How to Collect Unpaid Rent After Tenant Moves Out?

As a landlord, you might be frustrated dealing with unpaid rent after a tenant has vacated your property. It can create a significant financial impact, whether due to unforeseen circumstances or a lack of communication. However, you’re not the only one facing such problems.

A survey by Statista in 2023 reported that an average of 11.5% of renters in the United States were behind on rent, and mostly renters between 40 to 54 years of age were likely to be late on rent payments. I’ve also seen many landlords seeking help to collect rent from their unreliable tenants. And in my over 20+ years of experience in real estate, I’ve helped them with our hassle-free rent collection solutions.

It is crucial to understand how to effectively navigate this process not only for recovering lost income but also for ensuring future tenancies run smoothly. In this article, we’ll explore how to collect unpaid rent after a tenant moves out with practical steps and legal avenues, helping you protect your investment and maintain peace of mind. With the right approach, you can turn a challenging situation into a manageable one, paving the way for better landlord-tenant relationships in the future.

How Do You Collect Rent Payments Not Paid by the Tenant?

Collecting unpaid rent from a tenant requires a systematic approach. Here are some effective steps to follow:

1. Confirm if the tenant has really moved out

First, you need to confirm whether the tenant has actually moved out of the property. There may be signs indicating that a tenant has permanently left before the lease agreement has expired. If the tenant’s belongings are missing and the rental unit is completely vacant, it is likely that the tenant has moved out.

Another sign that indicates a tenant has moved out is significant damage to the property, such as holes in the walls, broken windows, or doors. If the utilities have been shut off or mail has piled up in the mailbox, it is likely that the tenant no longer lives there.

In some cases, the tenant might be on a business trip or vacation, which is why the rental unit remains vacant for an extended period. During this time, you may come across some of their remaining belongings, such as vehicles parked in the lot. However, there is also a slight chance that the tenant has abandoned their belongings when they moved out. It is advisable to contact the tenant and confirm your doubts.

Changing the locks without following proper eviction proceedings is illegal and can result in legal trouble for the property owner. This rule also applies to a situation where the tenant has removed all their belongings and cleaned the property but did not turn over their keys or notify you about their departure from the property.

To legally evict a tenant, the property owner must:

• Serve the tenant with a written notice to vacate, giving them time to move out.
• If the tenant does not vacate, file an unlawful detainer lawsuit in court and serve the tenant with the paperwork.
• Attend a court hearing where both parties can present evidence unless your attorney says you don’t need to attend the court. If the judge rules in the your favor, they will issue an eviction order.
• Only after receiving a valid eviction order can the property owner change the locks or have the sheriff physically remove the tenant.

Skipping proper eviction proceedings can lead to penalties and legal action against the property owner, regardless of the tenant’s behavior or rental agreement violations. The legal eviction process still must be followed to properly and lawfully evict a tenant.

Learn more on the Oklahoma eviction process in order to evict a tenant from a rental.

2. Check the Lease Agreement for Information to Recoup Unpaid Rent

In most lease agreements, specific terms and conditions are included regarding rent payments, late fees and nonpayment.

In some cases, there is also an option to collect unpaid rent by deducting it from the tenant’s security deposit. However, it is crucial to be aware of your state’s landlord-tenant laws or consult with the local housing authority. These laws regulate the use of tenant’s security deposits by landlords, and collecting rent without following proper legal procedures may result in financial loss.

3. Send a Letter to Tenant Notifying them of Outstanding Rent

This type of letter is commonly referred to as an ‘unpaid rent notice.’ The letter should clearly state the amount of past due rent and the due date. You should send this notice to the tenant’s last known address, requesting payment of the overdue rent. It is important to include a specific deadline for payment and a warning of potential legal action if the rent is not cleared by the deadline.

You should send the unpaid rent notice via certified mail so that you will have proof that the tenant received it. Make sure that you have a copy of the notice for your records.

4. File a Lawsuit in Small Claim Court

Small claims court proceedings are time-consuming but the best way to resolve disputes without the need for an attorney. To file a small claim, you need to fill out the paperwork and pay a filing fee.

1. File a complaint: You need to file a complaint with details on the facts of the case and the amount of money owed by the tenant.
2. Serve the tenant: After the complaint is filed, you need to serve the tenant according to the instructions provided by the court. You might need to hand deliver the complaint or send it by certified mail.
3. Wait for a response: You have to wait for a while for the tenant to file a response to the complaint. If they do not respond, then a judgment will be entered against them. If they do respond, then the case will be set for a hearing.
4. Attend the hearing: At the hearing, both the landlord and the tenant will have an opportunity to present their own evidence and argue the case before a judge.
5. Receive a decision: The judge will issue a decision that may include a judgment for the amount of unpaid rent. If the tenant doesn’t pay the judgment, then you may take legal steps to collect it, such as garnishing their wages.

5. Get an Attorney

Get an attorney involved in order to pursue a judgment for back rent or other damages.

Hiring an attorney can be very helpful since they can guide you with the best course of action. An attorney can help you draft a demand letter and help develop a strategy for securing outstanding rent payments. In addition, they can also help you file a lawsuit against the tenant if the rent remains unpaid. While hiring an attorney can be expensive, it is important to weigh the potential benefits against the cost before making a decision.

