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Property Management

Why Are Evictions So Costly? (And How To Avoid Them)

Evictions are costly, time-consuming, and stressful. However, unfortunately they are also sometimes necessary. The primary reason for evictions in the US is missed and late rent payments. This could be for any number of reasons, ultimately though, failure to pay rent is not sustainable for the landlord and is an eviction offence.

Generally speaking, evictions require the landlord to first submit a written notice to their tenant, as specified in the state’s termination statute.

In the case of failure to pay rent a pay rent or quit notice would need to be submitted. This notice gives the tenant a formal warning that should they not resolve the issue within the set period of time established by law that their landlord will be pursuing an eviction. In the case of a pay or quit notice the tenant needs to pay all overdue rent amounts in the given time. If the tenant does not resolve the issue promptly the eviction will go to court and may require a hearing.

The eviction process is time-consuming and can become expensive for both parties involved. This is especially problematic when you realise that most evictions could have been prevented. In this article, we take a closer look at the process of an eviction, the costs, and what landlords can do to mitigate the risks of having an eviction.

Please note due to the COVID-19 pandemic there is currently an eviction moratorium through June 2021. Read more about it here.

The Eviction Process

If after signing a lease agreement a problem arises – either the rent is not paid, the tenants violate a clause in the lease contract, or they break the law – then you will want to follow eviction proceedings carefully. This process varies from state to state and so it’s recommended that you look up state-specific laws regarding your individual circumstances.

The first step in the process is to talk to your tenant. Ideally, you and your tenant will be able to resolve things before sending an eviction notice. However, if you can’t resolve the issue with your tenant the next step would be to begin the eviction process with a notice.

Every state has different rules for how you must deliver a Notice to Quit, so you must check your state’s eviction laws. Some states require the landlord or a representative of the landlord to serve the Notice to Quit in person. Others allow you to send the tenant the Notice to Quit by first-class certified mail instead of serving it in person. Certain states require this Notice to be formally delivered to the tenant by a state marshal.

Depending on the reason for the eviction, the length of the lease and lease type there are various lengths of time that you will have to wait after sending the notice. You will have to wait at the very least 3 days after they receive it before you can begin the eviction – however, in some cases, this might be as much as 30 days or even 60 days.

During this waiting period, the tenant normally has a final opportunity to resolve the issue. For example, if they owe rent then they will be required to pay. It’s important to note that at this point you must be careful about receiving partial payments as these can delay proceedings.

If the complaint continues to go unresolved after the notice period, then a complaint will need to be filed in court. Once the court date is set your tenant will receive a summons.

Finally, in court, you will both be required to present your evidence and the judge will make a final decision.

If the tenant wins you may be required to pay their court and attorney fees. If you win, then the tenant will be required to vacate the property. The judge will issue a Court Order, also known as a Warrant of Eviction or Writ of Restitution. Either your tenant will voluntarily leave, or a law enforcement officer may be required to remove the tenant and their belongings. Based on the lease agreement and local laws, your tenant may be responsible for paying your court filing fees, attorney fees, unpaid rent, and/or damages and penalties.

evictions in England and Wales

A Breakdown of Eviction Costs

Legal Fees

In most cases, you will want to hire an attorney to evict your tenant, especially since the eviction process can be complicated and the paperwork needs to be 100% accurate. Even a misspelt name can cause problems and delays. Attorneys can charge hundreds of dollars an hour and those hours can add up quickly.

How much the legal fees will be depends on the attorneys rates, their experience and the complexity of the case. However, you can expect to pay $500 or more in legal fees.

Court Costs

Again costs vary, however, every state charges a filing fee. So, while the cost of eviction in terms of court expenses will vary depending on which state your case takes place in, the national average for filing is $50. Keep in mind that there are also charges for a sheriff’s office to serve notice, so be sure to research this eviction cost as well.

Lost Rent

This is even harder to estimate. However, an eviction might take months – which means if you’re evicting because of non-payment of rent then this missed rent could continue to accrue over this time. Plus, there will be a vacancy period after they are removed and it could be several more weeks before you see any additional rent. In a worst-case scenario this could mean as much as 3 or more months of missed payments, however, a more conservative estimate would be 4 to 6 weeks of unpaid rent.

Add to this the fact that regardless of the court-ordered outcome, you may not be able to reclaim all the owed rent from this tenant once they are evicted and if there is property damage, this will be additional time spent dealing with contractors and making necessary repairs that will prolong the amount of time your property is left vacant and not bringing in any income.

Property Turnover Costs

It costs money and takes time to get up to date photographs, write listings, show prospective tenants around, accept applicants, run screening checks, and get documents signed. All these costs add up and of course, while these costs are climbing, all the expenses that would normally be covered by the rent are now falling on your shoulders.

