Blog Post

Landlord, What are your options if your tenant won’t pay the rent?

Landlord, What are your options if your tenant won’t pay the rent?

First of all you can take comfort in knowing this is a very common problem. At any given time roughly 20% of all landlords are coping with rent delinquent tenants ( this statistics is in case owner is renting and mange by himself). However, evicting these troublemakers, or claiming restitution for damages, can be extremely problematic, requiring months of litigation and considerable investment of funds to resolve.

Damage control

If you already have rent delinquent tenants, then you are one of those unfortunate 20%. There are ways to reduce the risk of running into this complication in the future, but right now you need to address this situation. There is no cookie cutter solution for these troublesome tenants, as each is a unique individual with his own quirks and problems. You will not always need to go down the rent enforcement and involuntary eviction road, as the situation can often be resolved with more flexibility and finesse. You must, however, be prepared to pull out the big guns- you might need them!

Late rent and one time missing payments

Your tenant may have various reasons for being late in paying the rent. He might be living hand to mouth, with no cash reserve, and is waiting for his paycheck to come in. He might be procrastinating or disorganized. But whatever the reason, you should provide him with a reminder and a clearly worded warning of his legal liability and the financial penalties he will face if he does not pay up. Checking the payments regularly and reminding your tenant if he is past due is the best remedy for this behavior and when you slack off, often so do they.

Best practice:

If you do not receive payment on time, send the delinquent tenant an Email reminder in which on the one hand you should demand payment within three working days and warn him of the consequences of non-payment (contract termination, eviction, penalty fee payment and associated costs). On the other hand, you should reassure him that you are certain non-payment was an unintentional error, and that should he pay up none of the negative consequences will unfold. 95% of late tenants will not only pay up when cautioned but will avoid the unpleasantness of being late in the future.

Repeated missing payments

However, the situation is quite different when you are faced with a tenant who does not pay his rent for several months in a row. Such a tenant may have lost his job – or he might be a “non-paying nomad” who entered the apartment without any intention of paying the rent, and who has been repeatedly evicted in the past, moving on to the next apartment and landlord after each eviction.

A tenant who has failed to pay his rent for three consecutive months is in gross breach of his contract. He is no longer entitled to a three month notice of eviction – notice can be submitted immediately – but the landlord will still lose the rent from those three months. and he should claim it in legal process.

How can you know you are dealing with a non-paying nomad?

A repeat defaulter will likely be laboring under quite a few debts and foreclosures, a matter of public record for those prepared to browse through public records. Furthermore, you can always ask potential tenants about lease financing.

Collection of late rent

One or 2 month’s rent is typically covered by your tenant’s security deposit. You are obligated to inform your debtor of his obligations, and failure to pay will result in a pre-suit summons. However, these proceedings are best entrusted to your lawyer – and the case can drag out for several months to a year.

Prevention: Bulletproof lease

If your lease is not carefully prepared, you will find yourself without any enforceable legal remedy to collect unpaid rent. You should therefore always have your lease contract reviewed by an accredited lawyer. Do not, under any circumstances, make use of internet templates.

Debtor eviction

Tenants are obligated to leave the apartment as soon as their three month notice period is up. “Should” and “Would” are two very different words however, and you may well face a situation where the tenant holes up in your property, daring you to evict him. You can call the police to your property and confront him, given that he has no legal title to use the apartment or right to remain. However, you cannot evict him by force, and nor can the police. Not without a court order, which can be requested as part of a preliminary measure. Before embarking on these lengthy proceedings you should consult a lawyer. It is better, however, to try to communicate directly with your tenant and reach an out-of-court settlement or, if the debtor refuses to communicate, to reach out to his family and/or partner.

Non-paying tenants in need  

You may well find yourself facing a non-paying tenant who is a single mother with children, an ill elderly person, or a father who lost his job through no fault of his own. It is natural, in these situations, to be torn. You don’t want to inflict more hardship on these people, but you cannot support them on your own property. The best practice in such cases is to connect the tenant with an institution or organization that is dedicated to helping people in his position, and then to follow the standard procedures.

Prevention beats damage control

The best way to prevent defaulters is to screen them out at application, to verify in advance as much as possible the source of income of the potential renter, in Conbiz we invest for every applicant a paid check and careening that there are no debt and other legal problem, we find it best investment then to deal with eviction.

Contact us today to hear more about how we avoid and handle late- and non-paying  tenant. You will never have to deal with them on your own again!

Related Posts