Post-COVID Leasing: Self-Help Eviction of Tenants that Don’t Pay Rent
Throughout the course of this pandemic, landlords have found all kinds of creative ways to support COVID-19-strapped tenants who can’t pay rent. When the history is written, it is likely to show that working together to find mutually workable solutions was, in fact, the most effective approach.
But there’s also another way to deal with tenants who don’t pay their rent: Evict them. Landlords in at least some states can also resort to the leasing equivalent of a nuclear option, one that you can execute without going to court. Here’s a look at what’s known as “self-help eviction” and a three-phase strategy to implement if you want to position yourself to use it.
The Pros & Cons of Self-Help Eviction
Self-help re-entry/eviction is a remnant of the law of the jungle when tenants who didn’t pay rent ran the risk of finding that their locks had been changed. Modern leasing laws have severely limited and, in many parts of the U.S., completely taken away that remedy. However, there are 32 states where self-help eviction is or may be available to landlords. It’s not uncommon for landlords and tenants in these states to negotiate for self-help rights in their lease.
The biggest advantage of self-help eviction is that it enables you to get rid of nonpaying tenants without the hassle, expense, and risks of going to court. Simply having self-help eviction rights dramatically expands your leverage over the tenant, especially at a time when COVID-19 government orders temporarily banning commercial evictions are expiring. “When tenants know you can legally re-enter the premises, they’re more likely to pay rent or, if they can’t afford it, vacate voluntarily,” according to a New York City leasing attorney.
But there are also good reasons why so many landlords and attorneys are reluctant to actually exercise their self-eviction rights. Self-help eviction is highly risky. There are strict limitations on when you can use it, and the process must be done exactly right. In addition to restoration of the tenancy, slip-ups can result in liability for wrongful eviction, trespass, punitive and other damages, including compensation for damage to the tenant’s goods.
Example: A landlord in Ohio where self-help eviction is allowed changed a tenant’s locks without providing the required notice. The court found the eviction invalid, reinstated the tenant, and awarded it damages for the retail value of the goods the landlord damaged in re-entering [Wagner v. Weaver, 2010 WL 892108 (Ohio App. 3d Dist. 2010)].
You should also be aware that resorting to self-help eviction makes you the bad guy. So, if you do get sued, the court may go to great pains to find a way to protect the tenant.
3-PHASE SELF-EVICTION STRATEGY
If you have the stomach for it, there are three sets of legal issues you must address to make effective use of self-help eviction:
- Whether self-help eviction is legal in your state;
- What kind of lease language you need to establish your self-help eviction rights; and
- The steps you take when and if you actually exercise your self-help eviction rights.
Phase 1: Confirming that Your State Allows Self-Help Eviction
Self-help re-entry is never allowed for a residential lease. But it may be okay for commercial leases, depending on which state you’re in. The breakdown:
- 12 green light states: Peaceable self-help eviction of a commercial tenant is legal in Alabama, Alaska, Arizona, Georgia, Hawaii, Maryland, Mississippi, New Jersey, New York, Ohio, Texas, and Wisconsin;
- 7 yellow light states: Self-help eviction is allowed but only in cases of abandonment (or other specifically defined and limited situations) in Idaho, Massachusetts, Missouri, Montana, North Dakota, Virginia, and West Virginia;
- 18 red light states: Self-help eviction is illegal in Arkansas, California, Connecticut, Delaware, Florida, Illinois, Louisiana, Maine, Michigan, Minnesota, Nebraska, New Mexico, North Carolina, Oklahoma, Pennsylvania, Rhode Island, Tennessee, and Washington (and in the District of Columbia); and
- 13 unclear states: There are no statutes or reported cases banning self-help eviction, meaning it may be legal, in Colorado, Indiana, Iowa, Kansas, Kentucky, Nevada, New Hampshire, Oregon, South Carolina, South Dakota, Utah, Vermont, and Wyoming.
Phase 2: Creating a Legally Sound Lease Clause
Even in states where self-help eviction is legal, landlords may resort to it only if the lease specifically reserves its right to re-enter the premises upon tenant’s breach of its duty to pay rent. Like our Model Lease Clause: Reserve Your Right to Engage in Self-Help Eviction of Nonpaying Tenants, your self-help eviction lease clause should spell out and indicate the tenant’s agreement to the following five points:
- You and your agents, representatives, and employees may immediately or at any time (including any grace period that applies) after the tenant fails to pay rent or additional rent, re-enter and take back the tenant’s space;
- Your self-help eviction right is given in accordance with your “common law rights” of peaceable re-entry;
- You’re not obligated to get a court order, start an eviction proceeding, or take any other action before exercising your self-help eviction rights;
- You can remove any people and property remaining in the tenant’s space when exercising your self-help eviction right; and
- You won’t be liable to the tenant for exercising your self-help eviction rights and removing the tenant’s property and occupants from the space.
Phase 3: Executing the Self-Help Eviction Peaceably and Legally
Self-help eviction is legal in your state, your lease clause is in order, and the tenant has defaulted on rent. Now comes the hard part: carrying out the actual process. There are three basic rules:
Rule 1: Tenant must be in material default. Self-help eviction is allowed only if the tenant really is in default of its obligation to pay rent. While that may seem obvious, it’s often the crucial point in litigation challenging the validity of the landlord’s re-entry. And if it turns out that the landlord was wrong about the tenant’s being in default, it runs the risk of not only significant damages but also liability for criminal trespass. Bottom Line: It may be inadvisable to exercise your self-help rights when the tenant disputes or there are any doubt or questions about the tenant’s having defaulted on its rental obligations.
Rule 2: Landlord must give tenant proper notice. Even though landlords don’t have to initiate formal legal proceedings before re-entering, they do have to first give the defaulting tenant proper notice—that is, the notice required by the state’s real property law and the lease itself. Thus, for example, the reason the Ohio landlord lost in the Wagner case cited above is that it initiated its self-help eviction without giving the tenant the nonpayment notice the lease required.
The first thing landlords must do is serve tenants a proper notice of default and opportunity to cure that should typically include:
- A demand for the rent;
- The amount due; and
- The period for which the tenant is in default.
In addition, the notice must be served in a timely manner that’s specified by the law or lease, including any grace periods required.
Rule 3: Re-entry must be peaceable. Last but in no way least, the self-help re-entry process must be carried out peaceably without violence, force, or intimidation. In the words of one court, landlords must refrain from engaging “in any unusual activity that would bring about a breach of the peace, such as entering with a strong hand, or a multitude of people, or in a riotous manner, or with personal violence, or with the threat and menace to life or limb, or under circumstances which would naturally inspire fear” [Fults v. Munro, 202 NY 34, 42 (1911)]. Things landlords can do to keep things peaceable and protect themselves from liability:
- Re-enter at a time when the tenant’s business is closed and there are no people on the premises;
- Change the locks or padlock the doors after re-entering;
- Photograph and inventory all items of property that you remove from the premises;
- Place those items in storage for a reasonable period of time (or for as long as the lease requires if it includes a specific provision addressing this contingency); and
- Videotape the entire re-entry process.
See The Model Tools For This Article
|Reserve Your Right to Engage in Self-Help Eviction of Nonpaying Tenants|
|Lawscape: Landlord Commercial Self-Help Eviction Rights by State|