Before
we get started
with our collection lessons we should address how you got your debtor, and
where you want to go to start.
Sources of Judgments
A landlord can get a money judgment to
collect for a variety of reasons including eviction, unpaid rent, and
physical damage. Or, a landlord might have a judgment from a suit
against a vendor of services or supplies.
The limits of Small Claims Court suits in most
states, and the fact that costs are significantly reduced because an attorney
is not needed, means that most judgments related to rental properties come from Small Claims Courts.
Small claims courts are an important and
valuable tool that should be understood and used by every landlord. All to
often bad tenants get away with bad behavior which makes them more likely to
repeat with the next landlord, and the next. Judgments are usually good for
ten years, then renewable for another ten, so they are almost always
collectable at some point. That means that it is almost always worth the time and small amount
of money necessary to go to small claims court.
Small Claims Courts
Small Claims Courts are now better known as
People's Courts, perhaps because of TV shows by that name. They have
been established in the U.S. to resolve minor disputes and those involving
relatively modest amounts of money. The people or businesses involved in the
litigation appropriate to small claims, normally present their cases to a
judge, magistrate or court commissioner under rules that encourage a minimum
of legal and procedural formality.
The maximum amount you can sue for varies
among the states from $1,000 to $15,000, but small claims is limited to
$5,000 or less in most states. (See the chart below)
The presiding official listens to testimony,
examines evidence, then makes a decision (a judgment), usually right then and
there. The right of appeal to a higher court is protected, however small claim
rules may still apply.
Although procedural rules dealing with when and
where to file and how to serve papers are established by each state's laws and
differ in some detail, the basic approach to properly preparing and presenting
a small claims case is remarkably similar throughout the United States.
In most states you can be represented by a
lawyer in a small claims court if you like. However, in a handful of states,
including California, Nebraska and Michigan, you must appear on your own.
Some others, have adopted important new legislation that
allows a property manager to appear on behalf of a property owner in small
claims cases relating to landlord tenant issues.
Where hiring a lawyer for Small Claims Court is
allowed, it is rarely cost-efficient. Most lawyers charge too much to prepare
a case and go to court, given the relatively small amounts of money involved
in small claims disputes.
Interestingly, several studies show that people
who represent themselves in small claims cases usually do just as well as
those who have a lawyer.
