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5 steps for collecting unpaid rent after a tenant moves out

Unpaid rent keys
by Jeff Rohde, posted in Investment Strategy

When a tenant moves out, it’s essential to follow correct legal procedures for collecting unpaid rent. If you don’t, you may lose money that is rightfully yours. 

In this blog post, we will explain how to collect unpaid rent after a tenant moves out and provide tips for avoiding this situation. 

Key takeaways

  • Many landlords face this situation.
  • To collect unpaid rent from a tenant, verify that the tenant has left the property, review the rental agreement, send the proper notice, and go to small claims court.
  • Thoroughly screen prospective tenants, perform routine property inspections, and enforce on-time rent payments to mitigate the possibility of not being paid.

Steps to collect unpaid rent after a tenant moves out

1. Determine if the tenant has really left the property

There are signs that could indicate a tenant has permanently left the property before their lease has expired. For example, if all of the tenant’s personal belongings are gone and the unit is completely empty, they have likely moved out. 

Another sign that the tenant has permanently left is significant damage to the unit, such as holes in the walls or broken windows. In addition, if utilities have been shut off or mail is piling up in the mailbox, the tenant may no longer live there. 

While these are common signs of vacancy, a property may appear empty when it isn’t. For example, if a tenant’s vehicle is parked in the lot, but no one seems to be coming or going from the unit, they may be on an extended vacation or business trip. 

In some cases, tenants may even abandon their belongings in the unit when they move out, which can make it difficult to determine if the unit is actually vacant or not. It is best to contact them directly to confirm.

2. Check the lease agreement for information on how to collect unpaid rent

Check your lease agreement. Most leases have specific terms and conditions regarding rent payments and nonpayment. 

late rent

In some cases, the lease may allow the landlord to collect unpaid rent from the tenant’s security deposit. However, laws regulate how landlords can use security deposits, so check your state landlord-tenant laws or with your local housing authority or a local attorney to see if this is an option in your case. 

If the lease does not allow for the collection of unpaid rent from the security deposit, you may still pursue other legal options to recoup the lost rent. 

3. Send a certified letter to the tenant’s last known address, notifying them of the outstanding rent and requesting payment

This type of notice is sometimes called an “unpaid rent notice”:

  1. Include the amount of rent owed and the date it was due.
  2. Give the tenant a clear deadline for payment. 
  3. Make it clear that you will take further legal action if the rent is not paid by the deadline. 
  4. Keep a copy of the notice for your records.

An unpaid rent notice should be sent via certified mail so you have proof that the tenant received it. If you need an unpaid rent notice, you’re in luck! Download one here.

You can hand-deliver the notice, but this is not always practical. If you hand-deliver it, get a signature from the tenant acknowledging receipt.

4. File a small claim in court if the tenant does not respond to your letters or pay the rent owed

Small claims court is a process for resolving disputes without the need for an attorney. In order to file a small claim, you will need to fill out paperwork and pay a filing fee. 

Here are the general steps:

  1. File a complaint with the court, including the facts of the case and how much money is owed.
  2. Once the complaint is filed, you must serve the tenant following the instructions provided by small claims court. Often, you may do this by hand-delivering it or sending it by certified mail.
  3. The tenant will have an opportunity to file a response to the complaint. If they do not file a response, they will be in default, and a judgment may be entered against them.
  4. If the tenant does file a response, the case will be set for a hearing. At the hearing, both sides will have an opportunity to present evidence and argue their case before a judge.
  5. The judge will issue a decision, potentially with a judgment. If the tenant does not pay the judgment, you may take steps to collect it, such as garnishing their wages.

Filing a small claim can be time-consuming, but it may be the best way to recoup unpaid rent.

5. Get an attorney involved if necessary

Legal options are available to landlords in this situation. One option to consider is hiring an attorney to pursue a judgment for back rent or other damages owed. 

There are several reasons to hire an attorney. 

An attorney will have experience dealing with this type of situation and know the best way to proceed. An attorney can help you draft a demand letter, which may prompt the tenant to pay the outstanding rent. Additionally, an attorney can file a lawsuit against the tenant if the rent remains unpaid. 

While hiring an attorney can be expensive, it may be worth it if you can collect the outstanding rent. However, there is no guarantee that an attorney will successfully collect the rent, so you must weigh the costs and benefits before making a decision.

Take steps to avoid unpaid rent in the future

Tenant screening is arguably the most critical step to avoiding unpaid rent. Carefully vet potential tenants to ensure they are financially stable and likely to pay on time. Check references and employment history to get a sense of a tenant’s character and ability to meet financial obligations.

Stay proactive with property maintenance. Routine inspections can help you identify potential problems before they have a chance to spiral out of control. 

For example, if you notice that a tenant is falling behind on repairs or neglecting cleaning, you can take steps to remedy the situation before it becomes a bigger issue. 

Prompt rent collection is essential for avoiding unpaid rent. Establish clear expectations with your tenants from the start and follow up regularly.

Final thoughts

If you are owed unpaid rent after a tenant moves out, there are legal options available to you. 

No matter what route you choose,keep track of rent owed and document everything thoroughly. 

And for your existing tenants, check out Stessa’s online rent collection tool. It makes it easy for tenants to pay on time and automates key tasks like deposits, receipts, and accounting. Stessa online rent collection is a win-win and is free for both landlords and tenants.

Stessa is a financial technology company, not a bank. Banking services provided by Blue Ridge Bank N.A., Member FDIC.

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