When an investor purchases a rental property, whether a single-family home or a multi-unit commercial building, one of the often overlooked considerations is how to evict a tenant for violating the rental agreement. Each state has their own rules regulating the relationship between landlords and tenants. It is very important that an investor receive legal guidance from an attorney that is knowledgeable about the laws of the state in which they are purchasing property.
Investors are always looking to purchase affordable real estate in an area that is experiencing good, solid, and sustainable growth. This is what makes Tennessee so attractive to out-of-state investors, particularly from states like California that have very high real estate prices and a super-regulatory government.
As an attorney currently licensed California for over 15 years and Tennessee for over 4 years, I have been able to see the differences between how these states’ landlord/tenant laws differ, particularly with evictions. The purpose of this article is the highlight some of the major differences in how an investor needs to handle evicting a tenant in California and Tennessee. From the standpoint of removing a tenant causing problems or refusing to follow the terms of the agreement, Tennessee is much easier to navigate for the investor.
It is no secret that California is hostile to real estate investors. Just about every law that comes out of Sacramento gives tenants more rights and restricts the rights of the owner. Some laws that have been proposed and are under consideration include requiring investors to accept Section 8 tenants, requiring investors to accept the first applicant who is qualified, instituting rent control laws that restrict what the owner can charge for rent, and taking away the owners right to terminate a rental agreement with 30 or 60 days’ notice. All of these laws drive up the cost of housing and make California less attractive for investors.
When it comes to evictions, California has created a pitfall for the owners. First, a tenant must be served with a proper notice. For this article, let’s assume the tenant doesn’t pay the rent. A three day notice to pay rent or quit must be served on the tenant. This notice must be very exact in several respects. Even the slightest mistake can cause the investor to lose. If the tenant doesn’t pay the rent within three days, then the investor can file the eviction lawsuit. The fee in most counties is $240.00 that the investor has to pay up front. Next, the lawsuit has to be served. In some counties, the sheriff will serve, but they are understaffed and overworked, so it takes longer than just hiring a private process server, which will cost the investor about $100.00. If the tenant cannot be served, then a motion needs to be filed for a posting order. This costs $20.00 to the court plus the time to prepare the motion and get it filed.
Once the tenant is served, they will have either 5 or 15 days to respond. During this time period, there is nothing the investor can do but wait. If the tenant doesn’t respond, the investor can submit paperwork to the clerk to get the order directing the sheriff to remove the tenant. This costs $25.00 to the court and $145.00 to the sheriff.
If the tenant does file a response, the investor has to request a trial date from the court. The trial will be set within 20 days of when the request is made.
If the investor prevails, the sheriff will go post the property and tell the tenant they have 5 days to move. After 5 days, the sheriff will come back and remove the tenant if they are still there. In almost every case, the tenant leaves before the sheriff returns.
The tenant has the right to postpone the lockout by filing a motion with the court to ask for more time, which the courts routinely grant one to two more weeks.
If the tenant leaves behind personal property worth more than $700.00, the investor must store it, spend several hundred more dollars to publish and serve notices of sale, and then sell the property at auction. This can be done after giving the tenant 15 days’ notice to get their property.
In California, for a standard non-payment of rent case, the investor is going to spend at least $510.00 in costs, which doesn’t include any fee for hiring an attorney. It is also going to usually take about 4-6 weeks to get the tenant out if they don’t respond and 6-8 weeks if the tenant does file a response. It will be another two weeks, at a minimum, if the tenant leaves behind property worth more than $700.00. During this time period, the tenant is not paying rent and the investor is having to pay all the carrying costs.
Tennessee provides a much different statutory structure for evicting a non-paying tenant. First, Tennessee gives the investor and tenant the right to waive any notice for non-payment of rent in the rental agreement. This makes sense since very few tenants are caught off guard by the fact that rent is due on the first of the month and they didn’t pay it. There is no reason for the landlord to have to give a notice telling the tenant they didn’t pay the rent and giving them more time for doing so.
If the rental agreement doesn’t contain a waiver, the investor has to give the tenant a 14 day notice that rent was not received. If the rent is not received during the 14 days, then the investor can file the detainer warrant, which the sheriff will serve. The cost for this in Davidson County (Nashville) is $127.75. When the tenant is served, the sheriff will notify the tenant of the court date, which is usually within 7-10 days. At the hearing, the investor and tenant will present their case to the judge if they cannot resolve it outside court. If the investor wins, the investor can get the order from the court directing the sheriff to remove the tenant, which costs $65.00 in Davidson County. The tenant will have 10 more days to move. On the 11th day, the sheriff shows up and waits while the tenant and their belongings are moved out of the house. The investor takes back possession, makes the property ready to rent again, and moves in a new tenant.
The cost for an eviction in Davidson County, not including attorney fees, is $192.75 and usually takes less than 30 days.
This article is directed to the investor, but should not be read to mean that tenants have no rights and the investor has no responsibility. In most major counties in Tennessee, there is still the obligation to keep the property habitable and to allow the tenant to enjoy the property without harassment from the investor.
For an investor looking for a great investment area with laws that are well balanced between the rights of the investor and the tenant, look no further than Tennessee.
The information in this article is for general information purposes only. Nothing should be taken as legal advice for any individual case or situation. You should consult an attorney about your specific legal case.