What to Do When Your Tenant Stops Paying Rent

So your tenant stopped paying rent. And maybe it’s not the first time — now what? Eviction may be your first thought, but it’s a potentially costly and time-consuming one.

Before jumping to drastic measures, take a beat to walk through these smaller steps. An easier and more amicable resolution might be possible.

Before we speak with the tenant we need to go to our filing system and pull out our procedures guide. If you are exceptionally organised you even have a late rent procedure guide to follow.

STEP ONE Investigate and Analyze:

Does this require an emergency response? No.

What prompted this? Observation from neighbour, personal observation, tenant prompted.

Document it.

Evaluate potential loss:

Rent

Property Damage

Tenant turnover

Determine Response:

Friendly reminder

Negotiate

Warning Notice

14 day notice

Mediation/Tribunal Lodging

Take stock of the situation. If this is the first time they have missed rent, or even their very first payment due it is usually a mistake, easily fixed with a friendly reminder. Remember to keep document everything, email as well as call or txt the tenant to check with friendly reminder.

Ask to respond within X timeframe so you know they got the message.

When it was not a mistake and the tenant owns up to it, move through the following steps despite of excuses, however tragic they may be or promises of payment tomorrow. If payment comes through you can withdraw proceedings.

rent

Note: Banks tend to take one working day to process payments. Tenants should be advised that they need to make sure the rent is in the landlords account on rent due date. This may mean they need to make the rent payment a day or two before rent due date so it processes in time.

Day 1: A phone call/txt/email to tenants to advise of the missed payment.

Day 2/3: Depending on whether you have heard from the tenant or not – phone/txt/email contact daily.

If possible you want to speak with the tenant to be sure they have received your notice and to learn what is happening with the rent. Follow up any vocal contact in writing so you have a record.

PLUS: Issue 14 day breach notice to pay arrears.

Day 7/8: Apply to tribunal for recovery of rent arrears, termination of tenancy and bond refund. Tenancy Services will schedule mediation for as soon as possible after the 14 days are up.

Day 21: Apply for re-possession of property

In cases where a tenant has managed to catch up with their rent a frank discussion may be on the cards at which you mutually decide the property is unaffordable for this tenant and it would be best for both parties to end the tenancy early.

As we are dependent on Tribunal in such cases it is imperative that landlords act swiftly upon the first sign of trouble in order to minimise probable losses. This will also go some way to making sure bad or on the line tenants, realise repeat breaches won’t go ignored. If you take the above action you will reduce the likelihood of repeat offending.

Disclaimer: The information contained in this publication is exclusively for promotional purposes and is not to be relied upon for legal or contractual dealings. Tenant Source recommends you seek independent legal advice, and that you may need to seek technical or other advice and information prior to making any actions in regards to tenancies in your investment properties. Tenant Source Ltd including its staff and directors accepts no responsibility for any issues arising as a result of taking advice from this publication.