“And if I don’t want to pay, what are YOU going to do about it?!”
Dealing with difficult tenants can be tricky. So what is the most effective, and cost-efficient way of getting tenants to pay outstanding arrears?
WE’VE ALL HEARD the excuses, sometimes the blatant lies and the remarkable storytelling of people who owe a debt and for some reason or other, refuse to pay. It is no different in the realm of property management, and indeed, property managers are more than likely to be familiar with such undesired tales.
As much as it might give great cause to hair pulling, the ultimate objective is the retrieval of the outstanding amount. To do so however, requires a property manager to consider a series of steps.
First and foremost, allow at least a week to pass before raising the issue of any amounts owed by a tenant. Notifying a tenant of a debt any earlier is likely to agitate them and more than likely push them away from communicating frankly with management. After all, they may have simply forgotten to pay for their rent that week, or there was a problem with a banking transfer.
Many times, simply being patient and letting things happen naturally, resolves the problem. However, should a week pass without resolve, or become a frequent occurrence, it is time to act, but always appropriately.
More often than not, simple miscommunication is responsible for most disputes arising between tenants and property management. Facilitating a cordial dialogue should be the first step of any prudent property manager in the aim of recovering outstanding arrears.
Perhaps there is a legitimate reason why a tenant is refusing to pay rent owing?
The tenant may have a grievance with the agent or be dissatisfied with a rent increase or the property in general.
Or maybe the problem is more personal; the tenant may have lost their job, or suffered a health issue.
By being amenable to discussion, the dispute may be narrowed down to reveal the specific concern of the tenant which otherwise would not have been elicited.
As such, the property manager should refrain from sending any demanding letters or emails until reasonable attempts at communication have been made.
Often, the best means of doing so is by telephone, followed up by arranging a meeting between the parties in person. The reasoning for this approach is because:
- It gives the tenant the impression the agent is approachable and amenable to negotiation;
- It paves the way for establishing a dialogue from which the tenant will have difficulty leaving without appearing to be unwilling to participate; and
- It affords the tenant procedural fairness, which is vital should the dispute remain unresolved and end up being conciliated or litigated in QCAT.
Issuing notice of non-payment
The law permits property management to issue a Notice to remedy breach (Form 11) on the eighth day of non-payment.
Management must be clear about what it alleges the tenant to have breached, and how the tenant may remedy it.
In these circumstances, it involves expressly stating the amount owed and a demand for the full satisfaction of that amount. The tenant will have seven days to make good that breach by paying the amount.
Do I end the tenancy?
Should those seven days pass without the satisfaction of the rent owed, the property manager’s options for remedy broaden significantly. Management is permitted to issue the tenant with a Notice to Leave (Form 12), requiring the tenant to vacate the premises in no less than seven days.
If the tenant finally makes good the debt in that time, they can request management to allow them to stay at the premises. As the agreement has been breached, Management is not obliged to accept that request.
However, practically speaking, and dependant on the many variables involved in these situations, Management has the discretion to agree that the tenant remain.
There are many internal and external influences affecting whether or not Management should accept that offer. These include, for example, where the non-payment was an isolated incident arising from temporary financial difficulty as opposed to deliberate and frequent disregard for the agreement. And perhaps most importantly, how quickly can another tenant be found in the earlier tenant’s place? The hard reality is that an empty property is no longer an asset but a liability.
Should the tenant refuse to leave, Management may, within 14 days of the date to vacate listed on the Form 12, apply to QCAT for an order terminating the lease for the breach, and apply for a further Warrant of Possession order. That order will empower the police to enter the premises and remove the tenant.
Time to Litigate..?
A scary word, ‘litigation’ is a property manager’s last good hand to deal. But before a property manager goes about this, the question that must be asked is, ‘is it worth it?’
As the old adage goes, never throw good money after bad, and always know whether there is any prospect of seeing an outstanding debt being paid. Sometimes it may not be worth pursuing, for any victory may easily amount to a Pyrrhic one.
If a tenant continues to refuse to make payment, but Management would prefer to have the tenant remain, application can be made to RTA to resolve the dispute with an independent third party conciliator.
This requires submitting a Dispute Resolution Request (Form 16). Property managers must be aware that this step must generally be taken unless there is an urgent reason why application should be made to QCAT immediately, such as for a termination order.
If the matter is not resolved by dispute resolution, Management may then apply to QCAT for an order compelling the tenant to pay the outstanding arrears, or alternatively, to end the tenancy.
Can we recover the debt by taking a tenant’s personal property?
Unless a tenant has abandoned the premises, or there is an enforcement warrant in effect, under no circumstance should Management attempt to seize a tenant’s goods. Doing so amounts to a breach of the Residential Tenancies Act and can result in Management incurring heavy penalties.
Follow procedure and be patient!
The abovementioned steps are a good structure for how to approach the matter of non-payment of rent. It cannot act as a strict guide, for each situation is different, involving many variables and differing circumstances.
The only two constants which Management must always be conscious of in its quest to regain rent in arrears are patience and procedure. Ultimately, how these constants are perceived by Management will have a real influence on the final outcome, which at the end of the day is making sure your client gets paid!