Tenant not paying rent

Discussion in 'Property Management' started by bello, 15th Mar, 2009.

  1. Collector

    Collector Member

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    Constant rental arrears is certainly an area of great concern to both landlord ant tenants, the tenant falls behind by 5-10 days - you send a letter or notice the tenant pays, then with in 7 days the tenant is behind again by the same amount - ongoing - never ending.

    There is a way to fix this.

    I am of course referring to NSW legislation and this may not be relevant to other state, but it is worth checking.



    1. The way the legislation is in NSW a tenant must be at least 14 days in arrears before a notice to terminate is issued, if you post this notice you will need to add an additional 4 WORKING days (btw you count this days at the beginning not at the end - it does make a difference). The tenant can make a payments - could be as little as 2 days in rent (if posted notice) and then you will have to start the process over again. - So it is advisable to hand deliver notices and have someone with you as witness/security/support.



    2. You can also terminate a tenant for constant rental arrears - and the tenant does not need to be 14 days in arrears or has ever been in arrears by 14 days - not many landlords or PM's know this as it is not seen as standard and certainly not part of any PM's procedure manual.

    To explain:

    If your tenant has constantly paid late, you have constantly chased him and requested payment on time but the tenant has not complied, you are able to terminate the tenant by giving the tenant a 14 day termination notice for beach of Clause 2 of the Residential Tenancy Agreement(not for rental arrears).

    Clause 2 of the residential tenancy agreements states: "The tenant agrees to pay their rent on time"

    If the tenant does not vacate on the termination date and application to the CTTT is made and the tribunal will be required to terminate if you can prove that the tenant has had a problem with paying on time and if you can show that you have tried to get the tenant to pay on time. - I have been successful with this method each time I have used it.


    3. When a tenant is constantly late with rental payments and the landlord does not want the lease terminated, we deal with this by first sitting down with the tenant to see why they are not paying on time - may be as simple as they transfer rent from their bank to our bank (different banks) on the correct date but the funds are delayed and don't appear in our bank for a number of days, or the rent date is not aligned with the pay date. If this fails us then make an application to the CTTT for a specific performance order - court orders the tenant pays rent on time. - if that fails and the landlord still wants to keep the tenant there is not much else one can do but simply accept the situation.
     
  2. PropertyQuotes

    PropertyQuotes Member

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    The termination clause is standard in WA - for the Owner and Tenant. I just extracted the Owner clause.

    And yes, people do sign it knowing the clause exists - never had any problem, and fortunately only had to use it sparingly!
     
  3. Dazz

    Dazz Banned

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    You must be reading a different Act to what I have in front of me. RTA (1987) in WA....the latest version.


    The termination clause in the Act says nothing of the sort as you suggest above, and there is no such thing as "standard" to what you refer.

    The Act is the Act. The standard clause you refer to does not exist.
    --------------------------------

    What it does say is this ;


    Section 64 : Notice of termination by Owner without any ground

    (1) An Owner may give notice of termination of an agreement to the Tenant without specifying any ground for the notice.

    (2) Where an Owner gives notice of termination under this section, the period of notice must not be less than 60 days.

    (3) This section does not apply in relation to an agreement that creates a tenancy for a fixed term during the currency of that term.
    ---------------------------------------


    Section 68 : Notice of termination by Tenant

    (1) A Tenant may give notice of termination of an agreement to the Owner without specifying any ground for the notice.

    (2) Where a Tenant gives notice of termination under this section, the period of notice must not be less than 21 days.

    (3) This section does not apply in relation to an agreement that creates a tenancy for a fixed term during the currency of that term.
    ---------------------------------------


    You will note that in both cases, for both Owner and Tenant, the above sections do not apply and it is unlawful to issue a notice of termination during a fixed term Lease, as per the original poster's query.

    It only applies if the Tenancy has lapsed into a rolling monthly tenancy.

    If there is a fixed term Lease in place, it means just that, it's fixed.
     
    Last edited: 18th Mar, 2009
  4. PropertyQuotes

    PropertyQuotes Member

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    Thanks for the spirited response...

    "Residential Tenancy Agreement Form 24B Periodic Tenancy (No Fixed Term)" items 20, 21, and 22.

    I'll apologise and stand corrected if my interpretation was inaccurate.
     
  5. Perp

    Perp Member

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    PropertyQuotes, you're referring to a periodic tenancy, whereas it appears bello has a tenant on a fixed tenancy.

    PropertyQuotes, I'm sure you provided the information in good faith, and simply missed the distinction between a periodic and fixed tenancy. Dazz (TPFKAD) has a certain "way with words", shall we say... ;)
     
  6. alplant

    alplant Member

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    I guess it doesn't matter too much what is in the lease because like someone else said the RTA rules probably override it anyway. Here is an excerpt from the Queensland RTA.

