As a real estate investor or landlord there is a part of the business that no one likes, that is the time and money involved suing someone. “The only person who comes out ahead in a lawsuit these days is the attorney.” This popular theory, accurate or not, is spawned by an incontestable fact: it costs a lot of money and time to take anyone to court. But if, as a real estate investor or landlord, your claim is small enough, there is an excellent alternative: small claims court.
Every state has one. Each sets an upper limit to the dollar amount for which plaintiff can sue. That’s the bad news for the real estate investor or landlord. The good news is that it is fast and inexpensive. You won’t have to wait months or even years to get satisfaction. In many areas, you can get a date within a month or less. And it won’t cost you a second mortgage. Costs vary, but there is usually only a small filing fee. Other costs can include paying a constable to serve the defendant with a summons, and paying the court to attach the defendants wages if you win the judgment but have trouble collecting. Both of these costs are also nominal.
Before going to small claims court, however, be realistic. Too many plaintiffs take insolvent or shifty defendants to court, only to win worthless judgments because they can pay, have left the state, or are able to dodge the judgment in some other way. The real estate investor or landlord should access their chances of collecting before you file. If you are suing an established store or a solvent business, collection probably won’t be a problem. But if the business or individual is in bankruptcy or serious financial condition, your small claims court judgment may not be worth the paper it is printed on.
Your chances of winning the judgment is also an important consideration to make before filing. Don’t go into court unless you are certain your complaint is sound. But even that is not enough. The judge (usually a local attorney who fills in as an occasional small claims court judge) can’t give you the judgment unless you can substantiate your claim in some way. Often, this boils down to one or both parties explaining what happened and showing bills, receipts, products, pictures and other evidence. Defendants who realize they are at fault will frequently fail to come to the court at the appointed date and time. In these cases, if you can give reasonable verbal or physical evidence of your complaints, you can easily win judgments. But when defendants come ready to defend themselves, it may take more effort. Don’t hesitate to bring a witness, if applicable and available, together with any and all supporting evidence you can find.
Don’t bring a lawyer with you. Some people do, but it’s rarely cost-effective. So you’ll have to argue your own case. When you file, ask the court clerk for a description of any rules or protocols that apply. Then prepare your case. In court, don’t do a Perry Mason impersonation. Just be organized, clear and concise. The judge will likely cut you off if you don’t stay on target.
Finally, always remember – relax. No one has ever been taken out behind the courthouse and executed after a small claims court hearing.