In this third installment of our five-part series on the “Legal Side of Park Ownership”, we’re going to examine the entire evictions process – from A to Z. And we’ll include some insider secrets we’ve learned along the way to save you money and make the process go smoother. We’re also going to give you our ideas on the moral aspects of evicting and why you should not be judgmental but simply accept the fact that sometimes bad things happen to good people and the act of evicting a resident is a lose/lose. With over 70% of U.S. households lacking even $1,000 in savings, this is a big issue even beyond the affordable housing sphere.
Frank Rolfe: One of the big challenges to affordable housing is collections. It makes complete sense. Obviously, collecting money is tough when people don't have a lot of money laying around. This is Frank Rolfe of the Mobile Home Park Mastery Series. I want to go over the legal side of park ownership in our five-part series. This is the third part in our five-part series. We're going to be talking about evictions. What is an eviction?
An eviction basically is a court-ordered sanction in which the resident is forcibly removed from the property by the landlord using a legal process known as an eviction. Here's how an eviction works. Basically you have rent that is due on a certain date, typically the 1st of the month, typically late after the 5th of the month. So, you have a grace period of the 1st to the 5th. Thereafter, if you don't have the rent, you send what's called a demand letter.
Now, the demand letter varies by state, even sometimes by the courtroom of the city that you're in. Typically, there's required one demand letter, but in some states there's required two demand letters. The demand letter says, "You didn't pay your rent, and this puts you on notice. If you don't pay your rent, I'm going to file an eviction." So, it's basically an interim step before the legal process begins just to make sure the resident is fully aware they did not pay the rent and letting them know they need to do it or an eviction will be started.
A lot of people when they get the demand letter, they go forward and then pay their rent, but then there are those who do not. So, if the demand letter time elapses ... It ranges, again, by state. It could be three-day, 10-day, and some states, two of them, maybe a 10-day and a three-day. When that time ends, you then have the ability to file an eviction.
Now, what is an eviction? An eviction basically is just typically an 8-1/2 by 11 sheet of paper in which you fill in the blanks: the name of the resident, the lot number they're in, how much they owe you, how much it is per day, and you sign that and send it in with a check, and that starts the process. What happens then is, the court that you send the evictions process in on, they go ahead and go out and serve the resident with notice that they are being evicted. That one step alone will often make the phone ring and the money come in the door, because the resident really does not want to be evicted.
However, if they don't get the money in then, you show up in court. You show the paper trail: typically the lease, a copy of the demand letter, a copy of the filing. You warrant that no money's come in. Then the resident gets to say their piece. However, what most people do not realize ... in most courts there's nothing they can actually say that will stop the proceedings other than, "Hey, I paid it. Here's a receipt." If they say, "I didn't pay you, because it rained, and there was water standing in my yard," that doesn't work in the evictions process in most states. They could file a separate action if they'd like for that, but it won't stop the eviction. The only way you can typically stop an eviction in most states is to prove the money was paid.
Following the eviction, which the landlord typically always wins, unless you're in tenant-friendly states like California, where it can drag on for months and months, then what happens is the resident either needs to pay you or they need to move out. If they don't do either, then what you do is you file for what's called the writ of possession or in some states a writ of execution. Now the constable will go out again and post on their door a notice saying that within 24 hours they will be thrown out on the street. Then, literally, that's what will happen. The constable will go. They will open up the door. They will take, and box, and throw the resident's stuff out on the curb. They will escort the resident off the property and advise them they cannot come back on. It's a pretty gruesome proceeding, really, and it's a terrible thing to have happen. Most parkers never want that to happen.
Now you know how evictions work. Let's also talk about some of the corollaries of how you can not evict somebody, because, really, as a successful park owner, it's more important you know how not to evict than how to evict. How do you not evict? The first thing is, always affirm with people what a great value your property is and make it as good as it can be. Maybe give out a newsletter, try and build a sense of community. Make it where people don't want to leave; they want to pay their rent. That's the first rule as to not make an eviction.
The second thing would be, if someone hasn't paid the rent, try and see if there's any way to urge them to do it in a friendly fashion. We've had properties where the manager was an integral part of this. They went over and would constantly knock on the door and ask the resident, "Hey, is there anything I could do to get this rent paid? I really don't want to lose you as a resident." Sometimes that gentle nudging does the trick. That keeps you so top-of-mind that they actually then go out and find a way, whether they borrow the money, or get a second job, or do something to get the rent paid, and that's fantastic.
Now, if you fail there, basically if someone doesn't pay, and now you're going to court on the eviction, don't get it so stern in your attitude that you want to now punish them and evict them. Many residents come up with the money during the evictions process, but you're not required to take it. Even if you take it, you're not always required to let them remain. I think that's a bad idea. I think we all know from the beginning that we're in the affordable housing business. If someone pays you and is struggling to pay you, they possibly have a problem that you yourself would have in the same position. Maybe the car broke down; there's some other expense, maybe a medical cost. So, don't be so judgmental. If they pay you during the process, call off the eviction and let them remain.
Oftentimes I see park owners who get all bent out of shape, "How dare the person not pay. I'll show you. I'll throw you out of your home." That's not good for anybody. That's not smart for you as a park owner, nor is it good for them as a resident. So, don't be judgmental. If someone can get the money in prior to the moment that you were going to get the writ of possession, by all means, take it and then move forward.
