How to Collect Unpaid Rent When a Tenant Moves Out

It’s every property manager’s worst nightmare—your tenant’s behind on rent and moving out. You don’t want to wait months to collect the unpaid rent, but you’re not sure what to do. How do you get the rent legally and fast?

We’re sharing a step-by-step guide on how to collect unpaid rent after a tenant moves out so you can get your money quickly and focus on providing an exceptional rental experience for your stellar residents.

Step 1: Review the Lease Agreement

One of the best ways to avoid bad tenants is to adopt a thorough screening process and clearly outline the terms and conditions of the lease agreement—like late fees, rent obligations, and any penalties for unpaid rent.

After your tenant moves out, take a look at the lease. You need to verify the terms and conditions, including:

Rent payment obligations. The lease should include rent payment due dates, acceptable payment methods, and any penalties for late or unpaid rent.

Unpaid rent collection. Identify any clauses that relate to how to collect unpaid rent after a tenant moves out and the renter’s obligations to settle their outstanding rent.

Security deposits. Some states allow landlords to take unpaid rent from the security deposit, so check the laws to see if this is the case in your state. If so, it should be outlined in the lease.

While state laws vary, tenants and property managers have rights and responsibilities. Make sure you understand the legal implications of collecting unpaid rent and your tenants’ rights.

Step 2: Document the Unpaid Rent

Landlords struggling with how to collect unpaid rent after a tenant moves out generally end up in small claims court to recoup their losses. But without proper documentation—proof of unpaid rent—you could leave empty-handed.

To ensure you’ve got what you need in and out of court, document everything, including:

• Lease agreements
• Records of rent payments and when they made their last payment
• Communication with your tenant about payment
• A detailed record of the unpaid rent balance
• Documentation that shows amounts due and dates
• Supporting documents, like rent ledgers or eviction notices

These documents will support your claim for unpaid rent and help you collect what’s due.

Step 3: Communicate with the Tenant

Sometimes talking with a bad tenant can turn things around or, at the very least, open the door to a productive conversation on how to move forward. But you should also use more formal channels—like certified mail—to communicate with a former resident.

First, send a formal notice to the tenant’s last known address about the unpaid rent that includes:

• The amount owed and when rent was due
• A deadline for the unpaid rent payment
• Payment methods (like a check or online payment)
• Options for resolving the issue before pursuing further action, like small claims court

Keep a copy of the notice for your records. You can also use it in small claims court (if you go that route).

Pro tip: Send the notice via certified mail to prove that the renter received the notice.

Step 4: Explore Payment Arrangements

Figuring out how to collect unpaid rent after a tenant moves out can be frustrating and stressful, but it doesn’t have to get nasty. Try to keep a positive relationship with your former tenant by being as accommodating as possible.

One way to do that is to offer payment arrangements that work for both you and the renter. Discuss potential payment plans or a settlement, and be flexible in the payment schedule if you can.

And if you just want to settle the debt, consider accepting partial payments. 

Step 5: Send a Demand Letter

If you’ve sent a notice to the tenant and haven’t received a response, send a formal demand letter that clearly states that they owe rent, how much, and what consequences they can expect if they don’t pay.

The demand letter should also include the payment deadline and any potential legal actions you’ll take if they don’t settle the debt by the stated deadline. And, like with the first notice, send the demand letter through certified mail to ensure receipt of the letter.

Step 6: Use a Collection Agency

You’ve reviewed the lease agreement, documented everything, and reached out to the former resident—still nothing. Another approach for how to collect unpaid rent after a tenant moves out is working with a reputable collection agency that specializes in recovering rental debts.

Once you’ve done your research and found a quality collection agency, share all necessary documentation and tenant information, including relevant details like the lease agreement, total debt, and due dates.

Keep in mind that collection agencies come with fees. While fees vary based on different factors (like debt owed), most collection agencies typically charge based on a small percentage of the total rent recovered.

The Debt Collection Process

Before you hire a debt collection agency, familiarize yourself with the process. It’ll help you set reasonable expectations about timelines and whether you’ll need to take legal action.

Here’s what to expect:

Pick an agency. You’ll choose the right collection agency for your needs and then share all relevant information and documents.

Start the collection process. The agency will send a demand letter that includes the balance, due date, and potential consequences of not paying.

Follow-up. The collection agency will follow up with phone calls and try to negotiate a solution with the tenant carrying the debt.

Escalation. The agency will escalate the matter if they get no response from the tenant or can’t reach a successful negotiation. This might involve taking legal action or reporting the debt to credit bureaus, potentially lowering the tenant’s credit score.

