average investment > Understanding Evictions and Mitigating Them as a Landlord
Understanding Evictions and Mitigating Them as a Landlord
With over two decades of experience as a real estate investor and broker, I’ve encountered numerous eviction scenarios. I’ve been involved in evicting tenants from my own properties and properties owned by banks.
While evictions are sometimes necessary to address problematic tenants, there are plenty of situations where they can be prevented. This not only saves landlords time and money but can also be less stressful for tenants.
Many strategies for avoiding evictions were learned from observing how banks handled such situations during the last housing crisis.
Defining an Eviction
An eviction takes place when a tenant, a former property owner, or sometimes even a squatter occupies a property and refuses to vacate despite the owner’s wishes. Various reasons can lead to an eviction, including:
- Nonpayment of rent
- Violations of local codes or regulations
- Unpaid utility bills
- Former property owners refusing to leave after selling
- Former property owners refusing to vacate after foreclosure
- Lease expiration with the tenant’s refusal to leave
- Property damage or lease violations
- Criminal activities on the property
- Sale of the property with new owners wanting to move in, but the tenant won’t leave
It’s important to note that each state has its own laws and procedures regarding evictions. In general, property owners cannot forcibly remove tenants without following the legal eviction process.
Understanding the Eviction Process in Colorado
In Colorado, the sheriff oversees evictions to ensure no conflicts arise, but it’s the property owner’s responsibility to change the locks, remove the tenant’s belongings, and leave these items outside or in an accessible location for 24 hours. The law grants a one-hour window to move the belongings, which usually necessitates the presence of several people during the process. After 24 hours, the property owner must either dispose of the items or transport them to a dump. In some states, property owners may need to store the tenant’s belongings for a longer duration, often around 30 days. To avoid legal pitfalls and ensure a smooth eviction process, many landlords opt to consult with an attorney.
Dealing with No-Cause Evictions
Some states, such as California, have implemented stricter regulations to discourage no-cause evictions. These evictions occur when tenants fulfill their rental obligations but their lease expires. In California, landlords can proceed with no-cause evictions, but they may be required to provide relocation assistance to tenants. In other states, no-cause evictions can be executed without additional costs beyond eviction expenses.
The Costs of an Eviction
The expenses associated with an eviction can vary significantly based on the state and the circumstances. Costs may range from a few hundred dollars to tens of thousands. Various factors influence these costs, including:
- Legal representation fees, which can range from $350 to $5,000 or higher, depending on the complexity of the case
- Minimal court costs
- Expenses for hiring personnel to empty the property
- Costs for disposal or storage of the tenant’s belongings
- Lost rent and potential property repairs
- Possible relocation fees to compensate the tenants
- Legal action taken by tenants, such as suing for damages or injuries
While the cost of the eviction itself may amount to $500, the overall expenses tied to tenants who refuse to leave often total in the thousands, and can be even higher depending on the situation.
The Duration of an Eviction
The time required to complete an eviction varies by state and even within different cities. Temporary restrictions, such as eviction moratoriums, can further impact eviction timelines. The COVID-19 pandemic led to such moratoriums in various areas, halting evictions for certain types of properties. Although these bans had widespread effects, some evictions could still proceed, depending on the specific circumstances. For example, I completed an eviction in Colorado in 2020 due to code violations, even though the tenants had not been paying rent.
Challenges in Evicting Tenants
Certain situations can make the eviction process more challenging. For instance, in some regions, judges may be hesitant to evict tenants. In other cases, issues like property registration can complicate the eviction process, making it nearly impossible. In my experience, owning a property in Ohio within an IRA posed unique difficulties because registration issues prevented eviction.
Utilizing “Cash for Keys” to Prevent Evictions
During my time selling foreclosed properties, I often had to deal with occupants who remained in homes even after the bank took ownership through foreclosure. If they were tenants with a valid lease, they could continue residing there as long as they adhered to the lease terms. In situations where the previous owner still occupied the property, the bank typically aimed to remove them to facilitate the sale. In such cases, banks would offer occupants “cash for keys” as an incentive to vacate. If the occupants accepted the offer, they would receive the money once they fully moved out, leaving the property in a clean, debris-free state. The process included a clear agreement outlining conditions and responsibilities.
Some banks had lenient interpretations of what “broom clean condition” meant, while others adhered to strict standards. This practice is common for a variety of reasons, including helping the new owner gain access to a property without needing to evict the previous occupants. This strategy can prove effective in averting the hassle and expenses associated with an eviction.
Preventing Evictions as a Landlord
Evictions are sometimes unavoidable, but proactively working to prevent them is often the best course of action. One way to avoid evictions is by offering tenants cash incentives to leave when the lease expires or if they’re behind on rent. In cases where tenants feel obligated to remain due to an active lease, providing them with an opportunity to exit the lease agreement voluntarily can be an effective solution. Additionally, landlords can educate tenants about the potential consequences of an eviction on their rental history, which might incentivize them to leave on their terms.
Another strategy for landlords is to establish clear expectations from the outset. Address issues like late rent payments promptly, imposing late fees, and communicating the unacceptability of late payments. Posting a notice to quit early in case of non-payment or other issues sends a strong message to tenants. It serves as a warning and does not necessarily lead to an eviction. However, it ensures that the landlord is taking the situation seriously. In the event of continued non-compliance, the landlord can proceed with eviction more swiftly.
The most effective way to minimize the need for evictions is by carefully selecting tenants. Implement a thorough screening process, rather than solely relying on gut feelings or accepting the first applicant. A rigorous tenant screening process can significantly reduce the chances of eviction.
In Conclusion
Over years in the real estate business, I’ve encountered many eviction cases. While they are sometimes necessary, there are numerous ways to limit their occurrence. Most of the evictions I’ve experienced were inherited tenants in properties with pre-existing issues. Our proactive tenant screening process significantly reduces eviction needs. Avoiding evictions not only benefits landlords but also contributes to a more stable and harmonious tenant-landlord relationship.
