OK, my blood is running a little hot at the moment, though its cooled down a bit. I need to organize my thoughts here, so I can prepare for a meeting with my roommates this Sunday.
I came home late tonite, and found one of my roommates still awake. I had sent out an e-mail last Friday outlining some of the things I wanted taken care of before they move out (June 1). I hadn’t heard back from anyone, so I assumed everything was kosher.
Not exactly.
There are likely to be two potential flashpoints
1. Back Utility Bill
We didn’t get a heating bill all winter (thank you puget sound energy), and then got a big 1K one in Jan. They agreed to set up a 6 month payment plan.
Problem?
This should/needs to be paid off when the house sells.
Their Solutions
Their first solution (I heard this from the roommate I would actually consider a friend) was that they don’t pay rent for May.
Wow. I was floored.
Their second was that they pay me over the six months (leaving me to come up with the now over $1300 that is due….bear in mind, they know about my financial situation)
Wow.
2. Pro-Rated Rent For May
The second potential flashpoint is that they believe if they move out May 15th they should only pay 1/2 month’s rent. (bear in mind, they have given me no notice they are leaving, and I gave them notice 75 days in advance of June 1). I think the chances they will actually move out May 15th are very small, but still, this one really gets me going.
So, those are the two potential issues. Other points to consider:
1. We have no written contract. Everything was “month to month” (as I remember it, and I remember it exact. Apparently one roommate thinks he is getting screwed out of his “12 month lease”)
2. I never made them put down a deposit
3. There are at least a few hundred dollars worth of stains, broken fixtures, wear and tear, etc. (mostly occurring when they or their friends were over at the house wasted). I have told them they don’t need to clean the carpets when they move out, and they just need to have everything out of the house.
So, I don’t think I should waste my valuable time reading up on landlord laws….but maybe I should. At most, I’ll lose $750 if the pro-rated rent happens, and I’ll have to come up with $1300, though only 1/4 of that would be my actual expense.
Wow. Nice guys, huh? (maybe I am completely in the wrong here…but gosh, wow. I’m actually not shocked at this…I was just hoping for maybe a little uptick in decency from them. I guess not)
Sunday will be interesting.
{ 20 comments… read them below or add one }
stick to your guns. small claim court if necessary. verbal rental agreements are binding. if they agreed to pay their portion of utilities, then they owe for it. if they’re saying they can only pay over six months, and you believe them, then deal with it. i know it seems like a lot of money, $1.3k. i know you don’t have money or credit. and yes it will have to be paid on the property transfer.
i had problems with tenants. they think landlords have it good. they think landlords try to rip them off. they think if you own a house then you are doing great. my calm but firm position is that they pay every penny. but sometimes you float debt, and sometimes you get ripped off. stay calm and stick to the spreadsheet. insist on every penny. pick out the biggest deadbeat who can pay, and drag him to a judge. kick their asses because they’re creeps.
I am 24 and I have a house that I bought that I rent to ‘kids’ as well (in college). There are two problems here that should have been dealt with before they became problems. First, you should have been receiving statements from the energy company saying how much each month’s usage was and you should have added that to that month’s rent (so no large payout at the end like you have now). Or better yet, you should have went month to month. This would’ve eliminated any issues. The second flashpoint you mention: 1. No written contract = dumb mistake. You will learn next time though.
2. No deposit = no money to use for repairs like you mention in 3. Always require a deposit. If you have a problem with asking your friends for a deposit, then you should not be renting out to them. Also, if you would have had a written contract, you could have specific clauses that the tenents be responsible for any repairs. Hang in there though, you can only learn from this. If you keep the faith, you’ll overcome this mess.
Arghh… I was worried they’d try this sort of crap. Be fair but firm. Unfortunately they think you’re a softy and vulnerable so you need to counter that. A lesson learned I guess – oddly enough I don’t insist on written agreements but I am very firm.
Can you set up a payment play with your Utility Company?
Oops, I meant to say plan not play!
I sympathize with your situation and I applaud your efforts to work through your debts.
However, I don’t think it’s unreasonable for your tenants to expect some flexibility from you regarding when they depart (re: prorating May rent). After all, you are imposing a burden on your tenants by kicking them out (granted, with notice).
Further, you don’t have a written lease that defines the obligations of each party. That is why your expectations and your tenants’ don’t match.
Keep your chin up. Good luck!
Be careful here.
I believe there is something in the law regarding a landlord collecting rent but not using the funds to pay the property expenses (i.e., mortgage). Check this out first because you could be treading on thin water.
Regarding your utility bill. If the roommates had benefit from heat, hot water, electricity, then they owe their portion of the bill.
Regarding the repairs – these guys should stand up and repair anything they damaged. However, I stress that it should be repaired. Is there anything in the short sale contract regarding these items (i.e., is the buyer expecting these items to be repaired?). If not, then you may not want to worry about it.
One final reminder – you are the landlord of these guys. They will be needing a reference from you. Remind them that your relationship is two way and that if they fail to perform, then you will have no choice to tell any potential landlords of damages, unpaid utilities, etc.
Regarding notice – you gave them 75 days. Since there was no lease agreement, they are not obligated to stay the full 75 days and can leave at anytime with a proration of rent for any partial month they live on the premises.
Are these rooms furnished? My advice would be to look for “short-term” renters (i.e., visitors coming from out of town for a week or more who don’t want to stay in a hotel).
More creative ideas for you later.
Wow, your friends/roommates/tenants were bigger jerks than I had imagined. Now I see more where you are coming from. Well, Tyler (#2) makes some good points worth remembering.
