My Tenants’ Split: What Should I Do?
As a real estate investor, chances are down the road you may experience your tenants’ breaking up. You may think this in none of your business, but the ending of their relationship can affect you. How? Well, where there were two incomes coming in, now there may only be one and this can lead that tenant to not be able to make the monthly payment on that house.
In case this does happen, what should you do? What are your options?
Here’s a few tips for you should you run into this situation.
1. Listen Attentively, Remain Calm, and Offer Empathy
If your tenant comes to you in distress about the end of their relationship, worried that they cannot make payments, listen to them with a big heart. They’re in distress and probably have a hundred things going through their head that they’re worried about. Remain calm and professional. I mention offer empathy because that’s a respectful thing to do. I’m not saying you’re going to release them from the lease. I mean, before you even get to the professional or business level, meet them at the humanity level. Listen, remain calm, and let them know you heard every word they said.
2. Inform Them of the Lease Agreement Details
Now, you can remind them of the details of the lease agreement. Legally, they are required to pay the monthly rent. If they can’t, you can hold them accountable for the remaining money they would owe you should they break the lease. This can be done in a professional way. If they get defensive or angry, simply remind them that this isn’t personal. It’s simply business.
3. Give Them the Option to Renew the Lease
If your tenant desires to stay in the home, you can give them the option of renewing the lease for the same amount or a different amount if you choose. Of course, you don’t have to decrease the monthly rent. Most landlords don’t do that. If the remaining tenant won’t have enough funds to cover the monthly rent, then you let them know that they’ll have to move out within a certain amount of time.
If they are already behind and can’t catch up, you can arrange to take them to court if you choose.
4. What About the Security Deposit?
If the tenants break the lease, you are not required to give them back their security deposit or down payment if they put money down on a lease-purchase deal. If you are giving them partial or full security deposit back, be sure that you mail it to the person who actually paid it. If both of them gave the deposit to you, ask them specifically who you should mail the check to.
5. Check with your Attorney
If you run into an issue that you’re not sure how to handle, you can always contact your attorney to see what they suggest. Each situation may be different, so there’s not always a “one size fits all” answer. As you continue to invest in property, you’ll learn more about these situations and how to address them. As with anything, the longer you do something, the better you get at navigating unexpected things that pop up along the way.