Good and bad tenants exist. That’s one of the realities that players in the rental business must accept and handle. Landlords, rental agents, and property managers must know how to deal with them, particularly the bad ones. One of the strategies that bad tenants have is withholding rent from the landlord to manipulate the latter to cater to their every whim, which is often unreasonable.
Withholding rent works similarly with tenants threatening landlords with a lawsuit. Knowing how to handle this manipulative tactic can save the landlord from being dominated. He must know how to diffuse the situation, know his rights, and what the law states.
However, it is also vital to acknowledge that some tenants who withhold rent have reasonable cause, which the landlord has to address.
What Landlords Can Do
The first thing a landlord must do is to know the tenant’s reason for withholding rent. If they stopped paying without expressing any reason, the landlord could issue a pay-or-quit notice because non-payment is a lease agreement violation.
Most of the time, the reason for withholding rent is for unrepaired damage. However, for states that allow tenants to withhold rent for that reason, the damage must be very significant that it negatively affects the safety or health of the tenant or other residents. Non-dangerous and non-hazardous damages are not valid reasons to withhold rent.
Withholding rent is also illegal if the tenant or his guest caused the damage. Repair for such damage should be at the tenant’s expense.
If there is legitimate damage that the landlord failed to repair, the tenant must provide a written notice to the landlord regarding the repair request. There must also be a follow-up notice and a statement of intent to withhold rent.
In some states, the law requires the tenant to deposit the withheld rent in an Escrow account to prove their willingness to pay the rent once the landlord resolves the issue. It would also show that the tenant is not withholding rent to avoid payment.
Also, some states only allow a certain percentage of the rent that a tenant can withhold. It may be equivalent to the repair cost, but not all.
The tenant can not dictate a timeframe to landlords for the repair. For major repairs, they often require third-party service providers who are more credible in determining the timeframe. Some tenants want to dictate a timeframe hoping that they will be free of the rent owed if the repair deadline lapses.
Tips for Landlords
• Consider Emotions
The decision to withhold rent is often emotion-driven. When the tenant is genuinely frustrated over unrepaired damage and is not simply avoiding payment, the landlord must make an effort to get to the root of the negative emotion. There may be a fault on the landlord’s part that he needs to correct, or the tenant may be going through something else. Either way, acknowledging such emotions to diffuse the situation is an effective way to start a rational discussion about the withholding of rent.
• Know the Law
Laws regarding the withholding of rent vary from state to state. Landlords must educate themselves on their local laws because they can use them as a reference in dealing with the issue. Explaining the law to the tenant will clear up when they can withhold rent and when they cannot.
• Be Responsive
Ignoring the tenant or delaying the response would only make the situation worse. Landlords must show a willingness to cooperate with the tenant but without appearing submissive.
Landlords must respond to tenant concerns as promptly as possible, keep communication lines open, and update the tenant with the courses of action taken to address the problem. When the tenant sees the landlord’s willingness, it will neutralize their emotions and might stop threats from coming.
• Document Everything
Proper documentation of all transactions and exchanges in the rental property will always be beneficial to landlords. Landlords must have a record of repairs done, repair requests, proof of the tenant’s non-payment, etc. All documents could come in handy if the situation escalates to court trials.
• Don’t be afraid to lose a tenant
If the tenant has no legal reason to withhold rent and continues to do so despite the landlord’s law-based explanation, the landlord must not hesitate to issue a pay-or-quit notice. If the tenant has a hidden agenda to avoid paying rent, meeting them halfway will not be worth it. Tolerating such behavior will only encourage them to repeat this form of manipulation.
Instead of being afraid to lose a manipulative tenant, landlords can ask their rental agent to post a vacancy listing on Padleads to find better tenants who will not use manipulative tactics to save themselves money.