Step 7: Consider Small Claims Court

If all else fails, filing a claim in small claims court is a viable way to recover the rent owed, and you don’t need a lawyer if you don’t want to pay for one. While filing a claim is pretty straightforward—you file and pay a fee—it can be time-consuming.

So before you file a claim, make sure it’s a feasible option and worth your time. If you want to move forward, here’s what the general process looks like:

Gather documentation and evidence. Get together all relevant documentation related to the rent owed, like the formal demand letter, tenant communication, the lease, and any other evidence to support your case.

Fill out the forms. Make sure you fill out any necessary forms required by the court and include your evidence before filing the claim.

File the claim. Submit your completed forms and pay the filing fee—the court has specific filing instructions, so be sure to follow them to a tee, including submitting everything on time and following procedures.

Serve the former renter. Once you have a copy of the filed claim and court date notice, serve your previous tenant. How you serve them depends on your jurisdiction, but certified mail is a common method.

Go to court. On your scheduled court date, you’ll present your case to a judge—evidence, facts, and an explanation of why you’re entitled to the outstanding rent. If the tenant moved and doesn’t show up to court, you will automatically win the case.

Next steps. The judge will make a ruling. If they rule in your favor, you can then take the necessary steps to collect unpaid rent, which vary depending on the judge’s ruling.

While you don’t need a lawyer to file a claim in small claims court, hiring one with experience in landlord-tenant law can help you navigate the process and make sure you’re fully prepared.

Step 8: Report to Credit Bureaus

One way to grab a former tenant’s attention is to report the unpaid rent to the three major credit bureaus. Their credit score will likely take a hard hit, potentially motivating them to resolve the debt as quickly as possible.

If you go this route, make sure you’re compliant with legal requirements for reporting unpaid rent debts. The Fair Credit Reporting Act (FCRA) governs how you can legally report these debts—generally, you can report the debt to the credit bureaus without tenant consent if the information is accurate and complete.

The Impact on a Tenant’s Future Creditworthiness

You’re doing everything you can to collect the unpaid rent. But don’t forget to think about the impact reporting the unpaid debt to the credit bureaus will have on your former tenant—now and in the future.

Some of the consequences they’ll have to deal with include:

• A lower credit score that will make it difficult to get loans, housing, and credit cards
• Difficulty getting through a tenant screening process due to a poor credit report
• Higher rent or security deposits at their next rental property because of low credit

How to Prevent Future Unpaid Rent Issues

Instead of trying to figure out how to collect unpaid rent after a tenant moves out, create clear rent collection processes that prevent unpaid rent issues in the first place.

There will always be risks with property management, but establishing preventative and proactive practices can mitigate those risks and help reduce bad debt. 

Thorough Tenant Screening

Create a complete tenant screening process to assess the financial stability of potential renters and ensure you only approve tenants who are financially responsible.

Your screening process should include things like employment and income verification, background checks, identity verification, and contacting previous landlords.

Comprehensive Lease Agreements

Clearly outline the terms and conditions of renting one of your properties. The lease should include the rent due amount, due dates, late rent fees, any consequences of not paying rent, and anything else relating to non-payment. 

Remember, if you have to deal with collecting unpaid rent after the tenant leaves, the lease agreement is a crucial piece of evidence. Make it as comprehensive as possible.

Security Deposits

Preemptively protect yourself from future unpaid rent by requiring security deposits and last month’s rent upfront. This will mitigate potential losses should a tenant leave with unpaid rent.

Proactive Communication

One of the best ways to keep tenants happy (and keep them at your property) is to be proactive—with maintenance, communication, and support. Keep the communication channels open and reach out before problems pop up.

As you encourage open communication, let tenants know they can come to you with any financial challenges that might impact their ability to pay rent on time.

Rent Payment Enforcement

The lease agreement should clearly outline any consequences for late or unpaid rent. It’s up to you to enforce those penalties. Act on the stated penalties consistently to discourage tenants from repeatedly paying rent late or not at all.

Be Proactive and Prompt

You know how to collect unpaid rent after a tenant moves out. You’ve got a list of preventative measures to take to minimize the risk of getting tenants who don’t pay rent. Now, it’s time to put everything into practice.

Be proactive before problems arise and act promptly when a tenant misses rent or establishes a pattern of non-payment. But make sure you approach collecting unpaid rent legally, following industry guidelines. Staying up to date on best practices for rent collection will also help mitigate risk.

Additional Resources

We’ve rounded up a few resources to help you write better leases and rent collection policies.

• Information on how to write a lease agreement
• Ready-to-use lease agreement templates
• Examples of rent collection policy clauses