Commercial property interest rates

Discussion in 'Property Management' started by sparklestorm, 26th Feb, 2020.

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  1. sparklestorm

    sparklestorm Well-Known Member

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    Greetings all,

    Hope everyone is doing well.

    Just a quick run down. I manage mainly residential properties but have come to manage some commercial properties by default. Moreover, I have a particular tenant who never pays their rent on time and is constantly in arrears. I’m aware you can apply interest to these arrears but what’s the figure of such interest incurred? Does anyone know much about this or a way around this? This tenant is not only in rental arrears but invoices arrears such as council rates.


    I appreciate your feedback in advance
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Read the lease, this is Commercial PM 101.
     
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  3. sparklestorm

    sparklestorm Well-Known Member

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    Hi Scott,

    Thank you for your wonderful feedback. I have. I’m referring to the rate of interest which isn’t specified.
    Thank so much for your help though.
     
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  4. croseks

    croseks Well-Known Member

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    There should be some statement in the lease regarding what happens in case of arrears.
    If you want to be firm, after a written warning and some time (I think 14/28 days, not sure) you can simply change the locks and lock the tenant out until all arrears are paid.
    Have had my PM do that a few years ago and never had payment issues again.

    Commercial gives the landlord all the power, the lease is bible.
     
  5. Scott No Mates

    Scott No Mates Well-Known Member

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    The interest rate is not a steady target so a rate is not nominated.

    Every lease is different, most will refer to the 'default interest rate' and it will be something like a % above the CBA rate published in the SMH on Monday. The % is in the schedule or may be in the clause (unusual).

    So the answer is, read the lease.
     
    Last edited: 26th Feb, 2020
  6. sparklestorm

    sparklestorm Well-Known Member

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    Thanks so much. Done that a few times. But thank you for sharing.
     
  7. sparklestorm

    sparklestorm Well-Known Member

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    Thanks
     
  8. Scott No Mates

    Scott No Mates Well-Known Member

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    This has come out of one recent lease.

    upload_2020-2-26_10-34-48.png
     
    Last edited: 26th Feb, 2020
  9. sparklestorm

    sparklestorm Well-Known Member

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    Thank you I discovered it myself after taking your very practical advice. It refers to Penalty interest rate as prescribed by section 2 of the Penalty interest rate Act 1983 of a rare of 10%.
     
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  10. Scott No Mates

    Scott No Mates Well-Known Member

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    Another is:

    upload_2020-2-26_10-49-10.png
    upload_2020-2-26_10-48-41.png

    Every lease is different, read the clause in it's entirety, understand it, calculate it according to the methodolgy, check it, then invoice it.
     
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  11. sparklestorm

    sparklestorm Well-Known Member

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    Thank you for that. Thank you for your time and explaining it with the attachments. Thanks a lot