Are You Taking Advantage of Settlement Agreements in Your Eviction Actions?

Having to file eviction actions against tenants who fail to pay rent is inevitable in the property management business. Landlords should build this expense into their operations budget, as well as a vacancy rate based on reasonable assumptions. While many tenants do not contest evictions, some tenants do, which can prompt the court to set the matter for a rent determination hearing and can delay the eviction action. During the eviction action, the landlord, of course, is without rent, so it is important for landlords to “stop the bleeding” as soon as possible. One way to meet the landlord’s interest is to enter into a settlement agreement with the tenant during the action. Here are some benefits.

What is a Settlement Agreement?

A settlement agreement in a legal action is an agreement between the parties that resolves the factual and legal issues of the case. In eviction actions, a settlement agreement typically should address the following subjects:

  • the tenant’s paying back rent,
  • the tenant’s paying accrued rent during the remaining term of tenancy,
  • the tenant’s vacating the premises by a date certain or continuing to occupy the premises as long as the tenant continues paying rent on time,
  • the tenant’s paying landlord attorney’s fees and costs, and
  • the consequences of the tenant’s not paying back and accrued rent.

When the parties enter into the agreement, it is filed with a motion to the court that the court ratify the agreement. It would be a very rare occasion for the court not to ratify the agreement.

Once the court ratifies the agreement, the parties are bound to comply with the agreement, and when the tenant defaults on the agreement, the landlord is able to file a motion for a final judgment in its favor pursuant to the agreement, with the issuance of a writ of possession to remove the tenant.

What Can a Settlement Agreement Do for the Landlord and Tenant?

Landlords must be aware that without a signed settlement agreement between the landlord and tenant, if the landlord accepts rent after the notice to pay period has expired or during the eviction action, the landlord waives the right to pursue the eviction against the tenant. Landlords and property managers who do this likely do not realize the power of entering into a settlement agreement.

By entering into a settlement agreement that is properly worded, the landlord can accept back and accrued rent pursuant to the agreement, and the agreement can state that if the tenant fails to pay back and accrued rent as agreed, the landlord is entitled to a final judgment in its favor to remove the tenant from the premises without having to deliver additional notice or hearing.

Essentially, by failing to pay rent pursuant to the settlement agreement, the tenant agrees to the eviction when he fails to pay as agreed. This way, the tenant can retain the occupancy of the premises, and the landlord doesn’t have to dismiss the eviction and start over the eviction process. This benefits both the landlord and tenant.

Is Your Attorney Advising You on Your Ability to Enter Into a Settlement Agreement?

While landlords that are not a company can file an eviction on their own, corporate landlords are required to hire an attorney to file and handle their eviction actions. See “Corporate Landlords Need an Attorney.” In this author’s experience, many attorneys do not take advantage of the settlement agreement benefits for their clients, perhaps because they make more money by having to file multiple evictions against the same defaulting tenant.

For landlords that have an attorney who has not advised them of the benefits of the settlement agreement, those landlords should consider whether they need another attorney who will provide this beneficial service. Here’s why.

Benefits of the Settlement Agreement

A settlement agreement with a tenant who owes rent is beneficial for the landlord:

  • the landlord can realize more rent;
  • the tenant agrees to pay back and accrued rent, and agrees that upon failure to pay required rent per the agreement, the tenant waives all defenses and landlord is entitled to a final judgment in its favor forthwith;
  • the landlord does not have deliver a new 3 day notice to pay;
  • there is no need for additional hearings in the eviction action;
  • the eviction case is resolved by the parties’ agreement, rather than a court’s judgment;
  • in some cases, the eviction case is resolved more quickly; and
  • the landlord does not have to file a new eviction action and incur additional eviction costs and fees if the tenant defaults on payment in the future.

Of course, the tenant is benefited by avoiding an eviction judgment on their record if they comply with the agreement.

At Property Management Law Solutions, LLC, we consult our landlord clients of the settlement agreement benefits and prepare settlement agreements accordingly for our clients when they desire to enter into an agreement with the tenant. If you are a landlord and need an attorney who will protect your interests, save you money, and work every case for your benefit, contact us so we can help you.

Property Management Law Solutions, LLC is a Florida law firm that specializes in landlord-tenant law and is a landlord-only law firm. We provide statewide services including evictions, consultation plans, education and training, membership plans, lease agreement plans and more. If you are a landlord or property manager, contact us today or subscribe to one of our online membership plans.