Default of a Lease for Nonpayment of Deposit

Safe Deposit with Cash

There are a number of reasons that a lease can go into default, but the primary reason is for nonpayment of rent. This story is a recent example of lease default happening because the tenant didn’t pay the deposit as agreed.

Rarely will we allow for payment arrangements on a deposit. We did it this time because of the location of one of the houses. We hadn’t found a tenant for a couple of months and the owner was desperate to have his house occupied.

When we were in negotiations, the tenant agreed to pay ½ of the deposit and the other ½ on the 15th of the following month of December. The 15th of December came and went. On the 4th of January we received the monthly rent. Even it was a day late and the tenants hadn’t changed the utilities into their name either, so we had rent and utilities due.

In our TAR lease, it allows for rent to be applied to past due balances. When we received January rent, we applied a portion of the rent to pay for the past due deposit. This caused the full rent amount to be late and allowed for us to send the tenant a 3-day notice to vacate, setting the stage for an eviction to be filed.

When the tenant called after receiving the 3-day notice, we explained what had happened and that an eviction would be filed as soon as the law would allow. The tenant told us that she’d be in on Friday to pay the balance. We told her that the eviction would be filed on Thursday, the day before she said she would be in with the balance of the rent.

She was told further, that if we filed the eviction, the eviction would be recorded on her name for any future attempts she may have in renting. She decided that she could find money and would come in on the Wednesday before we were to file the eviction.
All of this happened in the first month of the tenant living in the house. It is an example of what not to do, settling for less-qualified tenants. I hope this works out for the owner. It sounds like it might. I’ll give you an update next week.

Until next time,

Cary

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