Economic forecasts are not kind for 2023

As we wind down 2022, economic experts are cautiously forecasting a bumpy 2023 as the US economy continues to wrestle with forty-year-high inflation numbers. While the economy figures itself out, policymakers and economists argue for which measures (such as increasing interest rates) will help without plunging the country into a deep recession.

Investors are also nervous. Although investment strategies vary, a diversified portfolio with real estate being one of many different investments can be a hedge against economic turbulence, especially in a declining housing market.

Now is a good time to reassess your tolerances for tenancy eviction in addition to how your leases are structured to weather the coming year. In this article, we’ll be presenting specifics on tenant eviction, especially in relation to Pennsylvania regulations.

Please consult your real estate attorney to make sure your eviction guidelines are stated clearly and the way you want them in your lease. If you didn’t have to evict any tenants in 2022, great. However, with the changing economy, be prepared as 2023 may increase the likelihood of a tenant encountering job loss or threats to their income resulting in lease violation, and ultimately, eviction.

The ten-thousand-foot view of eviction

Evicting a tenant is an unfortunate and undesirable part of being a landlord. Between legal bills, vacancies, loss of rent and time, the financial burden may seem overwhelming, however, you can lessen that burden by knowing your rights as a landlord and being prepared.

Even if you have a management company to handle potential evictions, you should know your rental property’s state and local laws regarding evictions so you can ensure your money is protected and evictions are expedited properly. The key to a successful eviction is acting promptly. Time is money when it comes to evictions. The recovery time will be delayed and financial impact will increase if you wait too long to act.

In Pennsylvania, the Landlord and Tenant Act dictates the eviction process for rental properties. Every state is different, so do your research on the state laws prior to purchasing your next investment. Evictions and vacancies negatively impact profitability. If you purchase in a state that is not landlord-friendly, one bad tenant could destroy your financial success for that term. Consider these questions when looking for your next investment property regarding eviction:

1. What should I evict a tenant for?

2. What is a Notice to Quit?

3. How do I file for eviction and what is the timeline until possession?

4. What happens to personal belongings left behind?

Reasons for potential eviction

Landlords can evict tenants for two main reasons: nonpayment of rent or lease violations. Nonpayment can be categorized as any bill not paid per the lease agreement including but not limited to rent, utilities and fees. Violations are any act that does not comply with the agreed-upon terms of the lease such as keeping a pet in the home when the lease prohibits it, allowing a person who is not on the lease agreement to live in the home or any illegal activity, for example.

In addition to nonpayment and violations, landlords can also evict a tenant for holdover. Holdover is when a tenant continues to occupy the premises after the term of the lease has ended. If the landlord continues to accept rent payments, the holdover tenant can continue to legally occupy the premises. If this occurs, and if a new lease is not signed, the length of the new rental term becomes dependent on each state’s laws. In Pennsylvania, the term is month-to-month. Once the landlord no longer accepts the continued payments, they can begin the eviction process.

Understanding the Notice to Quit process

Landlords may not take self-help measures such as changing locks or removing tenant’s property to force a tenant to move out. Instead, they must follow specific procedures beginning with serving a Notice to Quit to the tenant. A Notice to Quit is a document delivered by the landlord to the tenant notifying the tenant in writing of the violation and it provides a specific number of days to cure the violation or move out of the property.

The notice can be delivered personally to the tenant or posted to their door or at another visible location at the property. If the notice is posted for nonpayment of rent, the tenant is given the option of paying the rent or moving out by the deadline specified in the notice. If it is posted for a lease violation, the tenant’s only option is to move out by the specified date.

The deadline by which the tenant must move out (the date specified in the Notice to Quit) depends on the reason for the termination:

• Nonpayment of rent—Pennsylvania law requires that the tenant be given 10 days from the date of being served the Notice to Quit to either pay the rent due or move out of the property.

• Violation of lease—For lease violations, the landlord must give the tenant 15 days to move out for lease terms of one year or less, or 30 days for leases of one year or more.

You can expedite the eviction process by simply putting a waiver of a Notice to Quit term in your lease. Generally, it would say something like, “Tenant gives up or waives their right to a Notice to Quit by signing here.” In this case, as soon as a violation is discovered, for any reason, eviction proceedings can begin and is the quickest method when dealing with a tenant in violation of the lease.

How to file for an eviction

Once the violation occurs or the Notice to Quit deadline has passed, a landlord may file with the magisterial district office. The magisterial district judge's office will schedule a hearing in about 7-to-10 days from the date the complaint is filed. The landlord may ask for possession of the property or money for unpaid rent and damages to the property or both.

The judge will make a decision either at the hearing or shortly after the hearing, known as a judgement. There are two types of judgements: pay and stay or a possession order. Tenants in Pennsylvania have the right to pay and stay under the Landlord and Tenant Act. This means that a tenant can make payment up to the actual time of the eviction and remain in the property. If payment is received, the landlord may not seek possession. The law requires a tenant to pay “rent in arrears and the costs.” Simply put, the tenant must pay the judgment amount plus the landlord’s costs to be able to remain in possession of the rental property.

If the judges grants possession of the property to the landlord, the tenant will be given 10 days to leave the property. Keep in mind, in either case, that there is a 10-day waiting period in which the tenant can appeal the order. Once the 10-day period ends, if the tenant has not paid in full, appealed the order or vacated the property, the landlord can file for an order of possession of the rental property. If the tenant has not moved by the date set forth in the order for possession, a constable or sheriff's deputy will forcibly remove them at that time.

How to handle leftover possessions

A recent amendment to the Landlord and Tenant Act (Act 129 of 2012) established new rules for a tenant trying to retrieve personal belongings left behind at a rental property. If the tenant has been evicted from a rental property, they are still able to retrieve their belongings, but only for a very limited time. The new law gives tenants 10 days from the date of eviction to contact the landlord about retrieving any personal property.

The tenant then has 30 days to retrieve said personal property and the landlord may keep the personal property at a site of their choosing. If the tenant fails to contact the landlord within the first 10 days, the landlord can dispose of the personal property.

Eviction prevention

It is ideal for investors to never have to evict a tenant. Here are some tips on how you can reduce or prevent evictions:

• Be fair, but firm. You must be firm with your tenant from the get-go in hopes of preventing an eviction down the road. Have a solid lease agreement, stick to the terms of lease and be consistent with all tenants.

• Nonpayment must be acted upon quickly. If a tenant does not pay within the first few days of their due date, it can quickly turn into months of no income from that unit.

• Have the right connections. Build relationships with those who deal with evictions at your local courthouse. Be familiar with the process and how judges typically rule regarding evictions.

• Stay in the know. Landlord-tenant laws change. Get to know the law in your state and stay current on the changes while working with your attorney to make sure your lease has clearly stated eviction policies.

• Hire a property manager. A good property manager often has vast experience and relationships that make them well-suited to guide you through the eviction process and help you prevent evictions in the first place.

Work with your attorney to update and clarify your eviction criteria in your lease. Make sure your current tenants are aware of all eviction criteria. Have a solid lease, be well-versed in the Landlord and Tenant Act and have good communication with your tenants to prevent the risk of lease violations that result in tenant eviction.