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HOW TO CORRECTLY SETTLE OUTSIDE OF COURT​

Written by Connor Swalm

After sending your 5 day letter and before you actually are seen by a judge for your eviction there is an opportunity to save yourself months of headache and potentially thousands of dollars. You can save yourself all this time and money by settling with your problem tenant outside of court. Whether it is through a cash-for-keys agreement or a different arrangement, it is always worth your time to settle with your tenant without getting the courts involved.

    Every landlord can tell you that the worst thing about a problem tenant is the amount of time it legally takes to rectify a bad situation. Tenant’s may cause damage to a home, they may be late in paying rent, they may make unnecessary maintenance calls, but by far the worst situation is having to wait the 2 – 4 months (or longer) it takes to formally complete an eviction process. All the while the tenant is causing more damage to the property which costs the property owner more money and more time to rectify the situation. It is always in everyone’s best interest to settle outside of court.
     There is only one scenario where it might be in everyone’s best interest to settle in court and that is if you can verifiably prove the current tenant is purposely causing substantial damage to the property. If you can prove a tenant is purposely causing damage to the home then you will be able to see a judge much quicker and they will normally grant summary possession to the manager immediately to prevent the home from being destroyed.
      If your case falls in the other 99.99% of evictions, then it is in your best interest to settle outside of court. Keep in mind, pursuing settlement outside of court is not to be done in place of filing a formal eviction, you need to pursue both avenues in the event your problem tenant is unwilling to settle. If your tenant agrees to settle you can drop your case against them at any time.
      The first and most common method of settling outside of court is called cash-for-keys. This method is exactly what it sounds like, you call the tenant and offer them a certain amount of money to move out and hand in the keys. The amount of money offered is different every time, but keep in mind the cost of paying utilities, wear and tear, rent and late fees, insurance, a mortgage, etc. for the length of the trial and the likelihood the owner can recoup any of that through a debt action or judgement. We have seen anything from $200 to $2,000 to have a problem tenant willingly vacate the property, every case and every tenant is different.
     There aren’t many other ways to convince a tenant to give up their “free ride” in your property, and almost all of them are a slight variation on the cash-for-keys concept. As a company we have found one other method of convincing a problem tenant to willingly vacate a property: get the cosigner involved. Many cosigners are financially responsible individuals who were willing to help out a friend or family member by using their income to qualify for the property, so they might not even live at the property. We have seen cases where the cosigner isn’t aware of the nonpayment of rent until they receive their 5 day letter.
We will normally call the cosigner and explain the entire situation to them and how much in damages, unpaid rent, utilities, and extraneous costs in total we will be filing for along with summary possession. We then carefully explain to them that the eviction will be put on their eviction history as well, and that due to their financial position any debt collection agency will most likely seek to attach their wages first for the full amount.
     Then we hold out the olive branch. We tell the cosigner that we will not file for an eviction and we will not file for a formal judgement if they sign to a stipulated agreement. A stipulated agreement is a legally binding document signed by the court that lays out an agreement, where if any party violates their part of the agreement then the other side has grounds to immediately file a claim. We usually work out an acceptable payment plan with the cosigner or the tenant where they can pay a small amount per month if needed so that the owner can recoup some of their losses if the security deposit won’t cover the full amount.
     Whatever method of settling outside of court works best for your specific situation, it is always better than pursuing legal action. That being said, there are 5 things that need to be done when settling outside of court to protect you and the homeowner from any future legal troubles in regards to your agreement with the problem tenant.
 

     1.) Have All financially responsible tenants sign a document stating that they are willingly terminating their lease and vacating the property

     2.) Have the tenants hand you all keys to the property and get in writing that they handed you every key they have in their possession

     3.) Make sure all of their possessions are outside the property. Either have them put it all in the front yard to be picked up later or already moved out. If their possessions are outside the property, get in writing that they are aware their property on the front lawn will be disposed of within 5 days.

     4.) Take a walkthrough video of the entire home narrating damage as you go through the property (try to get a snapshot of the tenant in the video if you can)

     5.) Change the locks before you leave (this requires you to bring the new locks / keys to the property with you)

 

     If you do all five of these things it will be almost impossible for a tenant to bring a case against you. Even if they try to sue you for damages, you will have proof they willingly vacated the property, willingly turned in their keys which forfeits their ability to inhabit the property, willingly moved their possessions out of the property, and you have documented they have no possessions inside the home when they left the property.
     These are two of the only ways we have found of the years on how to settle outside of court. If you have found any other way to settle outside of court please let us know, we would love to hear it.