Who Decides on the Eviction?

Credit — Written by Todd Ortscheid from PMAssist Industry Insights 

Owners shouldn’t be involved in eviction decisions at all. I know I say that owners shouldn’t be involved in much of anything, but of all things that the client should have no say in, this is the biggest. This is the area where owners have the least knowledge and experience, but frequently the strongest (wrong) opinions and strategies. And it’s also where they can get into the most trouble, which is why I say that every landlord should be using a professional PM, even if they have tons of spare time and only a single rental property. This kind of stuff is a liability nightmare.

The Owner Has Never Seen One of These

Evictions are incredibly rare, despite the hysteria that the media loves to push on how many people are getting evicted. In reality, the national eviction rate hovers right around 5%, and the average tenancy is about three years. If you do the math, that means that an owner with a single property would need to be a landlord for 60 years on average before encountering his first eviction situation. Since most landlords don’t become landlords until middle age, that means that almost all of them are dead before they see their first eviction. You, as a professional PM managing hundreds of properties, however, deal with several evictions a year, most likely. And you also receive ongoing training, talk to fellow PMs at conferences who encounter unusual eviction situations, have attorneys on retainer, know the judges, etc. There is simply a massive asymmetry in the knowledge and experience between you and your landlord clients when it comes to this topic.

Owners Get it Wrong in Both Directions

Not only do owners almost always have the wrong ideas about how to handle an eviction, but depending upon their personality type, they can get it wrong in drastically different ways.

First is the angry, vindictive owner. This owner is so upset that the tenant is robbing him blind by not paying the rent that he wants to impart as much pain as possible on the tenant. Think Captain Ahab. He’s going to drag himself down with the ship, costing himself tons of money, time, and frustration, just to get revenge on some tenant who likely doesn’t even care. We all know that in the end, the tenant is just going to walk away and go about their life. For someone who was in a bad enough financial situation that they lost their place to live, they aren’t going to much care if you send them to collections and destroy their credit. Maybe years later when they get their act together and want to buy a car they’ll finally care about their credit, but maybe not, and even then they’ll have already long forgotten who that landlord even was. It’s not like the landlord will be living rent free in their head and getting revenge that way. These landlords need someone to be more rational on their behalf and make better decisions for them.

On the other hand, you have the soft and cuddly landlord who has fallen for the “noble poor person” trope pushed by the media and thinks that every tenant who stopped paying the rent is really just a great person who needs a little empathy and compassion and some more time to pay. As we know, that’s a load of horseshit. Sure, such a person does exist. Somewhere. But you don’t run across them very often. In reality, the typical evicted tenant is someone who just wasn’t responsible with their money and backed themselves into a corner. They’re not vindictive, trying to rip off the landlord, as the angry landlord above thinks, but they aren’t beautiful souls who just need another chance, either. Given that second chance, they’re just going to end up owing you even more money and unable to pay it. This landlord needs someone to make the difficult call on their behalf and not feel guilty about it. That’s you.

Finally, you have the disingenuous owner who thinks that eviction proceedings are a way to force a tenant to vacate mid-lease because they want to do something else with the house. They want to force you to conjure up fake excuses for filing eviction just so they can sell the house, rent to a tenant they like better (racists who are unhappy you placed a black person in their unit, for example), convert the property to an Airbnb, etc. In this case, your job is to stand in the owner’s way and prevent them from doing something that could get them into serious legal trouble.

Fiduciaries Aren’t Servants

I was speaking at the IMN SFR/BTR Conference last month in Austin, and I sat in on a panel session with several property managers talking about tenant relations, I think it was. One of the PMs said something to the effect of “always talk to your owner client first, because after all, it is their house, and they get the final say.” I had to restrain myself from throwing my bottle of Mountain Dew at the stage.

My accountant doesn’t say “I need to check with Todd first before I complete this K-1 in case he wants me to put additional deductions in.” I’m not the expert. He is. He gathers all of the documentation from me up front, and then he prepares the tax returns. This isn’t a joint exercise. He’s the expert, I’m not. It’s pretty simple.

For some reason, some PMs have such a low opinion of their own professional worth that they see themselves as gofers rather than experts. The best thing you can do for yourself and your business (and frankly, for your clients) is to get rid of this attitude and accept that you know more than your clients, and you don’t need their input. I don’t give a damn that it’s their house, just like my doctor doesn’t give a damn that it’s my body. I’m not involved in the decision about what medication he’s going to prescribe, because I don’t have an MD and haven’t spent years as a doctor. Likewise, your client doesn’t have a real estate license and doesn’t have dozens of evictions under their belt.

Being a fiduciary doesn’t mean that you do what you’re told. It means that you do what’s in the client’s best interests.

Fair Housing

I’ll keep this short and sweet, because I’ve covered it in several other articles. But as a reminder, every single decision that an owner makes on his own is a deviation from your standard policies and procedures. And every deviation is a fair housing lawsuit waiting to happen. Just don’t do it.

What the Owner Does Get

This isn’t to say that the owner should be left in the dark. When I work with consulting clients on process optimization, there is always a big focus on owner touchpoints where you let the owner know what’s going on. But notice what I said there: “let the owner know.” Not “ask the owner’s permission” or “get the owner’s input.” These are notifications, not collaborations.

But you should be updating the owner at every stop of the process. When the eviction is filed, when the tenant has been served, when the court date is scheduled, the results of the hearing, when the lockout is scheduled, and when the lockout is done. When you don’t keep the owner in the loop, you’re just going to encourage them to reach out to you and try to push you to do things their way. When they’re getting regular updates, they’re far more likely to just keep quiet and let you do your job.

Also, there are times when the owner actually does need to get involved to make a decision. Very rare, but an example would be something like a cash-for-keys offer. I’ve written about this previously in a piece specifically on cash-for-keys, but since you actually have to offer the tenant money to get them to leave the house in this scenario, you’re going to have to get the owner’s cooperation to deposit the money with you before you can make the offer to the tenant (unless you’re keeping a truly massive reserve).

Settlement Authority

Aside from having to actually hand the tenant money, though, you don’t want to be getting the owner involved in settlement discussions. Not only because they’re likely to be an irrational impediment, but also because it’s just not practical. Most judges will want you or your attorney to go out in the hall and talk with the tenant to try to work out a consent agreement on eviction court day instead of going through with a trial. Those discussions are worthless if you don’t have authority to settle without the owner’s involvement, because you sure as hell don’t want the owner there at court with you.

So, your PMA needs to give you broad authority to enter into and bind the owner on settlement agreements. Typically these consent agreements just involve waiving rent and fees or giving the tenant a certain amount of time to vacate, so unlike cash-for-keys, you don’t need to get actual money from the landlord, making this a lot easier.

Final Thoughts

I know I hammer on this general idea of PM authority regularly, but it’s important. Every time I go to a conference, I’m hearing someone talk about how they give owners all sorts of involvement in their processes. Frequently this is couched in ideas of “reducing liability because the owner is making the decisions,” and other such nonsense that makes me want to punch them in the face. There is nothing less professional and more damaging to our profession and industry than shirking our responsibility as the expert and pushing it off onto a layman who is just going to get themselves into a worse position due to their lack of knowledge and experience.

DO YOUR JOB. Be the professional. Make the difficult decisions. That’s literally what you were hired to do. Don’t shirk it.