I had the chance to speak at a seminar today regarding Louisiana landlord and tenant law (Lessor / Lessee here in Louisiana). During this seminar, I was asked a number of questions, some of which got me thinking about the topic of collection of back rent. Unfortunately, it can be tough to collect back rent in many circumstances, and sometimes is not worth the expense and resources. Once a tenant has been evicted, it is generally smart to pursue recovery of back rent only if the right circumstances are present.
Is the Amount Worth It To File A Lawsuit?
I typically do not advise clients to hire an attorney and file a lawsuit for any amounts under $10,000.00. Every case is different, so this isn’t an absolute rule, but the cost of litigation is simply too high to file court proceedings for every dispute.
Further, I usually do not recommend pursuing amounts under $20,000.00 unless there is a provision in the lease or a Louisiana law that allows for recovery of attorney fees and costs. Therefore, the first factor to consider is whether the lease (or relevant law) allows the landlord to recover attorney fees for successful claims.
To determine whether you will be able to recover your attorney fees, consider the type of lease, as there are different rules for oral leases and written leases. If a written lease is involved, there is no guarantee for attorneys fees and costs unless specifically provided for in the lease. An oral lease typically does not allow for the recovery of attorneys fees and costs, except in one circumstance, discussed in the following section.
Statute Awarding Attorney Fees and Costs In An Oral Lease
The landlord’s right to his property is a constitutionally protected right. The tenant is entitled to own, control, use, enjoy and dispose his/her private property. This right is reiterated by the legislature in La. RS 9:3258.
The law protects landlords with it comes to collection of rent. If done properly, unpaid rent is subject to the landlord collecting attorneys fees for collection. La. RS 9:3259 lays out the framework for how to secure attorneys fees along with rents due.
If the tenant fails to pay rent when it is due, within 20 days after delivery of written demand correctly setting forth the amount of rent due, the tenant shall be liable for reasonable attorney fees for the prosecution and collection of such claim when a judgment is rendered in favor of the landlord. The statute says “shall,” which means that the court must award these attorney fees if the landlord is successful in his claim. La. R.S. 9:3259 is a powerful statute, but for oral leases only. (These provisions can also be incorporated into a written lease and be just as powerful, as discussed below).
To comply with the law’s notice provisions, the written demand must be sent by certified mail to the last known address of the tenant, by personal delivery to the tenant, or by tacking it to the door of the leased premises.
All Written Leases Should Have An Attorneys Fees and Costs Provision
Unlike the statute discussed in the previous section, there is no law specifically awarding attorney fees and costs for claims arising out of a written lease. This is likely the case because a landlord can always include an attorney fees clause in the lease when drafting it. A lease should always have an attorneys fees and costs provision in favor of the prevailing party or, even better, in favor of the landlord if the matter is sent to collection.
Enforcing Awards and Judgments
Obtaining a judgment or an arbitration award is great (that means you won the case!), but it can be anti-climactic when trying to recover back rent. Even if you have a judgment that orders a former tenant to pay the back rent, you still have to collect what is owed. If the tenant refuses to pay, even after a judgment is obtained, and the landlord is unable to locate seizable assets of the tenant, the judgment or award is worth only as much as the paper it is printed on.
However, a judgment gives the landlord the power to seize and sell property of the tenant to collect the rent that is owed. This is a powerful tool. Each collection is different, but enforcing judgments is an art form.
The easiest way to enforce a judgment is by seizing funds held in a tenant’s bank account, so the key is to have accurate information about where the tenant keeps his/her money. Save copies of all checks that the tenant paid rent with, so that you will have accurate bank account information. Further, wages can be garnished to enforce judgments, so it is good to know where the tenant is employed. Finally, it helps to know if the tenant owns any other real property in Louisiana.
These three categories of assets – 1) bank accounts, 2) employment/wages, and 3) other property – are essential when attempting to collect on a judgment or award. With this information, an attorney can file a garnishment petition and have the sheriff seize the property of the debtor tenant.
Collection on overdue rent can be a tough task. However, if you carefully consider the tips in this article, you should have the information you need to make an informed decision about whether it is worth it to pursue that back rent you are owed.