To date of the writing of this FAQ article Grow Property Management has not had to evict a tenant that we have screened and placed into a rental property. Frankly we don’t anticipate ever having to evict a tenant that we have pre-screened and created a lease agreement for. As a property management company we have refined ourselves and we have systems in place to avoid tenant problems altogether.
However we have had to evict tenants that we have inherited. Most often this has happened when we take over a rental property that was previously being managed by another property management company; or sometimes landlords can find themselves in a spot with a bad tenant.
Personally, I have had to evict a tenant from a duplex property that I had purchased. The tenant asked me to evict her as she felt city programs would kick in to supplement her financially. As a rental property investor myself, I learned first hand the challenges an eviction presents for a property owner.
So, obviously an eviction can happen. It’s not pleasant for anyone when it does; but it can be managed, and in such a way that much of the financial damage can be negated for the property owner. It does take navigation and a certain understanding of things. Anyone who has had to spend anytime in an eviction court will see how much worse an eviction can get for an owner if its not executed correctly.
When is Rent Due?
Rent is due on the day of the month indicated in the lease. Typically this is on the first day of the month. In most respects, the rent is considered late on the day after this day. However, tenants are given a Grace Period, before a Late Fee is to be applied. The Grace Period is also defined in the lease agreement; and our lease typically states it as four days. This period of time isn’t arbitrary, rather it's based upon a common State & City minimum amount of days allowed by law before a property owner or a property manager can penalize the tenant with being late.
Rent Late Fee
In Philadelphia, when a tenant pays their rent late, we are allowed to charge a maximum late fee of 10% of the monthly rent, after the grace period. We are also allowed to charge the tenant a modest charge for each day that they are late after that grace period day. By modest, we are only allowed to charge a reasonable amount related to what it costs a property owner by not getting their rent on time. This charge is not set as punitive, with the intent punish a badly behaved tenant (though it certainly does that) but it is to compensate the owner for any losses incurred. In other words, if the owner loses banking interest they would have earned if the rent was in an account or the cost to borrow money.
Both the Late Fee and the Daily Late Fee amounts are both defined in the lease agreement. We typically set the maximum allowed late fee of 10% and a daily late fee of $7 there after. We feel anything above a $7 daily late fee might be deemed excessive by a Philadelphia Judge.
Grace period aside, rent is considered late the day after its due date. But we typically start the eviction clock the day after the grace period ends. While it’s important to start an eviction process immediately, as it’s a legally timed process, we still need maintain the grace period mindset with our tenants. However, we do have to start the clock to evict, as certain preset amounts of time will need to be given to the tenant.
Almost always the tenant pays before the grace period is over, and they are never actually affected by the steps we take to evict them. In rare occasions a tenant will pay after the grace period and, in those cases, we attempt to make contact with them and warn that they will need to take immediate action to avoid our next steps. At this point, a tenant that intends on paying their rent, will pay their rent; as the next step is to post a Ten Day Pay or Quit Notice. When possible this is done by mail, text, email & also posted upon their door. A Ten Day Pay or Quit Notice is the legally required posting that begins the ten day countdown to when we can begin the tenant’s eviction.
Obviously, the goal here is to avoid this step as an eviction notice posted to a door isn’t good for the tenant, for us, the neighbors nor the property owner. But if a tenant hasn’t paid their rent at this point, we likely know they don’t intend to pay it and we need to get them out as quickly as possible so we can get a tenant back in there who will pay the property owner the rent. Generally, by now we know the tenant’s mind as we have made it appoint to know their intentions. We want to know if the tenant just can’t pay and is moving out shortly or if they will they require us to force them out by an eviction. Even tenants that intend on not willing vacating can interpret the Ten Day Pay or Quit Notice to mean they are to legally vacate within ten days. And some will leave by then.
After we post the 10 Ten Day Pay or Quit Notice, we will reach out to an eviction attorney and ready them should we need their service. If it appears this will be going to the Philadelphia eviction court, there are several advantages using an experience attorney, that is also well known in that courtroom. Currently to the date of this article the cost to the property owner is $721.00. The reason it is so low is that we work directly with the attorney and handle some of the processes which saves considerable delays and expense. This is important as the attorneys goal is to get you an eviction; but as your property management company, our goal is to get you vacant and back to the rental marketplace asap.
Statistically, it is very rare for a tenant to actually show up to court to defend themselves. It would take a very bold tenant willing to stand in front of a judge and a full courtroom and state they just don’t feel they need to make rental payments. Add that they have to face our attorney and the fear they might have thinking they might have to look us in the eye when they say this. And if the tenant doesn’t show up at the designated time for the hearing, they will automatically lose the case and a default judgement will be entered in, in favor of the owner. Again, few tenants show up to court.
However if the tenant enters into an agreement with the owner, before the court date, the tenant will need to attend the hearing to solidify it.
If the tenant actually does show up to resist the eviction judgement, they can negotiate with us, as the property management company. In this case, typically, the first goal is to get the non-rent paying tenant out of your property, as quickly as possible, so we can get a tenant in who will make their rental payments on time.
Also, a tenant who feels they don’t need to pay a property owner their rent, is more likely to be a tenant that will cause damage to a rental property. These are two very good reasons for a property owner and his management company, to negotiate a vacancy agreement. The third being, that its very hard getting blood out of a stone. Any agreements involving money are suspect as we already know we have a tenant unwilling, or capable, of meeting financial obligations. However, we do seek as much financial recovery as possible for the property owner.
I understand the fear of an eviction can bother a property owner and it can cause damage to the rental investment’s bottomline; but an eviction can be avoided, and generally is by proper screening. And if you are facing an eviction, as a property owner, we do have experience, and systems to navigate your property through it. Done right an eviction can be less painful than most property owners might realize. And we are ready for it.