Five Common Mistakes that Landlords Commit in Debt Collection

by Frank Johnson US Record Search and Information Services

Sometimes, it is due to the poor state of the economy and, at other times, lack of cash flow, that tenants fail to satisfy their lease obligations. Most of the tenants also voluntarily withhold rent for their personal and business reasons. Consequently, landlords feel pinched by tenants becoming more and more negligent.

Here we learn about the five common mistakes that landlords make when dealing with tenants’ defaults and also eviction proceedings. We learn how landlords can effectively manage tenants’ negligence.

Shilly-Shallying

Landlords usually allow pining of tenant delinquencies; expecting that the tenant will soon be able to get rid of lower cash flow. Rather, they need to immediately respond to the first delinquency. Landlords may need to practice eviction proceedings. Hiring a company that offers landlord debt collection services leaves them in a better position to minimize their losses. Such companies help them to quickly react to tenant delinquencies.

Failure to Read the Lease

Landlords need to strictly adhere to the default provision of the lease, which involves where, when, and why a default notice can be sent. Other terms that require consideration include if the tenant personally guaranteed payment as stated in the lease and, if any sublease happened. Housing Court judges and referees need strict compliance with the default provisions of the lease, such as landlords sending default notices to tenants.

Refrain from Commencing Eviction Proceedings

Pursuing an eviction action is generally prudent for the sake of business. Doing so increases the landlords’ leverage, while negotiating a lease modification with the tenant. Other merits to commencing eviction proceedings when negotiating with a tenant include (1) providing a fixed deadline for when a settlement should be completed, and (2) insuring the landlord that if negotiations break down, the tenant is compelled to vacate the premises on time, in which case, the property is re-let immediately to a new tenant.

Failure to Hire an Attorney

According to the default rule, the landlord needs to hire an attorney for the purpose of drafting and arguing the eviction complaint in court. The landlord should an incorporated entity in such a case. There are a few counties within the State of Minnesota that do not impose this kind of requirement. This flexibility, can therefore, put the landlord at a disadvantage. Landlords may hire a debt collection company that also offers commercial asset investigation services.

Failure to evict all Occupants

The landlord needs to start an eviction action against the named tenant on the lease and against other occupants. Naming all occupants ensures that the landlord regains control over the property and won’t have to pursue an ensuing eviction proceeding, in case any occupant other than the named tenant asserts rights to the property.