What Happens If My Tenant Doesn’t Pay Their Rent?

By September 22, 2017Landlord Tips

Rental arrears can impact the performance of your investment property and if not managed correctly, the relationship between a tenant and a landlord can turn pear-shaped very quickly. Balancing the fine line between acknowledging the sometimes difficult circumstances of a tenant and securing a steady return on your investment property is a challenge that can rattle even the most hardcore property manager or landlord.

So, here is our take on what we believe is essential in a good arrears management process:

A Daily Monitoring Routine

Managing arrears effectively depends on strict daily routines and processes followed up with the right knowledge of legislation and documentation. Some tenants may have genuinely forgotten to pay rent if an automatic payment has not been set up – we’re all human! That’s why daily check up’s are important. Without a proper rent monitoring system in place, missed payments can easily go unnoticed. The earlier a rent arrear is solved, the easier it becomes to get a tenant back on track with their payments.

 

The Late Rent Notice

At Property Only we have a zero tolerance kind of approach when it comes to rental arrears. We contact late payers every day they are late – via phone calls, sms and/or emails to ensure that these issues are solved quickly and efficiently. If the tenant has not brought the arrears up to date we will issue a Notice to Remedy Breach on day 8.  The Notice to Remedy Breach form is not a formal eviction notice, but it shows the tenant they are in breach of their agreement and hopefully prompts immediate resolution.

 

Pay Up or Pack Up

Despite a detailed arrears follow-up process, proactive steps towards resolution aren’t always successful. In this instance, it’s time to back up our words with action. This is essentially the first step in the eviction process. The ‘e’ word is never ideal, but if the tenant can not or will not pay rent, it’s time to get serious. This means issuing a Notice to Leave if the tenant has not taken action within 7 days since the Notice to Remedy Breach was issued. At any stage, it’s important to document everything in writing and keep copies.

 

The Last Resort

If the tenant has still not paid their rent, despite a notice to leave the next step is applying to the tribunal for a termination order to remove the tenant from the property. This should be the last resort if there are no other arrangements to collect overdue payments. Once an official court order is obtained the tenant can be forcefully removed from the premises. This is, of course, the last resort. We never forget that each eviction case greatly impacts the life of a human being. These people lose their homes and even though we are professionals that take these matters seriously, it’s not always easy to follow through with the process. While we understand that these things are necessary, we always hope to solve the issue before it comes to this drastic measure.

 

Key Takeaways

Daily monitoring is vital step in successful property management.  Staying on top of rent arrears means that the situation can be dealt with before it becomes a real problem.

Protocol is everything once this process begins because the slightest slip-up could mean legal liability and the situation can quickly spiral out of control.

And finally, it’s important to approach the tasks at hand with your best interests in mind. While we like to remain considerate and empathetic to different people in different circumstances, it’s too easy to have tenants take advantage of the situation. As property managers, we see a tightly managed arrears process as a necessary precaution to look after our customer’s assets. Once a tenant falls behind it can be extremely difficult to recover the funds – especially when not equipped with the right knowledge. It’s a tough job and a delicate situation to be in, so we approach it with a cautious balance of empathy and tenacity.

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