Handling a Tenant's Abandoned Property When the Tenant Owes You Money
Take care before selling property a tenant has left behind in a rental unit.
Dealing with a tenant’s abandoned belongings is always bothersome, but it can be downright complicated when the tenant owes you money. If a tenant owes you back rent or money for damage done to the rental unit, you may be inclined to take or sell any property of value that’s left behind -- and worry about finding the tenant later. But that’s a risky course to take in many states, even if you have a court judgment stating what the tenant owes.
Some states do allow you to keep or sell abandoned property if the tenant owes you money. In legal terms, you have an “automatic lien” on your tenants’ belongings. This differs from the normal lien process -- which involves formally recording your claim (your lien) against the tenant’s property, then “getting in line” in case others have filed ahead of you.
Guidelines for Taking or Selling Abandoned Property
If your state statute gives you a lien on your tenant’s property, we advise you to use it very carefully, following these guidelines.
Use caution when seizing consumer or other goods that may not be paid for. If your tenant has financed a stereo, TV, sofa, or computer and is paying in installments, the merchant has a lien that’s ahead of yours. This is called a “superior” lien -- meaning that the merchant, not you, has first claim to the item when the tenant stops paying. (Not surprisingly, the tenant will typically stop payments after abandoning the item.)
You can’t simply seize and sell an abandoned item that is not paid off. Instead, you must surrender the item if the merchant comes to collect it. If you’ve already sold the item, you may have to pay the merchant the balance due or the value of the item. You can try to avoid this result by publicizing your intent to seize and sell the item, asexplained below.
Follow your state’s rules for publicizing your lien. Many states require a landlord to post notices in newspapers announcing the intent to sell an item abandoned by a tenant. This is to make sure others -- like the merchantsmentioned above -- who have superior liens on a tenant’s property don’t lose out when you jump ahead of them and take or sell the item. Merchants are presumed to read the legal notices; failure to do so may result in the merchants’ losing their right to assert the superiority of their lien. It’s a good idea to publicize the sale of a tenant’s valuable abandoned property even if your statute doesn’t require it.
Don’t seize items that are necessary for basic living. Many states that give landlords an automatic lien will exclude certain items from your grasp. These may include belongings such as season-appropriate clothing, blankets, tools, and things needed for a minor child’s education. If you’re not sure whether an item is a tool of your ex-tenant’s trade or simply supports the tenant’s hobby, don’t take it.
Watch out for out-of-date laws allowing “distress” or “distraint.” These were medieval procedures that allowed a landlord who was owed money, after or even during the tenancy, to simply grab his tenant’s possessions. In the words of one judge, it “allowed a man to be his own avenger.” A few states still have laws like these on the books, however courts have either ruled them unconstitutional or added so many safeguards (notice, a hearing, and so on) that the original process is unrecognizable.
If you encounter a distress or distraint statute when reading your state’s laws, resist the temptation to follow it without first learning -- through legal research or talking to your landlords’ association or lawyer -- how modern landlords comply.
Finding Your State’s Law
To find out whether your state has rules about liens, you’ll need to look up the law yourself or get professional help.
Doing your own research. To find out what laws your state has on the books, see State Laws on Handling Abandoned Property. There, you’ll find the statute numbers you’ll need to look up. If you don’t find a statute covering liens, there’s one more step to take. In most states with lien statutes, courts have stepped in with additional requirements, such as providing notice and an opportunity for the tenant to be heard. That means you should find and read any cases that have interpreted your state’s lien law. (For tips, see the Legal Research section on Nolo.com.)
Contacting a landlords’ association. You can often get good information and advice by talking with other landlords. You may want to search online for your local or state rental property associations. One place to begin your search is the National Apartment Association, an organization whose members include many state associations. Also, the National Multifamily Housing Council offers many opportunities for networking and information sharing.
Getting a lawyer’s help. A qualified lawyer can help you find and understand the rules that apply to your situation. You can search for an experienced landlord-tenant attorney using Nolo’s Lawyer Directory.
To learn the basics of how abandoned property laws work, see Handling a Tenant’s Abandoned Property: An Overview.
To find out about giving notice to a tenant who has left belongings behind, see Handling Tenant’s Abandoned Property: Legal Notice Requirements.
For more information about your rights and responsibilities as a landlord, see the Landlords section of Nolo.com.
This article was adapted from Every Landlord’s Legal Guide, the most comprehensive and up-to-date legal and practical guide for residential landlords, by Marcia Stewart, Ralph Warner, and Janet Portman (Nolo).