Damage to the Property

At the very least you will likely need to pay a cleaning fee to get the property ready for the new tenants. At worst though your previous tenants might not appreciate being evicted and take their frustration out on your property. If you’re evicting because of property damage anyway then this cost could end up being a substantial cost. Plus if they refuse to relinquish keys or you suspect they have made copies you might need to pay for a locksmith to change the locks.

Total Potential Costs of an Eviction

TransUnion SmartMove data found that total eviction-related expenses for property managers average $3,500 and takes an average of 3-4 weeks for the eviction process to run its course.

There are also non-monetary costs to take into consideration, such as the strain and stress of an ongoing legal battle. Time is money, and the more time you waste on eviction, the less time you have to spend on more lucrative endeavours.

meeting your CPA

Strategies to Prevent Evictions

The costs of evictions are high. Especially if you consider that in many scenarios these costs are preventable.

To ensure that your property continues to bring in revenue, you need to have quality tenants. If a tenant is behind in their rent and losing your money, you will likely want to quickly replace them with a tenant that can pay their rent.

Thoroughly screening your tenants, and making it a consistent part of your rental process, can help you avoid having to evict a tenant later on. You can get a full SmartMove tenant screening report on your prospective tenants from inside the Landlord Studio software which includes an eviction report, income report, a criminal background check, and a full credit report.

Whether you use Landlord Studio tenant screening or another screening service, it’s important to order an eviction report as part of your tenant screening package since prior evictions are highly predictive of future evictions.

Evicted tenants are statistically three times more likely to go through another eviction. This of course doesn’t mean that you shouldn’t rent to someone with a prior eviction record – however, it does demonstrate that you should be careful doing so.

Tenant Screening with Landlord Studio

We have integrated with Rentprep whose Smartmove report comes with a full TransUnion credit check on your prospective tenant.

These reports are thorough, comprehensive, and much faster and more accurate than checking all the details independently.

Our reports include a credit report, renting history, background check, and more.

tenant screening sample report
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Common Mistakes to Avoid in the Eviction Process

#1 Not Having a Lease

Without a written lease signed by both parties it is incredibly hard to evict a tenant as you can’t prove the terms of the tenancy.

#2 Shutting off utilities or other forms of “self-help evictions”

It is illegal to turn off the utilities to a building or in any other way attempt to force a tenant to leave. These Self-help evictions, as they are known, immediately put you in the wrong and will not only make an eviction almost impossible to pursue but could have serious legal ramifications against the landlord.

#3 Improper Entry

Apart from in the case of emergencies, you must give proper notice whenever you are going to enter the property. Not doing so is violating your tenant’s rights to privacy and is a serious offence.

#4 Not hiring an attorney

Evictions are legal processes. They require comprehensive documentation accurately filled out. Even small mistakes could delay or even cause you to lose the case. Hiring an attorney t make sure everything goes smoothly, while expense, could end up saving you a lot of money in the long run.

#5 Not documenting everything in writing

Everything to do with regards to a tenancy should be documented – every communication, every payment or non-payment, every formal notice you send. This will all form important evidence should an eviction become necessary.

#7 Threatening to Not Return the Deposit

Not only is this going to make a tenant less likely to be cooperative, but it’s not legal. The security deposit is an assurance for the landlord and can only be used under certain circumstances such as repairs to a property after the tenant movies out or in some scenarios a deduction of unpaid rent after the tenant moves out.

#8 Accepting Partial Payments

If you have issued a notice to pay or quit, accepting a partial payment is seen as the tenant resolving the issue – eg. they have paid and therefore don’t need to quit. This can delay an eviction as you will need to issue another pay or quit notice for the remainder of the overdue rent and wait for the obligatory notice period.

Final Words

Evictions can have drawn out consequences for both parties and should be avoided when at all possible. They are a nuclear last resort. Evictions go on a tenants record and it will make it harder for them to be able to rent again. And it can be especially stressful for families with children. Nobody wants to go through an eviction, for the tenant’s its stressful, expensive and could have long-lasting ramifications for their lives. For landlords, the dangers compound and overall costs can quickly spiral out of control.

This is why prevention is the best medicine in this scenario. A thorough tenant screening process and demanding standards are a must, it’s better to have a property empty for a little bit longer than to get a bad tenant. Should it become unavoidable though, make sure to give your tenant every opportunity to resolve the issue before taking it to court, and if they can’t, present them with alternatives. For example, if they find they can no longer afford the rent, you might allow them to break the lease and move out early. Or you could direct them to available rental assistance programs.

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Ben Luxon

Ben is an author and real estate enthusiast. His interest in all things entrepreneurial has led him to work with real estate professionals all over the world, distilling their knowledge into articles and Ebooks.

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