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.


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