In general, it is our firm’s recommendation that a landlord NOT seek a money judgment when a landlord is seeking to evict a tenant. However, before taking any action, a landlord must weigh the pros and cons of filing for a money judgment simultaneously to seeking possession of the property.
The strongest reason to seek a money judgment at the same time as seeking possession through eviction procedures is that theoretically a money judgment bars future lawsuits because the tenant could have raised the issues in the landlord-tenant eviction proceeding.[1] However, our firm has litigated a case in the Washtenaw Circuit Court where the court interpreted the law to bar res judicata in any landlord-tenant case.
A second reason to seek a money judgment, while seeking possession is that if a money judgment is obtained, collection on that judgment may begin 21 days after the judgment’s entry. If there are no further damages to the property, the security deposit may be applied towards the judgment and collection efforts may commence on the remainder without the need for a second suit.
However, seeking a money judgment requires an additional filing fee based upon the amount which the money judgment is sought. Additionally, that filing fee will likely be wasted. In order to obtain a money judgment in a landlord-tenant proceeding, the summons and complaint must personally be served upon the tenant or, the tenant must appear in court. Considering that the tenant is likely avoiding paying rent, it is highly unlikely that the tenant will voluntarily be served.
When a landlord seeks a money judgment, tenants who do appear in court often are incentivized to elongate the process and fight more vehemently in court. A money judgment may appear on their credit report barring the tenant from getting a future lease, making their desire to stay in the landlord’s property much stronger.
Even in the case where a landlord obtains a money judgment, a second suit still may be necessary. After all, a tenant could have damaged the property, which would have been unknown at the time that the eviction and money judgment was secured. Therefore, if a landlord wished to recover for lost rent and damages, a second suit would still have to be instituted to obtain the damages to the property and any other charges in addition to the money judgment previously obtained on the rent.
Worse, in these situations, applying the Security Deposit under the Landlord-Tenant Relationships Act could be extremely difficult. For example, if a landlord were to obtain a money judgment in the amount of $2,000 for unpaid rent, including court costs and the landlord discovered that the tenant damaged the property in the amount of $1,000. If the landlord had a security deposit in the amount of $1,000, would it be proper to apply the $1,000 against the damages or should the landlord apply it against the money judgment? If it is proper to apply it against the damages, then the landlord would only need to collect on the $2,000 money judgment. However, if the landlord must apply the security deposit of $1,000 against the $2,000 money judgment, the landlord must file a second suit against the tenant for $1,000. By not seeking a money judgment in a landlord-tenant eviction, this problem is avoided completely.
Therefore, prior to instituting any eviction action, it is critical that a landlord consult with an attorney to determine whether it is in the landlord’s best interest to seek a money judgment simultaneously to seeking possession.
[1] Jam Corp v Aaro Disposal, Inc, 461 Mich 161; 600 NW2d 627 (1999); 1300 LaFayette E Coop, Inc v Savoy, 284 Mich App 522; 773 NW2d 57 (2009).