In other cases, you're better off not filing the eviction and simply going to the resident and doing what's called cash for keys. You say to them, "Hey, I know that things aren't working out for you. I'm very sorry for that. So, here's what I propose: I will give you X dollars if you can be out of that home by, let's say, Monday." The benefit of this is, if you can do that at a price less than the cost of going to court, you're money ahead, because there's no time delay. That person will be out much faster than if you have to go in and get the eviction and later the writ of possession.
So, cash for keys is, again, a very good way to get the customer to pay, because as a park owner, about the worst thing that could happen to you is to actually evict a tenant. When you evict a tenant, not only are you out the money of the eviction, but, on top of that, now you've got a vacant home that you have to go in and renovate. Then, after you renovate the home, you're going to have, obviously, not only the cost of your renovation, but the downtime where you didn't collect want rent. So, really, it's better off, if you can, just to get them out quickly, and often it'll be at a much lower cost. If it costs you in a certain market ... the eviction costs and bringing an attorney to court ... let's say $700, and let's say that takes three weeks to do, would you not be better off giving them, say, $300 to leave immediately?
Some park owners tell me, "Oh, gosh. No, that doesn't seem morally right to me." Well, why is that morally of any importance at all? People have tough times. This is the affordable housing business. Things happen. Before you get too aloof and think, "Oh, gosh, that would never happen to me. I would always pay my bills on time," I would think you're not actually thinking clearly, because when you don't have a lot of money, the slightest thing can cause all kinds of problems. You're probably aware that 70% of all Americans do not even have a thousand dollars in savings. So, really, as a nation we're all flying about 500 miles an hour about two feet off the ground, and the slightest shift in wind is going to make your little plane hit and crash. So, again, don't get in a moral outrage ever when trying to collect money. It just goes with the business. It's affordable housing, and that's the kind of thing that occurs.
Now, there's two types of evictions you should know. There's a money judgment eviction ... That's where you get a judgment against a resident for the unpaid rent ... and then an eviction for possession, in which you're not striving to get a money judgment, simply get the resident out. In some states and courts it's a lot easier to get a possession judgment and not a money judgment. If that's the case, you probably don't need to get the money judgment, because you're probably never going to collect a penny on it, anyway. So, learn the court and see how it works. If the judge is much happier to give you a judgment for possession, then I would probably go that angle.
Another trick people don't know is, if you don't know the name of the resident ... Let's say you bought the property and you never got their full name, or let's say they put somebody else in the home and left at some point ... you could always file an eviction and/or all occupants. It's allowable in most states. What that is, is that's a blanket eviction for whoever's in the home. If the last known person's name is John Smith, you would file the eviction as John Smith and/or all occupants, and that would get the job done.
Another thing you should know is it's possible that the resident could file after the eviction an appeal. However, it rarely happens, because to file the appeal they have to post a bond, as much of the money they owe you in rent. If they had that money, they obviously would pay you the money in rent. So, we really never see an appeal.
There's another thing out there called the Pauper's Affidavit. Now, a Pauper's Affidavit is really not that effective in most states. It is in California. Basically what happens is, the resident says if they are displaced, they will become living on the streets, so they need time to get into a social program. The problem with the Pauper's Affidavit is they will have to prove they, in fact, will be homeless, that they have effectively no income in their job. It's very, very rare that someone would file that. I've never been in one that they won, because typically they always do have that job, whether it's at Jack-in-the-Box, or the tire shop, or whatever. The simple act of having the job typically makes you not allowable under that.
Now, some other things you need to know about evictions ... Here are some interesting things: one, you can file the eviction from nearly anywhere in most courts, which means you don't have to go down to the court and do it in person, as some park owners think. Instead, you simply fill out the document from afar, mail it in with the appropriate check, and the eviction has been filed. That's very reassuring to people who think, "Well, gosh, how do I file an eviction from 1,000 miles away?" It's easy. It's called a postage stamp. That's not very hard.
Another trick? There are attorneys out there who do just evictions that typically charge anywhere from $50 to $300 per case. How do you find them? Call local apartment complexes and find who they use. Just like those traffic ticket attorneys who just do traffic tickets, these guys only do evictions, and they're a fraction of the price of a traditional lawyer. If you were to send a regular lawyer out to do it, it might cost you $2,000 or $3,000. The evictions attorney might cost you a hundred or two hundred dollars.
Final item: Judges typically always rule with the landlord. There are a few states where this is perhaps not true, California most notably. In most states in America, if you don't pay the rent, the court system has not much sympathy for the fact that you're going to get evicted. If you are losing evictions, the problem is something with you, not with the court system.
I had a case once where I was losing eviction over eviction in a certain mobile home park court. I thought perhaps the judge was against me. So, one day I showed up at the court unannounced. When they read off the evictions, the manager stood up and said, "I want to dismiss that case, Your Honor." The next case, "I want to dismiss that case." Basically, they dismissed every single case. I then confronted the manager as to what was going on, and they admitted that, in fact, they'd been dismissing all the cases when they were called in court, because they felt physically threatened by the residents and, as a result, thought they'd be beaten up if they didn't dismiss the case.
At any rate, evictions, something that it's not worth getting afraid of. You can learn the process very simply. Most of the cards are stacked in your favor. Most of the courts are fairly easy to work with. Use an evictions lawyer. Use your head. Try never to evict anyone if you can help it. Never have any moral outrage or any insensitivity against the customer. Again, it's affordable housing, and things happen.
This is Frank Rolfe with the Mobile Home Park Mastery podcast. We'll be back again soon with a little bit on contract law.