If I can summarize everything I've learned from evictions related to my tax lien investments, it's to avoid confrontation. That doesn't mean avoid filing an eviction. In fact, it's often a good idea to get the legal process started as extra leverage; however, it's rare that you will actually need to execute the eviction if you follow some basic steps outlined below.
Your first step once you have been issued a deed or completed your quiet title action (depending on the state) is to determine if the property is occupied.
TAX LIEN PRO TIP: My favorite way to determine if the property is occupied is to check the electrical meter or call the utility company to see if there is active service (check local laws before going on to the property). If there is no electric service to the property, it is most likely not occupied unless it's a vagrant.
If it's occupied, you should contact your local attorney to learn about your rights as a tax deed holder and to begin the legal steps necessary to evict. The eviction steps and timing vary greatly by locality, but by starting the process, you get the clock ticking and it gives you a lot of leverage. You should also read up on the new law passed by the federal government called the Protecting Tenants at Foreclosure Act of 2009. While it hasn't been tested specifically for tax certificate investors, I always follow it so that I'm not the first one to create case law on the matter.
Once you understand the do's and don'ts of your particular locality's eviction laws, make contact with the occupants. The first method of contact should be to send a letter both by fedex and by regular mail to ensure its delivery. I succinctly explain who I am, what the situation is, and request they contact me as soon as possible. If I don't get a response after two weeks, I'll have a broker or myself knock on the door and introduce myself (again, check local laws to see if it's OK to do so).
Know your surroundings, but don't be intimidated. Most everyone that I've met in this way either doesn't understand the situation or they couldn't resolve their finances and chose just to ignore the situation. This is where you can help.
After learning and understanding their circumstances, I work with them to find a win/win situation for all parties involved. Here are the most common outcomes:
1. We'll setup a short-term lease while they square away a new place to live.
2. We'll setup a long-term lease with the understanding that they cooperate with my broker should I choose to sell the place.
3. Offer them cash in exchange for moving out. There is no set rule but I've seen $200 up to $10,000 offered. Just make sure you have it in writing and they fully move out before giving them the cash.
4. Sell the tenant or former owner the house on a payment plan or mortgage.
5. Or, if there is no suitable solution, let them know how the eviction works including a timeline and tell them you would like to resolve the matter as soon as possible. Don't create animosity; just let them know what the process is.
Why do everything you can to create a win/win situation? Obviously, it's best for both parties. However, the alternative could just find you with a property with the walls punched in, plumbing and appliances removed, or the entire house burned down. It happens more than you think.
Evictions are not pretty. You're dealing with real people, tough problems and someone's home. But, for many reasons, not just your own pocketbook, you should make every effort to resolve the matter in a way that benefits both you as an investor and those who are living in the property.