    When a lessor/agent gives a Notice to Leave

    2 month's 'without grounds' (no reason) under a periodic agreement; and
    14 days or the end of the term (whichever is later) 'without grounds' under a fixed term agreement.


    Here's a link to the actual website.
    http://www.rta.qld.gov.au/giving_the_correct_notice.cfm

    The way I read that, is that here in Queensland it is in the best interests of the tenant to not sign a fixed term lease. One of ours is obviously aware of this because we have a devil's job getting a new lease signed, every time. We need it for our insurance. They won't pay for lost rent if there isn't a fixed term in place.
     
  7. Raddles

    Raddles Member

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    Hi there
    I know where we have a tenant without a previous rental history - we insist upon a guarantee from either a parent or some other party. We have actually received them too.
    So one option if the tenant is not paying - call up the guarantor to pay - which may resolve the issues if the tenant is playing games.
    thanks
     
  8. Collector

    Collector Member

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    In NSW (don't know about other state but think they would be similar) you can not have a guarantor on a residential tenancy
     
  9. Raddles

    Raddles Member

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  10. bodybuilder

    bodybuilder Member

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    My parents found this out the hard way...
     
  11. kathryn d

    kathryn d Member

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    Just add them to the lease as a resident. That is what we do.
    Just signed a 17 yr old for our furnished bachelor suite, and the mother is also listed as a resident, even though the rent is being paud by social services.
    Social services don't cover any damage a tenant may do (in Canada)so we reuired her mother to be responsible.
     
  12. PropertyQuotes

    PropertyQuotes Member

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    Thanks :))
    My original feedback to the initiator of the post was simply to "check your lease agreement for a "termination clause". Hopefully the landlord can find an 'exit strategy' somewhere within the lease contract that's in place...
     
  13. bello

    bello Member

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    Thank you all for your comments and advice.

    The saga continues.

    The tenant had not paid the rent which was due on the 18 march. After 14 days had passed I issued them with a "Form 2 - Termination Notice" which gives them 7 days to pay the rent. If they do not pay, it goes to the tribunal and the tribunal usually gives them some additional time to pay the rent before they ask them to leave. Chances are they will pay on the last day (9 April).

    These tenants were starting to get to me as they were becoming very high maintenance so I now appointed a property manager to take over. I'm hoping that he will have more time to manage them.

    This is the first and last time that I will give my property without a good rental history.
     
  14. reservoir

    reservoir Member

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    VCAT warrant for possession

    Once VCAT issues a warrant and it is lodged with police, is it possible for a tenant to somehow stop the eviction?
     
  15. callander

    callander Callander

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    It is possible for a tenant to request via VCAT an urgent review of the posession hearing but only if they did not attend the VCAT hearing when possession was granted.

    If this was to happen the Warrant would have a stay put in place until the review hearing was held.

    At the review hearing VCAT will then determine if the tenants reasons for not attending are good enough to have review granted and the hearing re-heard then and there immediatly.

    Have had this happen a couple of times and usually the tenant does not show up at the review hearing and they are using the process to delay the eviction warrant (hopefully this gives them enough time to vacate the premises).
     
  16. rosey55

    rosey55 Member

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    We are just a about to start court proceedings and seeing as tenant can decide not to turn up for hearing, but then submit for an urgent hearing (which would take another month) is very concerning to us. This means that tenant can just squat in house not paying rent for several months due to way law is structured.

    Since moving in this tenant has refused to pay any more monies. Tenant has given us every excuse, including using wrong account no. for internet banking etc.

    After 3 weeks including receiving a dishonoured cheque from tenant, we got advice from RTA Brisbane and issued tenant with a Form 11 to remedy breach. We then decided to put the property into the hands of a Real Estate Property Manager who had previously seen the property and knew it had been recently renovated.

    This Real Estate PM spoke with the tenant then told us that our story and the tenant's story was different and she would need to get us all in to discuss. We told PM to get the tenant to start paying the rent as Tenant was in breach of Form 11.

    A week later (still no rent) the PM said she had met again with the tenant and after negotiations an amount was agreed to as well as a payment schedule. Still no rent eventuated from tenant.

    I again contacted RTA who advised that the tenant needed to be given a Form 12. We spoke with PM who said she would not give the Form 12 to tenant, that we would need to follow that path as the tenant had still not signed an application form with PM, nothing was on the ledger therefore PM could not instigate Court proceedings.

    PM also told us that all these problems were our fault as we let the house to tenant privately, without ensuring that they were reputable and could pay the rent. We told PM she had accepted the management of the property knowing the situation with tenant.

