The Property Management Shop
by Marc Wilson
Q. One of my tenants attempted to tender his rent payment with a third-party check, made out by someone I don’t know, yet mailed to me by the tenant. When I received this third-party check, I mailed it back to the tenant along with a letter that requested him to use his own personal check, money order or cashier’s check to pay his rent. One week later, I received another third-party check from the tenant. This time I again returned the check with another letter that explained I never accept third-party checks and I also included a Three-Day Notice to Pay Rent or Quit. Ten days later, the tenant tendered his rent with a cashier’s check purchased by the tenant. For the third time, I returned the cashier’s check to the tenant, because he had not paid within the time allowed pursuant to the three-day notice. I then immediately filed for his eviction.
Now my attorney is advising me that we might not prevail in an eviction trial, because my rental agreement lacks a statement that I do not have to accept third-party checks as rental payments. Should I settle with the tenant? Should I go to trial if need be? The tenant has a long history of late rent payments and nuisance problems. I really, really want to terminate our landlord/tenant relationship. What should I do?
A. First things first. You were right not to accept a third-party rent payment. No reasonable person can argue that one can effectively manage residential property in San Francisco by accepting third-party rent payments from unknown people. Quite simply, the tenant does not experience any hardship when you adopt this reasonable position. The tenant can pay his rent with funds that derive from absolutely any source. He simply needs to deposit these funds in his own bank account and generate a rent payment that originates from this account. The question is not whether you should or shouldn’t accept third-party checks, for clearly you should not. Rather the question is whether you should have proceeded with the eviction of your tenant, even after he tendered his rent ten days late through an appropriate vehicle (in this case with a cashier’s check). I don’t think you have anything to worry about.
I am assuming you use the PPMA rental agreement that is available through the San Francisco Apartment Association. This document clearly states in item paragraph 4 that the “tenant agrees always to pay rent by personal check, cashier’s check, or money order…” You gave the tenant multiple written warnings regarding third-party rent payments before you proceeded with his eviction. Similarly, the tenant has a long, documented history of late rent payments and other breaches of the rental agreement. Given these facts, you should not settle with this tenant. If the tenant wants a trial, give him a trial. You will benefit in the long run if you fix this problem once and for all. I will, however, recommend that you amend your rental agreement as I did after reviewing your question. Mine now reads: “Rent payments to be paid and tendered by named tenant as per the rental agreement. Owner will not accept rent payments from any third party at any time for any reason.” I suggest both you and our readers do the same.
Although hard to believe, the current rental market has some advantages. The plethora of available apartments has taken most of the frantic hostilities and contention out of the property manager/tenant relationship. Tenants with habitual behavior problems no longer fight tooth and nail to preserve their housing, because they know there are plenty of other available apartments and property managers whom they can torture. A couple of years ago, at any given time I would have four or five problem-tenant files in my office. Now I rarely have one. Similarly, I am detecting a distinct lack of sympathy or compassion by the mediators and judges down at 400 McAllister Street for problem tenants. I suspect that they, too, realize that separating a problem tenant from his apartment in this market is not the end of the world for the tenant.
What is the meaning of all this? Now, more than ever, you should insist on your rights and the house rules in your rental agreement. Believe me, you will get a fair shake in your mediation and/or at your trial.
Do you currently have any tenants who are torturing you and their neighbors at the property? Are any of your tenants dealing drugs or hosting drinking parties until all hours of the night? Do you have tenants who pay their rents habitually late? Are tenants smoking in the hallways and throwing their cigarette butts out their windows? Life is too short. Don’t delay. Don’t be intimidated by the legal process. Serve your offending tenants with Three-Day Notices to Cure or Quit, and if they don’t quit, then proceed with an eviction. Now is the perfect time for you to separate from those tenants who do not respect the property, their neighbors, their rental agreements or themselves.
The opinions expressed in this article are those of the authors and do not necessarily reflect the viewpoint of the SFAA or the San Francisco Apartment Magazine. Marc Wilson has been managing and selling San Francisco apartment buildings for over 15 years. Please send your questions concerning property management issues to Marc Wilson at 1699 Van Ness Avenue, SF, CA 94109. He can be reached at 415-229-1275. Copyright © 2004.