Today’s Question? My tenant’s utilities have been turned off. Can I re-take possession of the unit?

Retaking possession of a property can be a tricky situation.  Landlords who wish to  take possession when it is not clear that the tenant has vacated must weigh the risk of  a lawsuit for unlawful eviction with the lost time and income that can result from delay.  If you are considering retaking possession of your property because of abandonment of the premises, you should look at all the circumstances before taking any steps to remove your tenant’s belongings. The safest way to protect yourself from being sued for an unlawful eviction is to use the court system to retake possession, but sometimes landlords want to avoid using the courts because it can be time consuming.

If you are faced with the decision of whether to retake possession of your property it is probably a good idea to document your reasoning. Ordinarily, a landlord has no right to retake possession of the property just because a tenant has failed to maintain the utilities.  However,  disconnected utilities can be evidence that the tenant has abandoned the residence.  If you find that the utilities in your property have been disconnected, it may make sense to visit the property and talk to your tenant.  If your tenant is still actively living there, you probably do not have grounds to retake possession.  But, if you find that all of the utilities are shut off and the furniture has been removed, it may be appropriate to retake possession without resort to litigation.

If you decide to retake the possession because of abandonment, it is a good idea to document your reasoning. One way to do that would be to send your tenant a dated letter that explains that you have noticed that the property appears to be vacant and that any possessions left in the property will be discarded after 14 days.  The letter might also explain the reasons you have come to those conclusions and give the tenant a way to contact you to collect leftover possessions if you have changed the locks.

Remember, if you decide to retake possession without filing an eviction there is no way to ensure that your tenant will not sue you for unlawful eviction, but an ounce of prevention is always worth a pound of cure.

• Understand the fee structure: It goes without saying that you should consider the cost of the service in relation to the services offered.  Often managment companies charge 10% or more of the rental income on your properties.  You can also expect additional fees for the initial rental and maintenance costs.  Review the contract to ensure that you are not surprised by the cost of services.
• Review the rental companies proposed lease and termination notices: Ultimately, you are responsible if your manager is using outdated leases and termination notices.  Problems with these forms can cause you to lose precious time and money if your eviction proceeding is delayed or dismissed because of inadequate forms.
• Review their fair housing policies: All property managers should know that there are federal anti-discrimination laws that apply in housing rentals.  If a potential manager cannot answer your questions about the laws or openly makes discriminatory statements in your presence, you may want to think twice.
• Take a look at other properties the potential manager is currently handling.  Do they look well kept?  Is the yard maintained?  If the other properties in the manager’s portfolio look run down, you may want to look elsewhere. 
• How does the manager talk about the tenants? If a potential manager sees the tenants as the enemy, you may have future problems.  In my experience, when people have healthy relationships with the landlord or property manager, they tend to cooperate and pay the rent.  When the relationship breaks down or the tenant feels disrespected, it becomes harder to collect. 
• What are the manager’s policies with regard to scheduled maintenance and inspections?  It is a good practice to have quarterly walk throughs of your property to ensure that they are maintained.  While you are there, you can see the properties yourself and talk to your tenants if there are things that need repairing.  This is also a way to verify that the mainenance you were charged for was done in a satisfactory manner.

Under existing law, the provider of certain goods and services may require a landlord to pay the delinquent bill of a tenant for goods and services provided to the tenant of the landlord. This bill would prohibit the provider of goods and services from requiring a landlord or property owner to pay the delinquent bill of a tenant for goods or services provided to the tenant if the account for the service is in the name of the tenant.

A BILL
TO BE ENTITLED
AN ACTRelating to certain goods and services provided a tenant; to prohibit the provider of goods or services from requiring a landlord or property owner to pay the delinquent bill of a tenant for goods or services provided to the tenant if the account for the service is in the name of the tenant.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. The provider of goods or services may not require a landlord or property owner to pay the delinquent bill of a tenant for goods or services provided to the tenant of the landlord if the account for the goods or services is in the name of the tenant. In addition, the provider of goods or services shall not have a lien on the property for any goods or services provided in the name of the tenant.

Section 2. This act shall become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.

What’s a landlord to do?

Nobody likes to see an episode of Cops being re-enacted on their property and it is assuredly upseting to see that a tenant has put your property at risk, but it is important to  realize that you must still follow the law with regard to the terms and conditions of the lease.  Here are a things to consider before taking any concrete action.

• If you are lucky enough to get to the property before the police leave, try to find out the nature of the offense without interfering with the police as they work.
• If you can, get the detective’s card and or a copy of the incident/offense tracking number so that you can secure a police report.
• Try to find out if the police have damaged the property so that you can take actions to repair the damage.  The police will not reimburse you for the damage to the property, but you may still have recourse against your tenant.
• If you have a camera with you take pictures of the damage so that you will have evidence if you need them for court.
• Once the police leave, determine if the door can be properly secured.  The Police have a tend to use methods of entry that could leave the door inoperable.  Sometimes they will remedy this by nailing the door shut for you.  Whatever happens, you should make sure that your property is secured.
• If you have to replace the door and the lock, leave a note for the tenant so that they know how to get in touch with you, if they make bond and need to get back in to the unit.  You do not have a right to remove the tenant immediately simply because they are arrested.

