No money? No Keys!

Meet Bill.  He’s owned a condo in the West Loop for six years.  Two years ago, Bill got married.  He and his wife just closed on a new home in Wheaton.  Bill never intended to own his condo this long, but he could not find a buyer in the hosing bust.  He’d still like to sell, but the market is soft.  Things were fine when he was living in the condo, but he now owns a house and a condo and two mortgages.  Cash is tight and his reserves are running low.  Bill puts an ad on Craigslist to find a renter.  A few months and fewer showings later, Bill finds a person interested in renting his condo.  He’s relieved because his mortgages are due on the 15th and he doesn’t have the cash in hand to make both payments. “There’s only one problem”, the prospective renter explains, “I don’t get paid until the 6th, so I have the first month’s rent, but I don’t have the security deposit”.  Bill needs the money to pay his mortgage, so he drafts up a lease with the new tenant and includes a promise that the tenant will pay half of the security deposit on the 6th and the other half of the deposit on the 20th.  Bill takes the first month’s rent and hands over keys to his new tenant!  Now the trouble starts (after the break).You know the drill.  The 6th comes and goes and the tenant does not pay the security deposit due on that day.  Bill calls the tenant who apologizes and makes a reasonable excuse.  “Don’t worry, Bill, I’m getting the money from my brother and I will have it for you on the 10th”.  On the 10th, the tenant leaves a check in Bill’s mailbox for a little less than half of the amount that was due on the sixth.  There’s a tiny bit of email and text contact from there.  Then Bill calls the tenant, but no one answers…

If landlords take away only one tip from this blog this year, it needs to be this oneif a tenant can not pay the security deposit (if you are courageous enough to take a deposit) and first month’s rent when the lease is signed, do not rent to the tenant and certainly do not hand over keys!  Even better, make sure to get those initial checks in the form of a cashier’s or certified check to reduce the chance that they bounce.  Don’t take half rent with a promise that the tenant will come up with the balance plus the deposit later.  Don’t take no rent at all.  More often than not, it will end badly.

Once a tenant has keys to your property, the tenant has established a “tenancy” or a right to occupy the property.  Once a tenancy is established, a landlord cannot take advantage of “self help” to take back the property.  The only way the landlord can recover the property is if the tenant voluntarily turns over possession or with a court order for possession from a judge (obtained by filing an eviction lawsuit) that is enforced by the County Sheriff.  That’s it.  Period.

I get lots of calls from landlords wondering if they can change locks on a tenant who did not pay the security deposit or who bounced the first month’s rent check.  There’s an easy answer to those: NO!  Don’t lock out tenants, don’t cut off their utilities, don’t take off their doors, don’t change the keys!  All of those tactics constitute a wrongful eviction or constructive eviction and can land a landlord in a heap of trouble.

Be smart landlords.  Don’t rent out of desperation.  In the long run, it is way more costly.


About Richard Magnone

Co-founding member of Reda | Ciprian | Magnone, LLC, attorney at law and Illinois licensed lawyer since 1996.
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