Evicting The Live-In Manager Or Handyman
by Carolyn Gibson
When you purchase rental income property, you may decide to maintain it on your own. Perhaps you know a few things about maintaining heating systems, how to paint and plaster, and a little carpentry knowledge. You figure, you have only four apartments to care for, you live in one of them, and you can handle it.
Forty-five percent (45%) of homeowners (U.S. Census Bureau) spend from one to eight hours a week devoted to the maintenance and management of their property. Some homeowners either do not have the time or the experience necessary to put toward their property.
Let us say you are currently getting a good profit from the property. Your own job or business is keeping you busy. So, you think it would be great if you could get someone else who lives in the building to clean and do repairs. The tenant would be compensated by a small reduction in the rent. This way, you can devote more of your time to your business or career, have someone who is always on the property, and can clean, shovel, mow, and take care of whatever repairs are needed. What could possibly go wrong?
Well, what if your live-in handy man is not what you expected? As a tenant, he is great, and he appreciates the cut in rent. But, after a few months, working his own full time job and taking care of the building prove to be too much for him. In another scenario, what if you decide there is not enough work to be done at the property to justify the amount of rent that is deducted each month?
So, you let him know that he will no longer be your handy man. You give him written notice of his termination as the handy man, and a thirty-day written notice that he will have to pay the full rent on his unit. He may agree that he couldn't handle the property; he may not agree. There begins one problem, the job termination.
If you cut $100 a month from his rent to care for the building, he may not be able to cover the full rent again. He is living on a different income, and cutting back may not be as easy as either of you thought. Will firing your live-in handy man cause an unanticipated eviction for non-payment of rent?
Here is where a lease and employee contract is mandatory. You have created two relationships, tenant and handy man. When you terminate one relationship, it will have an impact on the other relationship. Outlining the relationship before you hire him in writing will help. Still, you will have to defend both relationships in housing court if the tenant cannot or refuses to pay the full rent.
You may also have your other two tenants taking sides. If they liked him as the handy man, they will resent his firing, unless it was for something that had a direct impact on them. If they didn't like the handy man, well, he knows where all the bodies are buried. Either way, your handy man tenant may decide he has a chance fighting the eviction.
Before you begin any legal action, go over your duties as a landlord and employer of the former handy man. Go over the lease and employee contract. Review and anticipate any potential problem that may come up in court. For example, did you provide the handy man with a written list of duties? Do "the courtroom test." If you were hearing your story, would you find a judgement for you, or for the tenant?
Did you pay the appropriate state and federal withholding taxes on the handy man? If you hired the handyman as an independent contractor, did you give him an annual Form 1099 tax report? If you pay money or forgive all or a portion of the rent, did you declare the rent he did not have to pay as his income and your operating expense to the IRS for each year of service?
It is not always easy to have a tenant become part of your real estate investment. If you are hesitant about anything, contact your attorney and/or your accountant before going to court.
Reprinted by Permission. Carolyn Gibson of Boston, MA, a property management consultant and Certified Property Manager, writes articles and books based on her more than 30 years of experience as a property manager and company owner.
Her web site, http://www.synergyprofessionals.com is devoted to the challenges of managing residential real estate, and provides answers to homeowners, rental managers, and real estate investors, including leasing, marketing, attracting and screening good tenants, property maintenance, and how to have a successful property management business.
Carolyn's books, "Secrets to a Successful Eviction", and "How to Pick the Best Tenant", can be found at Amazon.com. For more property management information, go to http://www.synergyprofessionals.com
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