Thursday, January 11, 2007

Being a landlord in a debtor-friendly state is the pits...

We're in Texas, and this state is a landlord's worst nightmare. Our office gets calls daily from landlords needing financial recourse on their court judgments against former tenants. Unfortunately, of all the types of cases we deal with, these are the worst, and our company rarely accepts these types of cases for assignment.

Why? Because in Texas, judgment debtors really must own some sort of property for a judgment to be enforceable. But why are tenants renting in the first place? Because they don't own a home!

Landlords, don't assume that a court judgment will take care of everything should your tenant be delinquent. In Texas, there's a huge brick wall of debtor protections you'll have to scale:

  • NO wage garnishment
  • NO seizure of assets unless the debtor owns outright cumulative value of $30,000 ind. / $60,000 couple
  • NO including a home in that $$ figure if it has homestead exemption
  • NO home seizures, if that home is a primary residence
  • NO help from the courts in identifying assets or financial accounts

The best offense for landlords is a good defense. Protect yourself before you agree to rent:

  1. Before proceeding with the following, have a solid understanding of your state's statutues regarding landlord and renter's rights.
  2. Have a solid, comprehensive Renters Application in place. Obtain as much detail from potential renters as possible. Make sure you obtain references and employment information.
  3. With a Renters Application you have "permissible purposes" to pull a credit report on your debtor. DO IT. Believe what it tells you.
  4. Check all references. Double check them.
  5. Ask to see an employment pay stub.
  6. Check your local county regarding criminal records on your subject. Many times, they are free and online.
  7. If city, county or state laws allow you to pass on questionable renters regarding any of the above, all the better. If not, and you must rent to a potential deadbeat, only accept checks as payment. No cash, no money orders (we'll explain that one later).

Having said all this, what can be done on a landlord's judgment against a renter? In Texas, there are many protections on property. But bank accounts...not so much. A bank account can be quickly garnished after judgment, with few restrictions, to immediately enforce the judgment.

Thus, the advice on point #7. Upon receiving a court judgment, the landlord will need to immediately file a writ of garnishment on the bank account. But to do so, the landlord, must know the banking institution where the debtor banks. The court will not find that out for you, nor will they accept the garnishment if you don't know! The best way to know is to have recently cashed checks from your debtor. Easy, cheap, quick.

But, sometimes it's not that simple. The debtor changes accounts, the judgment is older and the debtor has moved, or maybe your debtor didn't cash checks at his bank... If that's the case, the landlord should have a bank account search performed by a reputable company. A banking institution name is usually sufficient for garnishment, but many times the landlord will also want to know balances and other information.

Bottom line for landlords with judgments - seizing bank accounts is usually your only recourse. And our company can help you find such accounts on your debtor(s). Please click the "JCS - Asset Search" tab to your right to learn more.

And secondly - don't despair if your case is not immediately recoverable. Time changes people and their fortunes. Take another look at your case 3, 5, 7 years from now. A judgment that is not recoverable now may be recoverable in the future.

Best wishes to all long-suffering Texas landlords! And visit us at to learn about our bank account and other asset search offerings.

Q & A about our Bank Account Search:

Q: Are you able to find more than one bank account with your bank account search?
A: Yes. By request, when choosing a #6 Enhanced Bank Account Search, we can locate more than one bank account.

Q: What are the costs associated with finding multiple bank accounts?
A: The price we quote on the website for a #6 Enhanced Bank Account Search - $329 - finds one bank account ($75 no hit fee, then $254 with a hit). For each additional account located, we charge $239 per hit. There are no more hit fees. The customer will need to specify how many accounts they want to be searched.

Q: Can you locate multiple accounts with your less expensive search (#5 Bank Accont Search).
A: Sorry, that search employs a different methodology. It finds only one account.

Q: What are your hit rates?
A: A #5 Bank Account search has hit rates between 30 - 40%; the #6 Enhanced Bank Account Search has hit rates between 70 - 80%.

Q: Why are there no hit fees to begin with? If there's an account, won't you find it?
A: Many persons do not understand the purpose of a bank account search. The search does not verify whether or not an account exists; it seeks to find the location of an existing account. This is an important distinction. If our company comes back from a search with a no hit, we are not saying an account does not exist. We are saying that we were unable to locate it. Our hit rates are stellar in the industry, and no provider will have a hit rate of 100%.

Q: I'd like to get a bank account search on my aunt Hilda, just because...
A: Sorry! We can't help you...nor should any one else. For individuals to access our asset search services, they must provide documentation which substantiates that they are in legal proceedings. Only attorneys and private investigators may use our asset search services without presenting evidence that they are in process of civil litigation.

See our website at, especially the FAQ and Asset Search sections.

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