In this week’s episode, Podcast Host, Property Manager & Business Owner, Andrew Schultz, chats about a tenant that starts a rental property on fire. What is the responsibility of the tenant vs. the landlord?
Relationships can be hard. Find out what to do when there is a fight in your rental property between two partners and one refuses to let the other partner in.
Last, but not least, have you heard about Twitter’s eviction lately? That’s right, the tech giant got kicked out of an office building due to unpaid rent. Find out how much they owed and so much more by listening in.
Andrew Schultz: (00:00)
Hey everyone. Welcome back to another episode of the Rent Prep for Landlords podcast. This is episode number 408 and I’m your host, Andrew Schultz. On today’s episode, we’re gonna be talking about Twitter being evicted from an office, building a tenant, starting a rental property on fire, and relationship trouble in a rental unit. We’ll get to all that right after this.
Voice Over: (00:24)
Welcome to the Rent Prep for Landlords podcast. Now your host, Andrew Schultz.
Andrew Schultz: (00:30)
Have you joined the free Rent Prep for Landlords Facebook group? Our group members get access to our showroom Williams and PPG paint Discount Programs can ask questions in our monthly AMA sessions and if you have a question or a situation you’ve never encountered before or just need to bounce an idea off a group of over 13,000 housing providers, this is the place. If you haven’t checked it out yet, do it today over at facebook.com/groups/rentprep. Don’t forget to mention the podcast when answering the questions so we know how you found us. We’re gonna start things off this week with our in-the-news segment. This article comes to us via The Denver Post written by Megan Ulu-Lani Boyanton, and the title of the article is Boulder landlord succeeds in evicting Twitter over unpaid rent. Let’s go ahead and jump right in.
Andrew Schultz: (01:17)
A Boulder landlord has succeeded in obtaining an order to evict Twitter over unpaid rent. According to recent court documents, a judge for Boulder County’s district court permitted law enforcement to evict the tenant on May 31st, directing the tech giant to evacuate its suites at 34 0 1 Bluff Street in Boulder and returned them to the owner and landlord lot two S b o l l c on May 12th, lot two S B O a Delaware limited liability company related to Chicago’s, the John Buck Company filed a complaint against Twitter alleging unpaid rent. Twitter and the landlord signed a lease for the four building suites in February of 2020, but the corporation failed to pay its rent. According to the court documents, the landlord issued a default notice to Twitter, which went ignored through the end of March Lot two SBO instead used a letter of credit deposited by Twitter for $968,000 to pay the rent, which serves as security for the tenant’s performance under the lease.
Andrew Schultz: (02:11)
Twitter was then required to replenish the letter of credit back to its original amount, which the landlord requested on April 4th. The complaint details on April 28th, the landlord asked Twitter to either fulfill that demand or return the property to lot two sbo Twitter did not respond to either the documents alleged the landlord sought not only possession of the building but also the past due rent attorney’s fees and costs and both pre-judgment and post-judgment interest. Lot two S B O didn’t aim to terminate the lease yet, but could pursue that option in the future. A representative for Twitter didn’t appear or send an answer by the return date of the summons. According to the court documents, the Denver Business Business Journal first reported on the eviction notice Tuesday. This isn’t the only lawsuit the corporation is facing in Colorado. Last month, Boulder’s Avalanche commercial cleaning suit Twitter in the same court to get around $93,500 for alleged unpaid invoices. Last year, Twitter terminated 87 employees at its Boulder office. Another 38 voluntarily resigned according to a November 25th notice to the Colorado Department of Labor and Employment. The landlord’s attorneys Timothy Gordon and Ryan Lundquist at Holland and Hart l l p did not immediately respond to a request for comment. Twitter’s press email, auto reply to a request for comment with a poop emoji.
Andrew Schultz: (03:34)
So this is not the first or last story about Twitter not paying their rent. Since the musk era of Twitter began, this has actually been a pretty common occurrence for Twitter. Uh, the same pattern is repeated in San Francisco, Seattle, New York, even as far away as London. I don’t think I’m really breaking any new ground here. When I say that Twitter’s gone through a ton of changes in a very, very short time span, the employee account has reportedly gone from around 7,000 to as few as 1500 at this point. Entire departments within the organization have seen massive staffing cuts and some have disappeared entirely reducing employee account by that much combined with having some remote staff reduces the overall office space needs substantially. And even with Elon demanding everyone back into the office, you still don’t have nearly the space requirements for 1500 employees versus 7,000 plus employees.
