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My Renter Owes Me Money. Now What?
by Annette West, CCIM, MBA, CPA
Editor’s Note: Most landlords and property managers can tell you stories of renters who disappeared under the cover of darkness, and still owe them money. But many rental managers struggle with what to do to recoup unpaid rent after the resident is long gone. Here are some tips to improve your rental collections – and how to report unpaid rent as a consumer debt.
Two acts designed to protect consumers are usually not considered relevant by landlords or property managers: The Fair Debt Collection Practices Act; The Fair Credit Reporting Act. Until recently, the relationship between tenants and landlords was not viewed as a consumer debt relationship. However a recent case may suggest that anyone who helps landlords collect past due rents can be subject to the FDCPA, including property managers and attorneys.
The goal of the FDCPA is to stop unfair, unethical and illegal bill collection tactics by debt collectors. Personal, family and household debts are covered under the FDCPA. This includes money owed for the purchase of an automobile, for medical care or for charge accounts.
The act defines a debt collector as any person who regularly collects debts owed to others. This includes attorneys who collect debts on a regular basis. But does it include property managers or landlords trying to collect past due rent?
The answer seems clear: if you are the property owner, you need to follow landlord tenant law but not specifically meet the requirements of the FDCPA. If you are not the property owner and contact tenants about past due rent, it is recommended that communications with tenants meet the requirements of the FDCPA.
Within five days after first contacting the debtor, the collector must send a written notice stating the amount of money owed; the name of the creditor to whom the money is owed.