5 Steps to Avoid Unpaid Rent in Future

As a landlord, unpaid rent from a tenant not only represents a loss of rental income but can also create significant challenges in terms of time and resources required to collect it. Here are some steps to avoid unpaid rent in the future:

• Screen tenants thoroughly before renting out by checking their credit history, employment status, and rental history.
• Draft a lease agreement that outlines the terms and conditions of the tenancy, rent amount, due date, and consequences for late payments.
• Make it easier for tenants to pay rent on time by setting up systems like online payment, automatic bank transfers, etc.
• Send reminders and notices to the tenants who are late on rent payments. Follow up promptly and make them aware of their obligations and the consequences of non-payment.
• Offer incentives for tenants who pay rent on time, like discounts or other perks to encourage timely payment.

How Long Does a Landlord Have to Collect Unpaid Rent in Oklahoma

As a landlord, you generally get 3 to 10 years to collect unpaid rent, depending on the state or jurisdiction. In Oklahoma, the statute of limitations has given landlords a 5-years period to pursue legal recourse against tenants for unpaid rent, and this timeline cannot be reset once it expires.

When the tenant breaks the lease, the landlord can keep the security deposit whole or part of it to cover the costs associated with the breach of contract. But the lease clause has to state the penalty for breaking a lease. On the other hand, if the landlord fails to return, the tenant has legal recourse and will sue the landlord in small claims court for the deposit return. At the same time, other states let tenants sue for double or triple the deposit amount if the landlord unlawfully hangs onto it.

How To Collect Unpaid Rent After Eviction

To collect unpaid rent from a tenant after an eviction, you are required to get a judgement against the tenant. A judgment is a court order that says the tenant owes a specific amount of money to the landlord. The judgment is typically issued by the court after a lawsuit has been filed and both sides of the case have been heard.

Once a judgment has been issued against the past tenant, you can take steps to collect the debt. You can either garnish their wages or bank accounts, seize property, or place a lien their property.

It is important to note that the judgment against the tenant is a legal matter, and you must follow the laws and regulations when attempting to collect the debt. Moreover, the tenant also has the option to appeal the court judgment or seek other legal remedies, so it’s important that you consult with a lawyer in case you are involved in a dispute.

Also Read: Tenant Not Paying Rent? Here’s What To Do As a Landlord

Is it Practical to Sue a Tenant for Money Owed After They Have Moved Out?

When someone owes you money and you’re unable to collect it, it can be tempting to take legal action to try and recoup your losses. However, suing someone for money can become a fruitless endeavor if the person in question cannot be found or does not have any assets or money to pay what they owe.

In the case of a missing or untraceable debtor, it can be difficult, if not impossible, to locate their whereabouts or assets. Even if you hire a private investigator or attempt to track them down through other means, the process can be time-consuming and costly. In some cases, it may simply not be practical to pursue legal action against someone who has gone off the radar and cannot be located.

Additionally, even if you do successfully locate a debtor, there’s no guarantee that they will have the means to pay what they owe. Many people who owe money have financial difficulties and may be struggling to make ends meet. If they don’t have any savings or valuable assets, it’s unlikely that even a court order for payment will result in you getting your money back.

Furthermore, taking legal action can also be a stressful and emotionally draining experience. Lawsuits often involve a lot of paperwork, court appearances, and the need to gather evidence to support your case. This can be a time-consuming process that requires a lot of effort on your part and can take a heavy toll on your mental and emotional well-being.

In summary, while it may be tempting to pursue legal action against someone who owes you money, it may not be practical if the person cannot be found or has no assets. Before deciding to take any legal action, it’s important to weigh the costs and benefits carefully and consider whether it’s worth the time, effort, and emotional strain involved.

Also, be aware of what landlords cannot do.

Also Read: Illegal Eviction: A Landlord’s Guide to Avoiding Legal Trouble

Tax Implications of Collecting Unpaid Rent

Do you know? Collecting unpaid rent can have tax implications. Understanding tax laws and regulations regarding the tax implications for collecting unpaid rent can help you take advantage of all available deductions and credits. Here are some key considerations:

• Reporting Income: As a landlord, you’re required to report all rental income, including unpaid rent, on your tax return. You may need to file an amended return if you’ve already reported the income.
• Deducting Losses: If you’re unable to collect unpaid rent, you may be able to deduct the loss on your tax return. It’s best to consult with a tax professional to determine the best course of action.
• Security Deposit: If you use a security deposit to cover unpaid rent, you may need to report the deposit as income. However, you can also deduct the amount as a loss if you’re unable to collect the unpaid rent.
• Interest and Penalties: If you’re able to collect unpaid rent, you may be entitled to interest and penalties. These amounts are considered taxable income and must be reported on your tax return.
• Record-Keeping: Accurate record-keeping is essential for tax purposes. Keep detailed records of all rental income, expenses, and correspondence related to unpaid rent.

Conclusion

While collecting unpaid rent from former tenants can be frustrating, landlords have legal remedies, including payment plans, collections agencies, garnishments, small claims suits, and other strategies. Tolerating nonpayment sets a precedent that rent is optional. With diligent records, swift action, and legal support, landlords can maximize their chances of recovering rightful rents owed after tenants move out and bring closure to the tenancy.

A property management company can make your life way easier if you don’t like to deal with these kinds of issues. Contact OKC Home Realty Services if you have any queries related to property management services.

FAQs on Collecting Unpaid Rent