June 18, 2011 (Original publish date) • By Dennis Beaver
When you discover that your landlord is pocketing your rent money and not paying the mortgage, you’ve got a real problem. There are a lot of crooked landlords doing just that, as Cesar and his wife discovered a few months ago. Last week we began our look into how our reader, a naval lieutenant, was able to turn the tables on his crooked landlord with our help.
Cesar and his wife were renting “a cute little house near Kingsburg, and we always paid the rent on time. So, it was more than surprising to suddenly begin receiving letters addressed to the owner and/or occupant demanding that mortgage payments be brought current or foreclosure would take place.
“Then, phone calls and knocks on the door from bill collectors and bank real estate agents began, all of them asking for money. It was clear that our rent payments were simply being pocketed by the owner instead of applied to the loan,” the lieutenant told us.
You and the Law had crossed paths with their landlord years before, when he refused to refund another naval officer’s security deposit. He made it clear that he knew the law and chose to ignore it. We would later discover this guy took hypocrisy to a new level, boasting, “I attend church every week and all of my sins are forgiven.” He was completely serious.
In Cesar’s earlier contacts with the landlord, “It became obvious this guy is in love with and obsessed by money. On top of not paying the mortgage, he’s got our $4,000 security deposit.
“What should we do? Can we move? We don’t want to – that would be very expensive, and we’ve got several months left on our lease. If we do move, what about our security deposit? While his options were limited, we found a solution worth trying.
Don’t just move out
We explained that, strange as it sounds, while the landlord was certainly defrauding his bank, it is extremely rare for this behavior to be considered criminal. Since he had owned the rental for years, this did not fit the criminal law definition of “rent skimming.”
“Until the house is actually lost and out of the landlord’s name, he can legally collect rent as well as sue to evict a nonpaying tenant. It’s best to not get sued for eviction, as this can affect credit scores and even employment possibilities. So, to remain in the house for as long a possible, the tenant should consider offering to pay something,” observes Los Angeles-based real property management executive Erin Dolan.
“Calculate what it would cost to move, factor in the security deposit and then propose a rental reduction which would cover that amount over the remaining life of the lease,” Dolan recommended.
“As judges are becoming more aware of these kinds of landlords, many are ruling against them in eviction/suits for unpaid rent. But it is a gamble. So, even a dishonest landlord would have to weigh a significant rent reduction as opposed to losing everything in court,” Dolan maintains.
We told Cesar to phone his landlord and follow this script:
“I understand you are probably in financial difficulty, but your problems are now a real hassle for us. We can move, but do not want to. Since you are not using our rent money to pay the mortgage, it is unlikely a court would rule in your favor if you sued us. But, I’ve got a solution which gets you some money and helps us as well.
“We reduce the rent to (X dollars) over the remaining months of our lease, which covers the moving expenses we would incur as well as the $4,000 security deposit. I will need your written confirmation of the new rental amount.”
Phoned us, screaming
While verbally agreeing to accept the reduced rent, just as we expected, the landlord refused to give any written confirmation. Why was obvious: He planned on suing Cesar for the difference.
Anticipating that, we told our reader to clearly write on the face and back of every rent check, this language: New Rent Amount Per Agreement on (date of their discussion). Lease valid until (date of last month as shown on the lease.)
“When he got the first check with that language, he phoned us, screaming. I told him that it was either that, or we were going to stay here and not pay a cent Try to evict us. He hung up.
“But he cashed that check, and has accepted and deposited all of the others, with no objection at all,” our Kingsburg reader happily told us.
It’s always nice to prevent a bad guy from getting away with it.
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.