Once the drama has died down, as a landlord you are left with a decision about what to do next.  The first question is whether you would like to continue the landlord tenant relationship.  If you do not wish to continue the relationship you should assess whether you have grounds to evict the tenant or not. Hopefully, your lease addresses drug and criminal activity on the premises.  If it does not, consider including a provision prohibiting illegal activity of any kind in all of your leases and/or updating your rules to include similar provisions in the interim.

If the tenant does not return within a reasonable time because they are unable to make bond, consult the terms of your lease concerning abandonment and/or non-payment of rent.  If the tenant has not returned in time to pay rent, issue a timely notice of termination and immediately follow up with an eviction as soon as the termination notice expires. If the tenant has no plans to return or cannot be released, send a notice of termination based on the abandonment, wait 14 days and file an eviction.

But what happens if the tenant comes back?

If your tenant returns, it is important to remember that the tenant may not be guilty of any offense.  Have a conversation with the tenant about his or her future plans. Perhaps the offense was a misdemeanor with no real jail time likely to be imposed.  Remember that if the tenant is innocent and you do not evict them, you may gain a loyal tenant for years to come.

As more people begin to shy away from buying for fear that home values will continue to decrease and others enter the rental market because they cannot afford a mortgage or have been foreclosed upon, landlords stand to profit from a larger pool of prospective tenants.  As such, landlords who are financially able to increase their holdings will benefit and those who were once looking at empty units may now be fully occupied or able to increase rents.

All of this good news for Alabama landlords should also come with a word of caution.  Landlords should learn from the mortgage industry’s failure when it comes to investigating prospective tenants.  One of the causes of the mortgage industry bust was the failure to properly determine if borrowers were good credit risks.  Too many loans were given to people who simply could not afford the homes they were buying.  The result, as we all know now, was disaster.

The same risks exist for landlords who do not properly investigate their tenants before renting.  The best way to avoid an eviction is to properly screen applicants.  Failure to do so can be costly as unpaid rent and eviction costs mount.

Here are four tips for landlords who wish to take advantage of the housing crisis without taking unnecessary risk:

1. Require all prospective tenants to fill out an application.  The application should give you enough information to investigate rental history, income, credit and criminal background.
2. Call all references given on the application and be wary of people who have no rental history at all or long gaps,  Those gaps could mean that they are being untruthful, have spent time in prison or have been evicted.
3. Run credit checks on all prospective tenants.  There are many websites available that will run credit checks for you and then make a recommendation  about whether you should rent to an applicant or not.  Other sites will allow you to pull the credit reports directly and make your own decision.  The difference between the two is largely in the cost of start up and the amount of information you are willing to provide about yourself. The sites that provide recommendations are open to anyone, but direct access to credit reports requires the landlord to undergo a background check before being given access to credit files.  Running credit checks also means that the landlord must provide the applicant certain disclosures about the reason for a denial based on credit and an opportunity to view their credit report. The advantage to pulling your own credit and criminal history would be that there are some situations where the applicant has a good reason for having bad credit, like a medical crisis.  Which ever option you choose, credit checks are invaluable decision-making tools.
4. Get copies of all prospective tenant’s pay stubs for at least two months.  This allows you to evaluate whether the tenant can, in fact, afford the property.  You should always require the actual documents, because applicants may not always share their true income or their obligations.  This information also will help you determine where the applicant works, information you will be glad you had in the event that you later need to garnish their wages after an eviction.

What’s An Alabama landlord to do?

The first thing to do is to try to determine if the tenant is in the process of moving or has abandoned the property.  Obviously, if the tenant dropped off the keys to the unit, there isn’t much of a question as to the tenant’s intent. If the tenant simply left the property with no notice either by abandonment or because eviction was eminent, you may want to make an effort to determine whether the tenant intended to abandon the property.

Some things to consider would be:

• Whether there are expensive items that the tenant would probably take if they were moving.
• Whether the utilities are on.
• Whether the neighbors can give you an idea of how long it has been since the tenant has been on the property.
• Whether there is old mail in the mailbox addressed to the tenant.
• Whether the items left in the apartment have been moved  or the number of items has decreased since your last visit.

If you have satisfied yourself that the tenant has left the property, you have no duty to house the tenant’s belongings for more than 14 days. Once that period has passed, you may dispose of the property in any way that you see fit, including sale or discarding the items.  As always, if the removal of the tenant’s items causes you to spend money or resources to clean the property, you may, of course, deduct those expenses from any security deposit that may have been due the tenant.