8 April, 2015 / Category: Blog
In today’s market, buying a property to rent out is a popular form of investment. Unlike alternate financial ventures, the process towards owning a home can be remarkably simple. However, there can be some issues that landlords need to be prepared for, and late rent is one of the worst. When tenants refuse to pay their rent, for one reason or another, landlords can be placed in a difficult position. Not only do they stand to lose out on rental income, they’re also at risk of losing access to the property until the existing (nonpaying) tenant leaves. In instances such as these, it’s it can be difficult for the landlord to know what to do. Where lenience may be appropriate at times, you don’t want to end up being taken for a ride.
Thankfully, if you take the right steps, the problematic state of affairs can be resolved with calm and reason. Infolio are here to tell you how, commencing from day 1 of the rental arrears.
If you have noticed that your tenant’s rent is a day late, send a friendly SMS reminding the occupant that the funds need to be paid. At this early stage it is important to be as congenial as possible, as the tenant could have genuinely forgotten that their rent was due.
If two more days go by, and you tenant’s rent is now three days late, a phone call is in order. Touching base on a more personal level allows you to have a more open dialogue about the situation at hand. If your tenant dodges your calls, it’s also a warning sign that the issue could be more serious than a one-off, honest mistake.
By day five, it’s time to up the ante. If you’ve been unable to make contact via telephone, try again. If you are leaving a voice mail, be sure to remain cool, calm and collected. In addition to a follow-up phone call, send your tenant a letter. Documenting the situation in writing will be proof of your well-intended efforts to chase up the tenant’s debts.
If your tenant’s rent is seven days late, you’ll need to send another SMS, and make another phone call. Even if your tenant fails to respond, this contact sends a message to your occupant that you have not forgotten about the money that they owe, and that it still needs to be paid.
By day ten, attempt to call your tenant once more. During this phone call, you will need to remind the occupant that they will be issued with notice to vacate if they fail to pay their dues in full by day fourteen. If they do not pick up, leave a polite voice mail saying the same thing. At this stage, it is important to remain calm, but also to be firm.
Better late than never?
By law, the tenant must be fourteen days in full arrears before you can take action to evict them on the grounds of non-payment. And so, a landlord must wait until the time is right to take more serious action. By day fifteen, however, the landlord is well within their rights to supply the tenant with written notice to vacate, for failure to pay their rent at the time when it was due.
Third party involvement
Unfortunately, there may be times when the dispute cannot be fully resolved between the tenant and landlord alone. In the worst-case scenario, tenants may still refuse to pay their landlord in their given notice period. If this occurs, it is imperative that the landlord makes an application to go to VCAT, in order to obtain a formal order of possession.
Once this process is complete, the landlord can hand the order of possession to the local police station, and arrange for an official eviction to occur. From here, tenants will be removed from the property, their possessions will be placed outside, and all locks will be changed. By its very nature, the process of eviction is both emotional and invasive. So, where possible, it’s best to conduct all steps prior will a calm and respectful diligence. If negotiations begin politely, there’s a better chance that things will end well.
Remember, there’s (usually) an explanation
More often than not, when rent is not paid there is usually good reason. Very few tenants would not pay their rent just to spite you. Therefore, it’s important not to take hasty steps without attempting to come to a calm resolution. Any failure to resolve a matter on the landlord’s part will not be look upon favorably by the members of VCAT. And so, when tenants do strike financial hardship, it’s a good idea to consider a payment plan as a primary option.
Learn from your disputes
Strange as it may seem, there are lessons all landlords can learn from rental disputes with tenants. If, for instance, a landlord has a tenant who continually pays late, but who is never fourteen days in arrears, their tardiness could be a result of their own pay schedule. In this instance, it might be wise to alter the rental due date, and make adjustments at your end. However, if this is not possible, you could also issue your occupant with a breach of tenancy. Though it’s a drawn out process, three consecutive breaches for the same reason (i.e. late rent) is solid grounds for an eviction. As such, you could then present your case for eviction, or a compliance order, to a member of VCAT.
While every dispute is different, it’s imperative that a landlord knows their rights, as well as the rights of their tenants, when rent is overdue. Most importantly, as with any relationship, the best way to avoid a serious dispute is to keep all lines of communication between landlord and tenant open and clear.