Andrew Schultz: (04:23)
So how do you get your commercial landlord to renegotiate the terms of your lease or let you out of it altogether? Stop paying the rent. Commercial real estate has taken and continues to take a huge beating as a result of covid and remote work becoming more and more commonplace and companies reevaluating their needs going into a recession. And during covid, for instance, companies such as Cheesecake Factory and L Brands, which owns Pink and Victoria’s Secret, were using the force majeure clause or the act of God clause in their lease to tell their landlords that they would not be paying rent. These commercial landlords didn’t wanna get stuck with a ton of empty commercial space and so many of them chose to renegotiate with our tenants either long-term or short-term to make deals that worked for everyone. Some companies legitimately needed to renegotiate if they wanted to make it through covid.
Andrew Schultz: (05:10)
Others used it as an opportunity to reset things for themselves going forward. And interestingly, the S E C ended up charging and settling with the Cheesecake Factory for statements made in their S E C filings indicating to investors that they were operating sustainably while simultaneously telling their landlords during the pandemic that they wouldn’t be paying rent. So going back to Twitter, I see this is essentially the same as what a lot of other companies have done. I don’t think that they’ve used a force majeure clause here, but they’re absolutely trying to force their landlords into a renegotiation and very likely successfully. As I mentioned, no one wants to sit on vacant space any more than they have to, and the cost of evicting a massive tenant like Twitter won’t be small and then you have to find a new tenant to take up all that space.
Andrew Schultz: (05:55)
So just like in residential, the holding costs and mortgages don’t stop just because there’s no tenant in place and there’s likely going to be some turnover costs as well. Even if they didn’t do anything to the physical office space and let the new tenant do whatever they wanted to customize the space, you still have issues like signage around the building and things of that nature that need to be dealt with once an old tenant moves out. So it could force landlords into situations where they either need to refinance a property, sell a property, or be foreclosed on themselves. And when faced with those choices, the best option is likely going to be to renegotiate with your current tenants and keep them in place. So good, bad or indifferent, that seems to be Twitter’s strategy and overall it seems to be working. They’ll absorb the legal costs along the way and likely come out the other side with a lot less total office space and the space that they do keep will likely cost them a lot less
Voice Over: (06:49)
Forum quorum where we scour the internet for ridiculous posts from landlords and tenants.
Andrew Schultz: (06:58)
All right, let’s keep right on trucking along here. We’re gonna jump into our forum quorum segment, and this week our forum quorum segment comes to us from the Rent Prep for Landlords Facebook group. Does anyone have experience with insurance from fire damage intentionally caused by a tenant? Apparently, my tenant burned down my house yesterday as a result of some type of drug-induced mental break. It wasn’t directed at us. They are current on rent and the yard was taken care of when we were there about a month ago. I’m at a loss and we’ve already filed a claim. Uh, and they indicated that their insurance company is foremost, and I guess this one again comes from the Rent Prep for Landlords Facebook group. This is a terrible situation and I’m sorry for your loss. Hopefully, no one was hurt as a result of the fire.
Andrew Schultz: (07:43)
Anytime you have a serious situation such as this where you know it’s going to be an insurance claim, your first call should be to your insurance broker to bring them up to speed. You just lost a whole home to a fire. This isn’t something that they just aren’t going to find out about. Bringing them in early is probably going to be your best bet. The insurance company’s going to step in and handle dealing with the tenant, the tenants, renters, insurance, things of that nature. Anytime something like this happens, the first question asked is, well, who’s going to pay for this? And I think that’s where you may run into some concerns. I’m hoping that your tenant had a renter’s insurance policy. In theory, their renter’s insurance policy should cover a fire such as this one, and that’s why we buy insurance is to protect us when things go horribly wrong.
