Selling a property when tenant behind on rent.

[Pablo]

I am afraid that I have broken the number 1 rule when self managing one of my Adelaide properties.

I have let the tenant get behind on their rent.

This has occurred as I have currently got the property on the market for sale and as the tenant can be a little difficult sometimes (and also has been diagnosed with cancer so I felt sorry for him) I overlooked a couple missed rental payments here and there but he is now 4 weeks behind.

I have not served a breach on him because I have not wanted him to be difficult for the opens and effect the sales process.

So my question is what should I do to recover my lost rent and prevent further losses?

The auction is on Saturday the 12/2, if it doesn't sell I am definitely going to have to take action by serving a breach and/or working out a repayment plan so that the tenant catches up. But then if he does move out I am going to have a vacant house not earning any rent until it sells!

I was also thinking to have the settlement day timed for when the lease ends in 2 months time, so that I could at least recover the last 6 weeks rent and then the tenant could re-sign with the new owner if they turned out to be an investor or find another property to rent. But its odds on that he will not have the bond payment for the new lease and thus not be able to resign or move out on the settlement day!

Any advice?

Thanks in advance.

 

[BV]

The auction is on Saturday the 12/2, if it doesn't sell I am definitely going to have to take action by serving a breach and/or working out a repayment plan so that the tenant catches up. But then if he does move out I am going to have a vacant house not earning any rent until it sells!

Hi Pablo
I hope your property sells on auction day.
If it doesn't then my decision would depend on how good the tenant is and if his presence helps your cause.

If the place is kept in good condition and tidy it will be better to have the tenant in place while the property is on the market. However, if the place is untidy this will affect the resale value of the property so its best to have it empty and fixed up.

On this basis I've recently evicted 1 tenant and renovated a property to get maximum selling price.
Even if the property doesn't sell for more $ if it is clean and presents well it will sell quicker so I shouldn't have much of a vacancy.

Cheers

 

[Pablo]

Hi Pablo
I hope your property sells on auction day.

Me to!

Thanks Bill,

The house is tidy and his furniture is good but the yard is a little messy so it may sell quicker if he was out.

I did have a thought of how to recover my money, as he is a Tae kwondo instructor I could ask him to pay the owed rent in free lessons for my kids.

 

[BV]

The house is tidy and his furniture is good but the yard is a little messy so it may sell quicker if he was out.

The yard you could probably fix while he is there and he'll appreciate it as well.
Get a gardener to mow the lawn and clip overgrown plants and to spread some new woodchip on top of the garden beds and it will look a lot better

 

[Pa1nter]

Me to!

Thanks Bill,

The house is tidy and his furniture is good but the yard is a little messy so it may sell quicker if he was out.

I did have a thought of how to recover my money, as he is a Tae kwondo instructor I could ask him to pay the owed rent in free lessons for my kids.

You could always go around and threaten to kick his **** if he don't pay

 

[softmonkey]

I have not served a breach on him

Just a thought, does he actually know he is behind? He may have overlooked it himself. Have you tried a reminder call?

 

[Xenia]

Pablo a form 2 is the only way you can act. they either pay or get out on a form 7 in which case you'll have vacant possession for the sale.

Hope it sells on sat. If not they need to get a form 2, if you let it go longer it would be harder to get them out as the tribunal will deem you to be soft.

If you serve them appropriate notices (they are in breach not you) and they decide to be difficult you can legally serve them notices to allow you access for open inspections.

 

[Pablo]

Thanks for the replies.

No, kicking his butt is not an option, I don't like the idea of going head to head with a 6 foot 6 tae Kwon do instructor.

Yes he is aware that he is behind in rent and in fact I even gave him a week free in exchange for doing some renovations on short notice before the sale.

If the property doesn't sell on Sat a form 2 will definitely be getting served followed by the appropriate forms to grant access for the opens.

What happens if another investor purchases the property and takes over the lease, can I claim the bond or does it transfer to the new owner in its entirety and I get stuck with the loss?

Thanks.