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Property Management quick tip - Handling Rent Arrears - SA

Discussion in 'Property Management' started by Xenia, 5th Dec, 2015.

  1. Xenia

    Xenia Adelaide Property Manager Business Member

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    If a tenant falls behind in rent it's important to act quickly, if they are new tenants they get a phone call on the day the rent is due. We ask them when rent can be paid and follow up on the exact day they say.

    If the arrears reach 14 days, the tenant is technically in breach of their lease and a breach notice can be sent on day 15 asking for the arrears to be paid by the tenant and giving them a time frame of 7 clear days to remedy the breach.

    Note that a huge number of breach notices are done technically wrong by private landlords and some agents and if there is a fault found on the breach notice at a follow up tribunal hearing, the entire time to remedy needs to be started over.

    In SA, Sundays are now not counted so must be removed when calculating 7 clear days.

    The breach notice asks for payment or vacant possession.

    If no action is taken by the tenant at the expiry of the breach remedy period, ie they are still there after the 7 days and FULL payment as specified in the notice has not been received, then an application to a tribunal hearing is initiated - legal action against the tenant.

    The tenant is usually put onto a payment plan at the hearing but each case is considered on it's merits.

    Technically 3 breach notices in a given tenancy and the landlord can be granted vacant possession of the property - but that is not always the case.

    Last week we were granted immediate 7 day vacant possession at a hearing and this was the first time the tenant appeared before the tribunal. This was a property recently taken over by a private landlord who had allowed a tenant to get $6800 into arrears. We served a breach notice on the day we took over this property and applied for vacant possession just after.

    It was granted on the basis of how huge the arrears was and the fact that the landlord had no insurance to claim the arrears - sometimes they do look at circumstances, we were lucky to get a great tribunal member in this instance but that is not always the case.
     
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  2. jim1964

    jim1964 Well-Known Member Premium Member

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    I have just purchased another home in Christies Beach awaiting settlement 30/12/15, the current tenant is now 2 weeks behind in rent,do i inherit the arrears as well as the tenant?
     
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  3. Xenia

    Xenia Adelaide Property Manager Business Member

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    Yes you do Jim

    I caution you with this as you cannot get landlords insurance with a tenant in arrears.
    Ensure that he current owner/agent begins taking action now.
    I would recommend pushing for vacant possession and starting over with a new tenant and insurance otherwise you will be left exposed.
     
  4. jim1964

    jim1964 Well-Known Member Premium Member

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    Yes, i will opt for vacant possession,early Feb.
     
  5. D.T.

    D.T. Adelaide Property Manager Business Member

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    Are they on a fixed lease or periodic mate?
     
  6. jim1964

    jim1964 Well-Known Member Premium Member

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    Fixed until Feb.The water is up to date, the home is immaculate, and the rents behind.Let themselves down.
     
  7. Xenia

    Xenia Adelaide Property Manager Business Member

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    Oh that puts you in a better position Jim
    As well as a breach notice give them a form 2a right NOW!
    28 days stating an intention to not renew the lease.
    Don't delay this as there will be holiday days that are not counted in the 28 days you need to give them.

    Also put on the market for a new tenant immediately too.
    Or just after settlement if there are restrictions with access.

    Tribunal can stuff you around and do a payment plan and they can be on that for months. Nothing wrong with that normally but this is a new purchase and tenants paying in arrears cancels out insurance - and that is where the risk is.
     
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  8. Johnny Cashflow

    Johnny Cashflow Well-Known Member

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    Christmas time is prime time for not paying rent :mad:
     
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  9. jim1964

    jim1964 Well-Known Member Premium Member

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    Cooling off has finished, deposit paid.Does this legally entitle me to exercise my right to issue breaches and form 2 ?
     
  10. WestOz

    WestOz Well-Known Member

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    Whilst you want to make sure all is in order prior to settlement I don't believe what you've described requires such drastic measures, yet.
    Have you reviewed the tenant ledger (rather than just listening to a PM/Rep perhaps covering their butt), do they have a history of being late, being breached etc?

    Tenants are ~10mths (or more) into the lease and it's "only two weeks" in arrears (one payment if paying fortnightly, is it only recent or ongoing?) and appears from info provided that apart from that;
    Keep in mind it's not your place yet...
    Perhaps there's a genuine minor issue, misunderstanding or discrepancy between the current PM/landlord and tenant, things can be difficult especially when a place is on the market, the tenant's privacy continually disrupted, being pressured to allow access for inspections at short notice, insecurity of whether their gunna have to move due to the new owner wanting it as a PPOR etc etc etc, can all get too much...

    Personally, if me I'd be knocking on the tenant's door or giving them a call, sus them out, find out if they've got a reason to be annoyed, issue with PM, maintenance not being done etc, granted not reasons to not pay rent, however perhaps something you can easily resolve as the new owner/landlord.
     
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  11. D.T.

    D.T. Adelaide Property Manager Business Member

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    You can't yet as its not yours yet, but I'd see if the current owner or PM will.

    Also read what westoz says, it is very sound. If its just a once off as annoyed about an issue, best to fix that issue rather than throwing paperwork around.

    Worst case, You could issue breach at settlement as it'll be > 14 days in arrears by then.

    You could do a form 2a (intent to not renew lease) once you own it. Keep until February then find new people.
     
  12. jim1964

    jim1964 Well-Known Member Premium Member

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    Yes, it has put some things into a different perspective.Made me think about a few of the issues from another angle.
     
  13. WestOz

    WestOz Well-Known Member

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    To give you a personal example with an IP I purchased recently;

    When I went into the agency to sign the O&A (aware there'd been issues) I asked to meet the PM, she not only bagged out the tenants but also the landlord, had a shocking attitude incl towards me, I asked to see the PM manager & got the same.

    I asked for a copy of the ledger, they refused as it wasn't my place yet I apparently had no rights to review them.
    The Sales Rep was present when this went on, I could tell she was frustrated/fed up with the agencies disfunction, later I asked if she could organise the ledger, which she did (after this sale she quit, went to another agency as principal).

    Tenant had been in the place for 6 years prior to me taking it on, shocking history of breaches, court threats etc, they'd been on periodic for 16 months.
    Whilst I'd already met them via inspection I knocked on their door for a private chat.

    I was aware the place was in poor condition, needed work, general maintenance had not been carried out, e.g. amongst many, solar hot water booster wasn't working, an aged powerpoint in the bathroom, screw fixings had gone brittle, when pulling out the hair dryer they broke, it was hanging by the wires down the wall, was reported, 4 months later was still not repaired. Roof had been leaking when rain, holes in the ceiling, dripping on the carpet, nothing was done about it, lots more (I fixed most myself).

    Since becoming my tenants all the maint I can do whilst not vacant has been done.
    I've not had an issue with them, rent has always been paid on time.

    I later found out that the previous owner had other properties through the agency, was peaved that he hadn't been made aware of the required maint requirements until I'd put in a pre-purchase inspection, he ended up with a huge bill prior to settlement (like a new solar +), he pulled all his business from them.

    Tenants don't have a say in who manages a property, they rarely have contact details for owner so can't advise/report poor treatment etc, some strangely find it easier to stay and put up with it rather acting or moving, but don't expect them to be happy about it, if a PM doesn't do the right thing why should they...
     
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  14. Xenia

    Xenia Adelaide Property Manager Business Member

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    No
    I would be making a recommendation that the current owners do that.