Multifamily Tenants Who Lease And Disappear, What Do You Do?

Multifamily owners know it all too well: new tenant, everything looks great, but no one shows up on move-in day. What should you do?

A Tenant Signs the Lease and then Vanishes. What do you do?

The prospective tenant passed your background check, they were very welcoming in the showing, and really everything looked great when you signed the lease. But then when move-in day comes, nothing happens. The tenant is nowhere to be found. Plans can change on a dime. Below are suggestions on handling and preventing cases like these.

Multifamily Insiders’ Joel Killinger spells out one of the worst nightmares for a multifamily owner: a signed lease, but no tenant and no rent. But, he says, it’s about handling it the right way. If you’ve “signed a lease with a tenant, it is a binding contract and you must go through the same legal process as any other tenant”. He does acknowledge though:

This will be a unique circumstance since the tenant is not presently occupying the unit and may not see the notice on the door.

He advises that you should “post the notice there” anyway.

Follow The Laws On Notice And Access

When you’re giving the tenant a 3-day notice, Killinger says “you as the landlord need to make every attempt to clearly communicate” the notice, and adds:

This means not only posting a notice on the door of the property, but also emailing, making phone calls, and any other possible form of communication you have at your disposal.  After this period of time, and you have established that the unit is vacant, you then will be able to go back to putting the unit on the market.

And if you want to enter the unit to verify if the tenant is there, remember to give 24 hours notice. But Killinger rightly points out that “this will simply extend the timeline to getting the unit filled with a paying tenant”. Thus his recommendation is simple:

If you haven’t received the rent payment on the day it was due, simply make the 3 day notice to pay rent or quit and go from there.

And Don’t Make This Mistake

Killinger says that lots of landlords err by not asking for the rent until move-in day. His take is:

If the tenant doesn’t move in, then you’ve wasted valuable time that could have been spent marketing your vacancy to other tenants.  You’re also out of revenue from the lease during that period of time that you are serving the notice to pay rent or quit and establishing that the unit is in fact vacant.

His suggestion is that “it’s much better to have the tenant pay you a security deposit on the same day you sign the lease”. If you go that way, he says:

If the tenant never moves in, that security deposit usually can mitigate the lost rent and cost of marketing during that awkward period of trying to notify the tenant to pay rent or quit.

Get Expert Help

Your multifamily asset is worth a lot of money, and empty units don’t help the investment at all. You need to work with experts who understand not only the multifamily market, but also how to handle the business side of ownership.

As the Eugene-Springfield area’s experts on multifamily, Pacwest Commercial Real Estate has the professionals you need to maximize your investment. Give us a call today at 541-912-6583!