Read This Before Renting Your Property to Family Members
A Nightmare Experience That Could Have Been Avoided
Grab your popcorn. . . it’s story time.
(But not too big of a bag, because I’m going to keep it short).
About 6 months ago, a past client of mine reached out for help.
They’d gotten stuck in a sticky situation involving family (making it even stickier).
My client inherited his father’s home, which of course, came along with the financial responsibilities of the outstanding mortgage, annual taxes, utilities, repairs, so on and so forth…
At the time that he inherited the house, one of his siblings was already residing in the property along with a few other adult family members.
My client offered them the opportunity to execute a formal lease at a discounted rent rate, as well as the option to purchase the home below fair market value. They declined both, leaving my client no choice but to proceed with the eviction process. That’s where I stepped in.
After multiple court dates, my legal team negotiated a fair move-out settlement amount on behalf my clients. The residents were granted 3 months rent-free plus a lump sum payment to help them relocate.
On the day of their move-out, my client issued one more final payout to his relatives and changed the locks throughout the property. Days later, he returned to the property to find all of the windows broken and the landscaping destroyed. One of the family members that had been residing at the property followed up by calling via a blocked number to deliver a few unsavory choice words.
My clients were crushed. Less due to the fact that they paid thousands of dollars to help them move, but more so because they never foresaw that their own family would carry out such a heinous act.
Over the following days, I assisted my clients with filing a police report and opening a claim with their insurance company. Luckily they were covered for vandalism.
But before we could begin processing compensation for the damage that had already been done, my client’s relatives returned to the property in the middle of the night to finish the job. Although the windows were boarded, they located a small opening between the slats of wood, inserted a water hose, and flooded nearly the entire first floor of the home.
Even as an experienced investor and broker that’s seen their fair share of ‘revenge property damage’, this topped the list. To make it worst, the insurance claim processor notified us that the water damage wouldn’t be covered by their policy.
As my clients grappled with all that had taken place over the matter of only a couple weeks, they gave me a call to let me know that they’d like to proceed with selling the property after closing out the insurance claim. I assured them that my team and I would handle the listing with the utmost care and expediency; hopefully avoiding any further run-ins with their disgruntled relatives.
Before we closed out our call, my clients thanked me for standing by their side throughout all that had transpired.
I spent the rest of the afternoon reflecting; trying to identify where things took a left turn, rather than us making a right. I couldn’t locate where the ball had been dropped. My team and I were strategic in how we handled the eviction, and my clients were swift in taking our advice.
Still, I found myself pondering: What more could have been done to help prevent any of this from happening?
This is what I came up with…
Albeit my clients’ relatives were compensated to relocate and never outwardly expressed resentment, it may have been wise to err on the side of caution. As the saying goes: hope for the best, but prepare for the worst.
Installing cameras and motion sensor security lights can be costly; but they can also deter property damage that costs far more. Alternatively, my clients could have moved in a trustworthy friend or family member to help them temporarily house sit while we worked on placing a long-term tenant or prepared the property for sale.
Hearing this, I’m sure some of you may be wondering: Then why wasn’t this recommended in advance to help your clients avoid such a headache?
It was discussed, but my clients never had much of an opportunity to act.
Within 48 hours of their relatives vacating, they returned to break out all of the windows; the water damage incident followed shortly after.
Furthermore, this wasn’t a hostile eviction. It was an amicable departure in which the vacating family members received compensation to help them relocate.
Perhaps if we would have taken a more precautionary approach to the situation, we could have foresaw some of these bumps down the road. But once again, hind sight it always 20/20.
As we come to a close, I hope that you’re able to leave with 2 valuable lessons:
Dealing with family can be tricky (to say the least). Not necessarily for the obvious reasons, but more so for the unforeseeable issues. My clients never expected that their own siblings, nieces, and nephews would have put them through so much trouble. But they did, and it’s hard to protect yourself from what you never see coming.
Never hesitate to spend $500 in order to save $5,000. It’s easy to talk yourself out of spending a few hundred dollars on cameras, lights, and surveillance; but the spend is justifiable.
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