My Tenant is Behind on Rent and Gave Me a 30 Day Notice. What Do I Do?
“My tenant is two months behind on rent, and he gave me a 30-Day Notice. I was getting ready to evict him for nonpayment of rent, but now I don’t know what to do. Should I wait and see if he moves out after 30 days?” -Bay Area Landlord
This is one of the most common scenarios I encounter, and there is no right or wrong answer. The answer is tied to time and money lost more than it is to there being a correct or incorrect way to move forward. Let’s explore this one scenario with two different outcomes.
Scenario: Your tenant is behind two months of rent, and in the Bay Area, chances are that’s an average of $3,000 a month, so your tenant is behind $6,000. You’re frustrated, you’re ready to evict, and your tenant has probably caught wind of that. So, your tenant responded by giving you a 30-day notice. Sure, that’s great that he may move out in 30 days, but what about your rent? Now he’s going to be three months behind on rent! This is where it gets tricky. Does it make more sense to wait and see if he moves? Or does it make more sense to take action now?
Outcome 1: What if he does move out after 30 days? Then you got super lucky. Hopefully you have a full month’s security deposit, and you can use that to offset some of the rent that’s due, then you can go to Small Claims Court to obtain a judgment for any additional rent they owe you and didn’t pay.
Outcome 2: What if he doesn’t move out after 30 days? Then the tenant has allowed you to wait, the tenant has another free month of rent under his belt for a total of $9,000 past due, and you still have to start the eviction process that you would have had a 30 day jump start on by now.
Fortunately, if the tenant gave you a “good” 30 day notice, we can start an eviction based on that notice immediately. But if it’s a “bad” notice, we’ll need to start over by serving a notice to pay rent or quit, wait for the time period in the notice to end, then start the eviction. This leads to the loss of more income, the loss of more time, and added expenses.
What’s a “good” termination notice versus a “bad” termination notice from a tenant?
In a nutshell, these are the things you want to be included on a “good” termination notice from a tenant, and you should reject the termination notice if it does not include these three things*:
It must be in writing.
It must be signed by all adult occupants.
It must have the end date listed on the notice.
*I covered these requirements thoroughly in this blog post: The Perfect 30-Day Notice (from Tenant to Landlord)
How do I know if my tenant will really move out in 30 days?
In my experience, the amount of rent the tenant is behind is directly related to whether or not the tenant will get out as agreed in the 30 day notice.
Here are Two Examples:
Example 1: If the tenant hasn’t yet paid June rent and gave you a 30-day notice stating he’ll be out by June 30, then chances are high that he’ll move out as agreed. I can also assume the same tenant will say “use my security deposit as the last month’s rent,” and you should not ever agree to this or do this. Make it clear that the security deposit has a specific purpose in your lease and is not to be used toward rent. Be sure to follow up with a Notice to Pay Rent or Quit if he attempts to do this, so he knows you’re serious.
Example 2: However, if the tenant hasn’t paid you two months of rent and gave you a 30-day notice stating he’ll be out by the end of the month, chances are low that he’ll move out as agreed. Why would he leave a place that he can stay in for free? Most landlords don’t want to believe it, but if their tenant has a million excuses as to why they can’t pay the rent (it’s their employer, something happened to their check, direct deposit didn’t go through, an employee was sick, their child was home sick from school, a family member passed away, etc.), then chances are that they don’t have any money in the first place to pay the rent. Further, they’re not going to have enough money to save up a security deposit and first month’s rent somewhere else if they’re not even paying you.
This scenario usually plays out as follows: Tenant is two months behind, tenant gives you a 30 day notice, tenant doesn’t vacate and still doesn’t pay, you start an eviction, you’re not allowed to take rent during the eviction, the eviction takes close to two or three months (depending on if it’s during the eviction moratorium or not), and it ends with the Sheriff Department locking the tenant out of the property. If you go through this process, you’re looking at five to six months of not collecting rent, plus the cost of the eviction.
You can remedy this by taking action immediately as soon as your tenant is only one month behind on rent. Do not ever let your tenant get more than one month behind. You can always serve a notice the day after the rent is due, regardless of your late fee grace period. If rent is due the 1st, serve a Notice to Pay Rent or Quit the 2nd (as long as the 1st is not a weekend or holiday). Train your tenant when you expect rent to be paid, and take action if they do not pay it as agreed. Period.
Is it better to just hope they move out after 30 days, or is it better to get the eviction started right away since they didn’t pay the rent?
In my world, the faster you can get a nonpaying tenant out and a paying tenant in, the faster you can reclaim income from your investment property. Because the reality is, why do you own the property in the first place if it’s not to collect an income? Do you have it as a charity to help tenants stay there for free? Probably not, so don’t operate your investment portfolio that way, either.
The moral of the story is to take action, and take action fast. As soon as your tenant doesn’t pay you a month of rent, serve a Notice to Pay Rent or Quit the day after rent is due. If it’s due the first of the month (and the first does not fall on a Sunday or a holiday), serve it the second of the month (or the day after the Sunday and/or holiday). If your tenant doesn’t pay, if your tenant starts listing out unreasonable excuses, then be sure to keep the wheels in motion to get your property back as soon as possible, and never play into the excuses that don’t ever seem to end.
Do you need help with a scenario like this? If so, click the button below to schedule your consultation this week!
AUTHOR: ANNE-MICHELLE FRANCES*, SENIOR PARALEGAL
*This blog post has been read, reviewed, and approved by Daniel T. Paris, Attorney at Law.