Late Rent - Dealing with Arrears

So, you've done your homework, signed up a tenant and still found yourself in an unfortunate situation. From here on out, it is a process of damage control. It is highly likely you will lose money. The key to limiting your losses is speed. Act immediately.

• Tackle overdue rent immediately. A tenant should be two to four weeks in advance at all times.
  
  
• A bad tenant will make all types of excuses for not paying the rent. Do not accept any excuses except those that would genuinely affect their ability to pay. Compromises can be made for legitimate difficulties, particularly for tenants with a good track record.
  
  
• If rental arrears occur, take note of whether you had to call the tenant to chase the rent, or whether they notified you of their difficulties. The latter is usually a more positive sign.
  
• If a payment is missed, notify the tenant and request immediate payment.
  
  
• If rental arrears exceed a certain number of weeks, you are entitled to approach the rental tribunal for an eviction notice.
  
  
• If your tenant is persistently late in paying rent and is always behind, then the tribunal may also grant you possession of your house.
  
  
• If your property managers are late paying the rental payments, ring them up and pressure them to enforce payment. Do not accept their word for delays any more than you would from a bad tenant. They may be inexperienced, slack or underhand.

In NSW, the Consumer Trader and Tenancy Tribunal is the area within the Office of Fair Trading that deals with tenancy disputes. It charges a fee of $31 for a hearing, which is usually held within one month of lodgement.

There are time limits on lodging applications for certain orders — usually you are required to submit a complaint within 30 days of the breach of a tenancy agreement, so be quick.

The landlord has the right to evict a tenant if the tenant:

• Fails to pay rent
• Is consistently late with rental payments
• Damages the property
• Is a nuisance to neighbours
• Uses the property for illegal purposes
• Is in breach of any other obligation in the tenancy agreement.

In any of these instances, the first step is to lodge a hearing with the rental tribunal. If the tribunal grants you possession, it will usually order the tenant to pay arrears.

Make sure you have before and after photos and a house inventory signed by both parties on signing of the tenancy agreement.

And finally, use your commonsense. Not all tenants who fall behind in rental payments are necessarily "bad tenants" as defined in the top few paragraphs. If a tenant has a good track record and suddenly starts experiencing problems, try and open a line of communication before approaching the tribunal.

At True Property Management, our procedure for dealing with rent arrears is as follows:

• All rents are due either monthly or fortnightly in advance
• The vast majority of our tenants utilize our DIRECT DEBIT facility from their bank accounts for rent payments
• If your tenant is 5 days late with their rent, they are personally phoned, faxed, emailed or sent an sms message
• Tenants who are 10 days late with their rent are personally phoned or visited by a property manager
• If the outstanding rent is then not paid within 2 days, we will contact you to update you on the situation and seek your instructions regarding the possible termination of the tenancy
• Once the tenant is 15 days late with the rent and subject to your instructions, we serve the tenant with a Notice to Vacate requiring the tenant to vacate the property within 14 days. 

Visit our Frequently Asked Questions page for more information.