It’s a fact of life in the landlording world: Despite our best efforts to attract quality tenants, anyone involved in Real Estate IRA investment will sooner or later need to consider evicting a problem tenant.
But if you’re evicting a tenant from your Real Estate IRA property, there are some important things to keep in mind – some of them apply specifically to IRAs and other tax-advantaged accounts.
First, be careful to maintain strict segregation of your personal and IRA funds. For example, any payments for court costs, attorneys’ fees, process server fees and anything else related to the eviction must come from the IRA. You may not use your own personal money to pay these costs. Otherwise you could endanger the tax-favored nature of the account and potentially face forced distributions, tax liability and penalties.
Second, you cannot pay yourself to act as your own attorney in any eviction proceeding involving your own Real Estate IRA. This prohibition also applies to hiring your spouse, children, grandchildren, parents, grandparents or anyone involved in advising you about your Real Estate IRA in a fiduciary role.
Third, South Carolina prohibits landlords from effecting any evictions without a court order. Don’t try to take matters in your own hands by changing locks, shutting off utilities or doing anything else to make their tenancy unbearable. You must go through the process and obtain a court order.
In South Carolina, you must provide a five-day notice to pay or quit before filing to evict for non-payment of rent (unless you have such a provision in bold print in your lease agreement already.)
If you are evicting because of a violation of lease terms, but there’s no need to evict if the tenant will fix the problem, you can provide a 14-day notice to cure or quit. If the tenant does fix the lease violation, you may not continue with the eviction.
In some circumstances, you may not want to give the tenant a chance to cure a lease violation. For example, if the tenant has been engaging in illegal drug activity or has been violent or threatening to other residents, or committed other crimes, you can end the tenancy immediately with an unconditional notice to quit. In this case, you can go to the county courthouse and file to evict immediately.
Once you go to the courthouse to file, the court will take care of notifying the tenants of the hearing.
If the tenant no-shows, or mounts an unsuccessful defense, you’ll get a judgment in your favor. This judgment allows you to coordinate with the sheriff’s department in your county to have a deputy show up and ensure that the tenant leaves the residence. If the tenant refuses to leave, the sheriff’s deputy will force them out, and you can then change the locks.
South Carolina law allows you to remove any property left behind and dispose of it, or you can store it for the now-former tenant. If you do store it, or you have moving expenses, these expenses must also be paid out of IRA funds, not out of your personal funds.
In any case, we recommend all Real Estate IRA owners conduct evictions only with the advice of a qualified attorney licensed in South Carolina.