Landlords Try for a Better Lot : Services Help Owners Evict ‘Bad’ Tenants
The villains are the ones in the black hats and the good guys are the ones in the white hats.
But ever since the silver screen days of Hopalong Cassidy, life has gotten a lot more complex than this, and in few areas have the good guy/bad guy roles become more muddied than in the relationship between landlord and tenant.
The occasional, highly publicized slumlord and the more common landlord who is simply insensitive to tenant needs, have painted virtually all holders of non-owner-occupied residential property with the same, broad, black brush.
And the landlord, so goes the common feeling, holds all the aces. In virtually no other economic activity does the simple role of being an investor--and, by investment standards, a small investor at that--carry such a stigmatic risk.
‘Mom and Pop’ Operations
Even within the membership of the Apartment Assn. of Greater Los Angeles, considered the nemesis of all renters by public interest lawyers, the average card-carrying member, according to Charles A. Isham, its executive vice president, owns an average of 12 rental units--a comfortable portfolio, but a long way from the “mogul” status.
And the smaller he is as a landlord--and there are thousands in the Los Angeles area who are literally “Mom and Pop” operations owning and managing only one or two rentals--the more likely he is to be a victim of the legal system as often as he is a victimizer.
“We had this elderly lady come to us for help, but there really wasn’t much we could do,” according to Richard Weldon, a partner with Craig Doolittle in San Marino-based AAA Credit Service.
“She has an older house with five units, but with two of them vacant. The city has ordered her to tear the house down but to do that, she has to pay each of the three tenants a $5,000 relocation fee because they are either over the age of 62 or have minor children. Where’s she going to raise $15,000 in addition to losing virtually her only source of income?”
Legal Rights of Landlord
In a society that has become increasingly sophisticated and litigious on behalf of tenants, are there subtle signs of a shift in the pendulum--the timid emergence of a small growth industry built around the legal rights of the individual landlord?
As personified by AAA Credit Service, the category “Eviction Services--Residential” wasn’t even carried in Pacific Telephone’s previous Yellow Pages. The current edition has five such listings.
Also a reflection of a new interest in the small landlord as a viable market in himself, perhaps, is the unique Westlake Village-based Secure One, a property management firm specifically designed for the single-family home investor, which goes the ultimate step--from tenant screening to plumbing repairs to a complete guarantee of the owner’s rental income. (See accompanying story).
AAA Credit’s Weldon, with 18 years of experience in the county court system, put it this way: “We felt that there was a real need for this sort of service for small landlords because it’s a tough business, and it’s easy to make mistakes unless you’re really used to doing it. And, let’s face it, it’s a rare landlord who has had any experience at all.”
Intimidating Experience
Even the simple action of serving the tenant the required three-day notice to “pay the rent or quit the property,” can be an intimidating experience for the average small landlord, ill-equipped to face a tenant who may be physically or verbally abusive, Weldon added.
“Most of the people we use to serve the notices are former police officers and are used to this sort of thing and who tend to look authoritative,” he said. “so we haven’t had any altercations yet, but the potential, I suppose, is always there.”
AAA works on a flat $100 fee for unlawful detainers (evictions), but with a payment, up front, of $200, the unused portion of which is refunded. “Typically, the costs are between $75 to $125,” Weldon added, “but if the action goes to trial, an additional $75 attorney’s fee is involved.”
Almost invariably confronting the small landlord bringing an unlawful detainer action, Weldon said, is a corps of lawyers--some associated with public service agencies, but many simply acting as free-lancers--who “go to all the courts, scan all of the unlawful detainer actions that have been filed, and then contact the tenants and for $75, will file an answer for them that will give them another three or four weeks in the property. The tenant doesn’t even have to show up in court.”
Delaying Tactics
Even after a judgment has been received and the marshal has posted the property, another $75 retainer will tie the actual eviction up for another couple of weeks, Weldon said. Other tactics--such as one of the tenants claiming that he lived in the affected apartment, too, but was never served the proper papers (every adult living in a property must be served), can buy a few more weeks and, ultimately, a filing of bankruptcy can drag the actual repossession of the property out for months.
“The average eviction,” according to the apartment association’s Isham, “takes about three to four months, and with bankruptcy, the tenant can frequently stay there, rent-free, for as long as 18 months.
“And it’s not just the unsophisticated homeowner who gets caught up in this thing. I had a friend who was pretty knowledgeable but inexperienced, and he had a luxury house on Mount Olympus that he was anxious to rent. So, this high-flyer blew into town, claimed he had been transferred here from another part of the country and was desperate to get a home right away because his family was already en route.
“He flashed a big roll of bills and my friend let him take possession without any further checking. That was the last cent the tenant paid and, by the time my friend was able to get the guy out--months later--he had lost the home through foreclosure.”
Available Protection
Both large and relatively small investors who take their real estate holdings seriously have a fair amount of protection available either through property management firms or, in the case of smaller investors, through membership in Isham’s association.
The long-established Beaumont Co., for instance, according to its vice president, Gary R. Holmes, caters to the larger individual investors--those with anywhere from 25 or 50 units to as many as 200--and to institutional investors. In all, Beaumont manages approximately 12,000 apartment units and takes care of everything from tenant screening to physical maintenance of the properties, collection of rents and, when necessary, evictions.
“Property management fees by law are negotiable,” Holmes added, “but normally range from 4% to 8% of gross rentals. There’s a big difference in managing an apartment complex a few blocks away that generates $30,000 a month in rentals and managing another one in Agoura that generates $3,000 a month.”
Through membership in the Apartment Assn. of Greater Los Angeles ($45 a year plus $2 per unit), Isham’s 25,000 members have the services of the association’s staff attorney, Trevor Grimm, and the association’s own paralegal staff for routine telephone inquiries on legal matters.
Screening Tenants
Carrying through on normal evictions, Isham added, runs in the neighborhood of $200 to $250 in legal fees “although it’s higher than that when the tenant takes bankruptcy.”
But probably the greatest value to the membership, Isham said, is the association’s screening of prospective tenants.
“For $6.50, we will run a consumer credit check on his paying habits through Trans Union Credit Information,” he said. “For another $6.50 we can check on any previous evictions in his background and, through our nationwide affiliation with Telecredit we can, for $4.50, get a complete profile on any bounced checks and similar banking problems he’s had.
“Proper screening takes care of about 95% of the problems. I own a number of apartments myself, and I haven’t had to go the eviction route for more than five years.”
Like true love, the course of the relationship between landlord and tenant may never run entirely smoothly all the time--but resolving disputes from an equitable footing could be a big step in the right direction.