    We sought legal advice and were told to take what the RTA advised us with a grain of salt, as it is the person behind the bench who ultimately makes the decision as to whether the tenant is evicted or not; that the tenant can lie in court about the terms of the lease etc; when they received the Forms 11 and 12 etc to make them null and void. That we have placed ourselves at considerable risk of being fined by Court if Judge believes them over us. At the end of the day, it is their word over ours, not about whether they are paying the rent or not. Has anyone else experienced this?

    The Tribunal have now informed us that they can not hear the case until the end of January and this tenant can now live in the house until then paying no rent. We are not to go near the property or change the locks even though formally the tenancy has ended due to Form 12.

    I understand that several forms will need to be produced to claim for all monies owing however, apart from the Bond no one can enforce the tenant to pay the remainder of unpaid monies, not even the Small Claims Court. So what is the point of the RTA or the Tribunal or the Small Claims Court?

    No wonder there is a shortage of rentals in Brisbane My trust in people has gone out the window. We are now putting the house on the market as we don't want to go through all this again.
     
  17. skater

    skater Capitalist

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    OK, you have learnt a couple of very valuable lessons.

    Firstly, self-management is not something to go into lightly. You need to know all the rules and regulations before contemplating this course of action. You also need the disipline to issue all the notices as soon as possible.

    Secondly, there are good and bad PM's. In my opinion the PM should have taken over if that was what was discussed. Whether or not the tenant agrees to the PM is irrelevant. They are employed by you, not the tenant.

    Thirdly, you need to have a buffer. Things don't always go to plan, so you need to have the funds to see you through rough patches. Without it, you can get into all sorts of trouble.

    Lastly, have you got Landlord Insurance? I hope so, because they will come to your rescue to pay for damages & lost rent etc, but don't expect to claim on it next week, you will usually have to go through the process to rid yourself of the tenants first.

    Investing in properties is not without risk, as you have found out, however there are things you can do to lessen that risk. Don't let this nasty experience put you off. Get back on the horse, but this time do it with the knowledge that you have mitigated as much risk as possible.
     
  18. Alex P Keaton

    Alex P Keaton Member

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    Reading all this has got me a little scared. I am leasing my unit out to a 25 year old. She lived at home with her parents whilst studying at uni. She is working full time in her chosen career since June. Employers are impressed with her, she has very good character references but no rental history. Perhaps I should talk to PM about her parents going guarantor just in case. I dunno. Any tips for me? This is the first application I have had and have decided to give her a chance.
     
  19. RumpledElf

    RumpledElf all fun in the big city!

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    My tenants got evicted from their previous house - which was managed by a PM - for falling very behind on rent over several years. Not a good start.

    They seem incredibly guilty about it and didn't seem to mind being put on centerpay. It seems my house is a lot better than their old house (they were mentioning leaky pipes and collapsing ceilings) and is cheaper too, although their old PM wouldn't give me the exact figure for their previous rent, just that it was higher. The man of the house in particular seems to really, really like the place. The rent they are paying *should* put them under absolutely no financial stress whatsoever.

    Previous PM - who I had a veeeeeeery long talk to about them - admits they should have been put on centerpay years ago and couldn't explain why they didn't do it :confused: Doesn't exactly make you trust PMs ...
     
  20. Peterw

    Peterw Member

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    Rosey, as an agent, as well as a property investor, yours is always the storey you dont want to hear. Also, what I dont want to hear, is what I believe is bad advice from property managers. Over the years I have struck more situations than I have wanted, where property managers have said (such and such etc) and I thinkto my self that is wrong. When I challenge them to offer me evidence to support that statement, it is more often than not, "what I was taught". So that leads me to believe, that either the person was not switched on during the training, or the trainer was more giving their "view" as they understood it. Now, my recommendation is to get your self together and prepared for the tribunal hearing. Sadly the new structure is still finding its feet, and is a bbit slow. You should have applied for an urgent hearing, and could have got in early. I assume that you have a tenancy agreement signed by the tenant. Even if you dont, under Qld law, the standard terms and conditions of the tenancy structure apply. Just locate all the paperwork you can, form when you met. If necessary, sit down and write down in point by point items how things transpired. Sadly, the PM did not need a signed application from them to issue breach notices, I dont know why the PM thought they needed it. Dont think the worst just yet, I have collected lots of outstanding monies from bad tenants over the years, and if you would like to contact me, I am happy to give you advice and assistance. Another thing, think twice about selling. Dont make decisions, in this mind set, as there is a chance that you may regret it afterwoods, when things settle down.
    cheers
    Peter Weiss