I understand a tenant wanting to prorate the last month’s rent, but wanting to skip out on the utility bills is unacceptable. Can you consolidate the utility bill in your debt management plan?
I’m a tenant in the exact sort of situation you describe (no contract, no deposit), but I’ve made it clear when I plan to move out (August). I painted the room in the house that I moved into when I moved in two years ago, and have done other small repairs gratis when the landlord bought the parts. I expect to pay the full month’s rent plus utilities when I move out, and I will still have gotten a good deal. YMMV.
Just FYI, the correct spelling is “etc” not “ect” and “a lot” not “alot”.
Knowing the landlord laws isn’t going to do much good unless you intend to take your “friends” to court. And trust me when I tell you that it’s probably not going to be worth your time.
Instead take a little time to realize that they probably feel a little bit betrayed here. The house that they live in is being foreclosed around their ears and they found out from a guy from the bank/court. And they are probably a bit hurt that they’ve been paying money to you and you haven’t been paying the bank (of course it’s none of their business, but even still).
As much as you need that money, speaking as a landlord myself, the best solution may be to split the bill and then prorate their last bill (if they move out in the middle of May, they only pay half).
For the record, I’m very much behind you and what you are doing. I’m looking forward to the day when I see a post that reads “today I payed off my last trading debt”. It’ll be a tough journey, but you are doing the right thing.
I am so impressed with your determination to dig your way out of the hole you dug yourself into. Don’t completely give up the idea of Bankruptcy, though – avoid it if possible, but don’t hesitate to file if you need to.
G-d bless you and give you success.
One thing that struck me is the fact that you didn’t bother to find out where the heating bill was. Did you call to ask? That kind of negligence doesn’t look good, and in court a judge would ask you that same question.
One of the other roommates was in charge of bills. So we all just gave him $ each month, and assumed that included the heating bill. Obviously that was a mistake on my part, and I should have noticed the bill was too low. But at the time, I still thought I was gonna make $10K that night trading…so, it didn’t seem important.
Then I would second the other posters who said to see if the utility would offer a payment plan. If you play hardball, they will often allow that so that they will actually see some money. Then have the roommates sign a contract. Once you have that, you can use the courts for leverage! And then I would punch the roomie in charge of the bills. That’s just lazy on his part.
Hi, found you from Casey Serin’s blog. While you initially made mistakes (like Casey), you are actually making concrete steps to fix the situation (unlike Casey).
The comments in response to this blog post are pretty good. I actually agree quite a bit with “The Landlord”’s comments. While you may be upset with them, it might help to address where they are coming from as well. You have also acknowledged that you have learned a lot from this experience, and I believe you will fix all of those problems in the future (again, unlike Casey).
I have traded some options myself (bought a few naked puts). I have only done this after doing a ton of research on the affected stocks, which include a couple subprime and Alt-A mortgage lenders (I am a financial analyst, so analyzing financials is my thing). I don’t day trade because it takes too much work and there is a lot left to chance. I prefer working on a 1-year time horizon by buying a stock that I think will be higher in a year, realize the lower capital gains tax rate by holding for a year, and then reassessing whether I should continue to hold the stock or sell it, or sell just a part of it to lock in gains. Of course you don’t want to think about any of that stuff right now, which is smart.
Hey, I’ve been reading your blog for the last few weeks (learned of you from crazy ol’ Casey), and like many others, have been really impressed with your determination and integrity. I’m not much older than you (27), and I will be graduating grad school next week and come out with $150k in debt (most of it school debt). I’m also really bad with my personal finances, so reading your blog has been really inspirational for me and motivates me to handle my business.
Anyway, I’m commenting on this particular post because it involves legal issues and I wanted to point you to this site: http://www.kcba.org/ScriptContent/KCBA/legalhelp/legalasst.cfm
Specifically, the Neighborhood Legal Clinics. They don’t take cases, but if you just wanted some quick legal evaluation of your landlord/tenant situation, or maybe bankruptcy if it comes to that, you should call them and make an appointment. It’s free, and a consultation will at least give you an idea of what your options are. If you need info on other legal-related issues, feel free to email me as I’m from Seattle and used to be involved in the legal community there (and will be joining it myself in a few month’s time!). I’d offer to help with some free legal research regarding your situation but I don’t want to do anything that will even come close to giving legal advice being that I’m not licensed yet.
Anyway, I wish you the best of luck with your situation. It’s kind of crappy what your roommates are doing, but I’m sure things will work out in the end. Take care!
You are actually only required to give your tenants 20 days notice when asking them to leave (for any reason). They are also required to give you 20 days notice. If they give you notice and the day that they leave is after the first on the month they are responsible for the entire months rent.
I saw this response in the “recent comments” bar on the right and clicked on it. This post and all but the last response are over a year old, and I think debtkid is long past the roommate/tenant situation.
However I wanted to comment on landlord22’s above post that seems to indicate you are only required to give tenants 20 days notice and the information regarding how the notice days are counted. I am not sure which state landlord22 is in, so the information may be accurate in some state. HOWEVER, in the vast majority of states, this information will not be correct; landlords are required to give 60, 45 or 30 days notice, and the notice must be prior to the end of a lease term. Do not rely upon posts like this for such information. Read your lease and research your state laws.
Wow, very interesting? And they were friends? how close of friends were they? Did you ever think in amilion years you would be in this position? Hi all I am about to be a homeowner and am struggling with the topic of renting to a friend, a best friend. Im petrified it will ruin our friendship….