Most landlords know the feeling – the mortgage
payment on the rental property is due on the first of the month, but the rent
payment did not arrive. Thus begins the long, expensive eviction process,
in which the landlord continues to pay the mortgage, and often other expenses
like utilities and eviction costs, without any rental income to offset the
expenses. While eviction is a part of being a landlord, and it is a risk
that all landlords must prepare for, there are ways that landlords can minimize
this risk, from adhering to all the relevant landlord-tenant laws to rental
income insurance to knowing the right people and process once eviction must be
1. Screen Tenants for Income and Credit and Rental History
In the lending industry, they say that income offers insight into whether someone can pay, and credit and rental histories offer insight into whether someone will pay. Carefully peruse rental applications, verify rental applicants’ income and credit and rental history before signing a rental agreement with them, and avoid 90% of rent default scenarios.
2. Use a Legal Lease Agreement (Specific to Your State)
It may sound self-explanatory and obvious, but it’s shocking how many landlords fail to use a lease agreement that’s even legal in their state. If the landlord expects to be able to enforce their rental contract, then it must be legally enforceable! Understand your local landlord-tenant laws and restrictions, and use a state-specific residential lease. As a member of Landlord Connection you have access to a legal NH lease.
3. Be Prepared for the Eviction Process, and Start It Immediately When Rent Is Late
The eviction process in most U.S. states takes several months, so it is critical that landlords start the process on the first day that the rent becomes late. Aside from simply avoiding further delays, it sends a message to your tenant that they need to prioritize paying the rent over their other bills.
Each rental agreement sets a different grace period between when the rent is due (e.g. the first of the month) and when it becomes late (e.g. five days later, or the sixth of the month), and each state sets minimum grace periods. In NH, the typical grace period is five days. The first step is serving the tenant with an Eviction Notice and Demand for Rent. Eviction notices give the tenants a second grace period (seven days in NH) - another reason to start the process immediately. On Day Eight, landlords must file in your local court for eviction. If you do not know how to do this, or do not want to do this yourself, there are companies and attorneys you can hire to do it for you – inquire among other local landlords and property managers to find out who they use, or simply search your local listings for eviction specialists. Once again, be prepared and know whom to call before you actually need to file in court!
While evictions can’t always be avoided, the risk can be minimized through a multi-pronged approach. Properly screening tenants for income and rental & credit history is critical, and using the appropriate forms will prevent the judge from delaying your eviction proceeding due to unenforceable legal forms. Acting quickly when tenants default will both minimize the period that rent is not flowing inward, and will deter tenants from defaulting in the future. For more, read our overview of the eviction process from start to finish.