would not hesitate to represent myself in any future court hearings. All of the necessary court forms and instructions were on the county website which allowed you to fill the forms out and print them. The tenants did not show up to the hearing, and as a result of their no-show, a Default Judgment was awarded to me. The Default Judgment included all past due rent owed, late fees, court costs, and a 10% penalty per year until the tenants have paid the judgment in full.

I hope I never have to evict anyone else again in the future but as an investor / landlord, it comes with the territory. I will definitely not make the same mistake I made with these tenants during the screening phase again. Decisions have to be made using objective criteria and not with emotion. In my blog article titled, "Picking Good Tenants Requires Some Discipline", you will find the tools I've used to minimize the possibility of having to go through the process of evicting your tenants.