Andrew Schultz: (08:28)
So if the tenant does not have insurance, all of that would end up falling back on the tenant. Personally, the issue here is your tenant was apparently on some sort of drugs and intentionally started the fire. I’m pretty sure that would be considered arson in most places and I don’t know if any insurance policies that will cover you if you intentionally set fire to something. So if the tenant has a renter’s insurance policy, it may not step into cover in this scenario. If it turns out that this was not an accidental fire, if this was something that was intentionally caused, regardless, you have to try to go after their insurance to try to recoup this loss. Your insurance company can handle this on your behalf, which is again why I recommend looping them in early. If the tenant either doesn’t have insurance or their insurance won’t pay out or their insurance coverage is insufficient for the total damage, your insurance may pick up the claim.
Andrew Schultz: (09:19)
It’s likely gonna depend on how you have your insurance set up on the property and what your coverages are. But this is a very unique situation for sure. One thing worth mentioning is that you may need to bring in a private fire adjuster to examine the home in the event that either insurance company is trying to short you on the settlement. Private adjusters work in your best interests when examining the scene and determining cost to repair or replace. And that doesn’t mean that your insurance company or the tenant’s insurance company is going to accept the report is written, but at least it does give you a place to argue from if the settlement numbers aren’t lining up. I’m curious if there are any criminal charges that can be pursued here against the tenant as well, but that’s a completely different topic for another day. Uh, another thing that I think is probably worth mentioning at this point is that this is a really good reminder.
Andrew Schultz: (10:06)
If you haven’t had a chance to stop and take a look at your insurance policies in a while, it’s about time for you to stop and take a look at ’em. You never know when something completely catastrophic is going to happen, and it’s always better to know that you have the coverages that you need in place prior to a situation like this happening rather than after the situation has already occurred. And then obviously it’s a little bit too late at that point. So my recommendation would be at least on a once-a-year basis, take the time, schedule some time with your insurance broker to look over all of the policies on any properties that you own, any liability policies that you may have, things of that nature just to make sure that you have the correct amount of coverage in place for your needs and your unique situation.
Andrew Schultz: (10:47)
That’s not something that anybody’s going to be able to really advise you on other than your insurance agent who will know your situation and understand what it is that you’re trying to protect and how much protection you need. Especially with the real estate market being what it’s been the last couple of years, and with property values increasing as much as they have, you may find that the insured value of your property is actually substantially less than the market value or the rebuild value for your property. So it’s definitely worth making sure that you review those properties and those policies on a regular basis to make sure that everything is still lining up. The best advice that I can offer up is to file the claim without delay and let your insurance company get involved as early in the process as possible. This is not a battle that you’re going to be able to fight alone. Good luck to you as you sort through this mess.
Voice Over: (11:35)
Water cooler wisdom expert advice from Real Estate Pros.
Andrew Schultz: (11:44)
Our final segment of the day is water cooler wisdom and we have a doozy for you this week. Let’s go ahead and jump right in. This one also comes to us via the Rent Prep for Landlord’s Facebook group. I have a tenant with a boyfriend that broke in on Sunday. She gave him the garage door code and then decided during a fight that he couldn’t come into the unit. After all, he’s not on the lease and his application was denied, so she locked the door from the garage to the kitchen. He proceeded to kick the door in. In my lease, I have stated that I can bar any guest that violates the lease or damages property. The cops were also called in regards to a noise complaint from said individual. The unit is a condo and the unit next to them has expressed not feeling safe.
Andrew Schultz: (12:26)
I sent a notice barring the individual from the property, am I allowed to share that letter with the neighbor also and should I share it with the H O a, am I violating anyone’s privacy? And again, this one comes from the Rent Prep for Landlords Facebook group. Alright, so let’s take a look at this as there are a few different issues at play here. Let’s start with the property damage aspect. As I think this is the most straightforward part of the situation in our lease, tenants are responsible for damages that occur at the property, and it doesn’t matter if the tenant caused the damage or if it was caused by one of their guests. Once the damage is caused, it’s the responsibility of the tenant. So in this instance, I would’ve the door or the doorframe repaired and I would add that charge to the tenant’s ledger as a damaged charge.
Andrew Schultz: (13:11)
We then send a letter to the tenant letting them know what the amount is that’s been added to their ledger, and we also let them know that it needs to be paid along with their next monthly rent payment. And depending on the amount of the bill, sometimes we’ll give the tenants the ability to set up some sort of a payment plan just to make it a little bit easier to digest. If you find yourself in a situation where the tenant does not wanna pay, you have a couple different options. You may be able to evict for non-payment at that point as the tenant will have an outstanding balance on their rent ledger. If you wanted to attempt to collect the balance without actually evicting the tenant for some reason, you could take the tenant to small claims court or civil court depending on the cost of the repairs.
