Tips for Collecting Outstanding Rent

In our 10/16/22 post we discussed ways to avoid renting to financially irresponsible tenants.  Unfortunately, the reality is that non-paying or habitually late paying tenants are difficult to identify and avoid, even for those landlords who spent the time properly screening the tenant at the inception of the relationship.  Here are some tips on collecting from rent from tenants who have left the rental unit with an outstanding balance owed to the landlord.

Locating The Former Tenant

The usual first step in the process is locating the former tenant, since defaulting tenants seldom provide their forwarding address.

One way to start the process is to send a demand letter to the last known address on file, even if it’s the rental address.  Write ‘Address Service Requested’ on the front of the envelope.  In response, the United States Postal Service will research its database for a new address and send you a postcard with the corrected new address if one is found. You can also conduct your own, online research to attempt to locate a former tenant’s current address.  

Send Demand Letter

Once the tenant’s new address has been located, you can send a formal demand letter to the tenant for payment of the outstanding debt.   Consider offering to discount the debt by 20-30% in exchange for the debtor’s agreement to pay the reduced amount in full by a date certain.  You should memorialize any agreement by having the debtor execute a Stipulation for Entry of Judgment, which becomes effective immediately upon the debtor’s breach of his payment obligations under the agreement. 

Debt Reporting

You can also report the outstanding debt to the three major credit bureaus. It will then remain on those credit reports as a negative entry for unpaid rent, providing an incentive for the debtor to clear the outstanding balance in order to remove the negative entry from his or her credit report.  This will not work with habitual offenders, who typically are unconcerned with how their credit profile looks.   

Debt Collection Agency

If personal contact and credit reporting are unsuccessful, consider hiring a collection agency to pursue the debt. The best option for landlords interested in this method is to work with an agency specializing in the recovery of rental debt.  The collections agency will attempt to recover your back rent and charge certain fees during the process. Flat-fee services are done online and charge an up-front payment, allowing you to keep a portion of the proceeds.  Contingency services charge a percentage of the money collected, typically in the range 30%-60% of the recovery.

File Collection Action in Court

Filing a collections lawsuit against the tenant is a viable option for collecting past due rent.  Since this method normally requires a relatively significant investment of time and effort from the landlord, enlisting outside help can conserve resources and streamline the process.  Let Lynx handle the hard parts for you.  We will prepare all documentation necessary for you to start the case, and to resolve uncontested matters, guiding you throughout the process.  

Please contact us for more information or if you are ready to start a collections case.  We can be reached at 925-237-9216, toll-free at 888-441-2355, or by email at info@lynxlegal.com.  You can also schedule a free telephonic consultation with one of our representatives to discuss your issues by selecting the Calendly button on our website.