When The Tenant Doesn’t Pay
You’ve thoroughly interrogated anyone and everyone with the slightest interest in becoming your tenant. You’ve narrowed it down to a few candidates. And suddenly, you realize you’ve found the right tenant.
You’ve learnt every single detail about them – right down to the fact they make their morning coffee before they’ve brushed their teeth. And you simply cannot believe your luck. You’ve managed to find a tenant who you can get along with and trust to live in your home! And sure enough, everything sails smoothly. No complaints. No difficult scenarios. And no arguments.
Until one day, the rent does not arrive on time.
Unfortunately, the reality is that there are tenants who do not pay their rent on time. It is a situation that most home owner will need to deal with. So what do you do?
First of all, don’t panic.
If it is the first time your tenant has missed rent payment, you should contact them to ask/remind them that rent is due. Depending on their response, you could take different courses of action.
If they have merely forgotten to pay, they should be able to transfer the money to you quite quickly. If they are unable to pay due to changes in their financial circumstance, you have two methods of dealing with it.
Option 1: Don’t involve the law
The simplest way to deal with missed rental payment is to negotiate with your tenant. Find out why it is that they have missed paying their rent. For example, their car may have needed emergency repairs which had set those back more than they planned. In this case, you can be quite confident that your tenant will be able to pay you back quite quickly since it was a one-off cost that had affected their financial circumstance.
Depending on how much you trust them and their ability to repay, you can always let them pay some time in the future. If you want to, you can always play it safe by having them sign a formal agreement to pay the rent back at a later specific time. That way they cannot go back on their word as you have written proof.
If it is the tenant’s first few times to miss paying rent on time, I would suggest you to use this option. The main advantage of this is that it enables you to maintain a good relationship with your tenant, especially if they have been quite easy to get along with so far. You want a good relationship with your tenant because:
- You want to encourage them to continue renting your home (which provides you with income), and…
- If they ever move out, they are more likely to find some friend’s to take over the lease (hence saving you the trouble of finding new tenants).
Most homeowners take this option because it deals with the matter plainly by not involving any sort of legal proceedings.
Note: If you feel that it would take too long for your tenant to make repayment, you could always advise your tenant to take out a loan or to seek rental assistance from Centrelink. HOWEVER, if your tenant does decide to borrow money, make sure that they are still able to meet future rental payments. It is not sustainable to house a tenant who has to constantly borrow money to pay rent.
Option 2: Involve the law
If your tenant is always late on rent and you’re tired of having to deal with all their complaints, slap them with the law. Legally speaking, if a tenant does not pay their rent on time, they will be in “arrears”. This is a legal term which means that the tenant is late in rent payment.
Depending on which state you are in, a certain number of days after late rent payment allow you to serve your tenant with a “Notice to remedy breach”.
In Queensland, the law states that tenants must pay their rent on time and be at least two weeks in advance.
- A tenant that is 7 days late in rent payment can be given a Notice to remedy breach.
- The tenant then has 7 days to pay their outstanding rent.
- If your tenant is still unable to pay rent, a “Notice to leave” can be issued. This gives the tenant 7 days of notice to move out.
If in spite of your notice, your tenant still refuses to leave, don’t freak out. You will merely need to involve the court of law to assist you with the eviction. They will also assist you in claiming the amount of rent that is owed to you.
Remember if at any time your tenant becomes rude or abusive, you do not need to put up with their behaviour and should seek assistance from relevant authorities (e.g: the Residential Tenancies Authorities).
And if they do manage to pay?
If amidst all the drama, the tenant manages to pay their rent – good for you. But when their lease comes to end, you will need to seriously reconsider whether you trust them enough to renew their lease. After all, issuing someone with these legal notices means that the issue of late rent payment has become quite serious. It also turns your relationship with them sour.
Consider carefully whether you really want to continue dealing with such an unreliable tenant before making your decision.