Andrew Schultz: (13:52)
But realistically, if I was in a situation where the guest caused a bunch of damage and then the tenant was trying to get out of ping for that damage, I would probably be looking towards ending that tenancy. Now let’s talk a little bit about restricting access to the property. The first thing that I wanna mention is that you’re not a law enforcement officer, uh, or at least you didn’t say you were in the post. You don’t have power of arrest or anything even remotely close, and my recommendation would be that you stay out of the situation as much as you possibly can. You aren’t there to bar someone from anywhere you issuing a paper to a tenant or their guest. Barring that individual is not gonna stop them from coming back. However, depending on your jurisdiction, having issued that letter can help the police to remove the person from the property if they show up again, the best option here is for the tenant to get a restraining order against the individual who came to the property and caused the damages.
Andrew Schultz: (14:48)
The police had already been out at the property for a noise complaint and they may have been out there for other reasons that you’re not aware of as well. I’m not sure if the police were out when the door was booted in, but that also could go a long way in helping the tenant to get the restraining order issued. The other issue is once the restraining order is issued, the tenant actually has to call the police department to enforce the restraining order when the individual comes back to the property, and that’s something that the tenant’s gonna need to handle on their own. That’s not something that you’re gonna be able to handle for the tenant as their landlord. You’re not sitting in their living room all the time to see who’s coming and going. If the tenant is gonna continue to allow this person to come back to the property and be in their life and they’re not going to follow the restraining order, then there’s very little that you can do in that situation because your tenant needs to be onboard for this to work.
Andrew Schultz: (15:38)
You also mentioned a neighbor feeling unsafe. If the neighbor approaches you, again, I’d recommend that you tell them to contact the police if they feel unsafe and leave it at that you’re under no obligation to and should not as a rule, disclose anything about your tenants to anyone else unless obligated by law or the tenant has signed a written release. It could be someone who legitimately feels unsafe, or it could just be someone who wants to be the nosy busybody in the neighborhood and find out as much as they can so that they can gossip either way. If they feel unsafe, it’s up to them to deal with that concern. And more than likely, the best way for them to handle that is gonna be to contact the police department. I’d carry that same policy over to the H O A as well unless you’re legally obligated to share information with them.
Andrew Schultz: (16:24)
Don’t H OA boards are also notorious for not taking their obligation seriously and over-disclosing information or gossiping amongst themselves or other community members, so keep them in the dark unless you’re legally required to provide them with information. This tenancy would not be one that I would seek to renew when the time comes. I think that this tenant may be better served by another property owner, or perhaps it’s time for them to become a property owner themselves. Good luck to you as you extricate yourself and your property. From this scenario, we just released our latest guide on rental lock boxes. If you’re looking for a simple, secure, and effective way to lock up your rental, check out our top recommendations. Visit rentprep.com/blog today for more information. That pretty much wraps up this episode of the Rent Prep for Landlords podcast. Thank you all so much for listening.
Andrew Schultz: (17:13)
We truly do appreciate it. Our goal with the podcast is to help as many people as possible make educated decisions when it comes to real estate, and you can help us to reach our goal. If you heard anything in this week’s episode or any of our other episodes that will help someone that you know, please do us a favor and share it with them. If you’re looking to get in contact with me, I can be reached over at whatsdrewupto.com. From there, you’ll find links to everything going on with me over at Own Buffalo, as well as other projects that we’re working on. Grab a copy of our free deal analysis tool today over at whatsdrewupto.com. There’s no obligation and it comes with a companion video showing you how to use it. If you’re looking for top-tier tenant screening services at on over to rentprep.com, there are multiple products to choose from, including a tenant-paid option. And if you’re over 50 doors, ask about the enterprise-level programs and pricing. I’ve been an enterprise user of Rent Prep for over a decade now, and it’s definitely changed the way that we screen our tenants. Check that out today over at rentprep.com. Again, thank you all so much for listening. We’ll be back in two weeks with an all-new episode that you won’t want to miss. Until then, I’m Andrew Schultz with ownbuffalo.com for rentprep.com, and we’ll talk to you soon.
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