Property Management quick tip - The benefits of Tenant Databases

Tenancy databases are online databases used by property management professionals to check tenant details as part of a screening process for tenant applications.

Aside from the benefits of using databases as screening tools to assess the financial risk of a given tenant, tenancy databases also have the added benefit of listing tenants who have not paid rent, water invoices or other charges as stipulated by tribunal orders or the agency.

The main benefit to the landlord for listing a defaulting tenant (aside from warning other real estate professionals about the risk of the tenant) is that the debt remains on the database until it is paid.

In our agency we've had tenants approach us several years later to arrange a way to pay the debt back so that that the debt is recorded as paid on the database - makes it easier for a tenant to then rent again.

The best way to recoup an arrears debt is off course through landlords insurance, however recording bad debt on a tenancy database also gives the landlord some chance of recouping the debt even several years later when the tenant needs to rent again but finds that they are often getting rejected.

 

That's really good information to know, Xenia, straight from the horses mouth.
From someone who's dealing with it on a day-to-day basis.
My PM in Qld mentiond it in passing, I only know that you can give a black mark on it to a defaulting tenant who does not make the arrears payment and it can stay on their record for 5 years (?)
Wow, I didn't know that even unpaid water invoices can get recorded, that's great info,
thanks Xenia!

 

Also any damage that was done to property as long as it was paid for and there are associated invoices and evidence.

 

Also what's interesting is that not every tenant that is listed on a database is necessarily a high risk.

Last year our number one choice in a group of applications we had had a tenant that was listed on one of the tenancy databases.

The information on the database also showed that the entire arrears was paid off by the tenant.

His rental history after that incident was perfect.

It turned out that at that time which was about five years ago he walked out on a very bad marriage and walked out of the lease the partner that remained behind fell into arrears and because he was on the lease He was blacklisted as part of that debt.

He actually paid it off once he found out that his name was on the tenant blacklist

Our landlord was quite okay with this information and willing to offer him a lease.

We have just renewed a 12 month lease for this tenant and he has been more than perfect.

Sometimes how people react to a situation and how people can rectify a situation shows more character Then the situation never having Occurred.

 

Can I find something out from you, Xenia?
I am going to get paid by my insurance company for some unpaid rent by a tenant that was a victim of domestic violence by her new partner. She fled the home to go to a domestic violence women's shelter.
If my PM has made a black mark against the male partner in the database and he comes back later to make good the debt, do I get paid twice - once by the insurance company and another by the defaulting tenant? Any info on this would be greatly appreciated from someone that works in the trenches day-in and day-out.

 

This is an excellent question Beanie. We only list debts that are over and above what we able to recoup from insurance and the bond or any other means of collecting that debt so actual money that is owing by the tenant.

My suspicion is that you can't recoup the debt twice for the same thing but just looking into the legislation of why not.

 

You cannot profit from insurance claims. If a settlement was made by insurance and then you were to receive a cash settlement from the former tenant, this should be paid back to the insurer. This would be in your policy documents.

@brettc should be able to confirm this.

 

I'm not trying to profit from this at all, Dave. This is unfortunate for me and unfortunate for my lady tenant. Just trying to find out if this scenario can happen and has happened from someone who has been in property management for many years and is in the trenches - day in- day out and will have seen variations of every scenario happening in the many properties they manage. The more properties they manage, the more scenarios they see.

I have lurked in Somersoft since 2007/2008 and I remember Xenia posting even back then about Adelaide.

 

It can happen yes and so long as you reimburse the insurer in that scenario you should be fine. Also note the insurer may pursue the tenant to recover costs if the claim is significant enough. I had a 12k claim last year and from memory the insurer went after the tenant for that amount.

 

Yup - I remember you, having been a member of Someroft since early 2003

I think a good agent would list the whole amount on the database as this is reflective of what the tenant has done wrong, rather than the insurance-covered amount. Section 99a of the Act actually references amounts that exceed the Bond.

For example, say 2 identical tenants have caused say $10k worth of damage. Landlord A has good insurance and covered it all and Landlord B has poor insurance who covered only $8,000 worth.

If you were a landlord and they were your prospective tenants - would you rather one that had $0 listed or one that had $2K listed, being the post-insurance amounts? The former sounds better, but they've both done the same "crime" so need to be treated the same in my eyes. Therefore, they should both have been listed at $10k, being their pre-insurance amounts.

I've also written some points about databases here Tenancy Tip Thursday - Tenant Databases if it's of any interest, but don't mean to take away from any of Xenia's excellent points.

 

The good agents are out at open inspections and listing appointments today - will be back to answer this more fully x

 

It's unlikely that people would be listed for not paying a $100 water because the tenant could object to it and take it to tribunal, and many agents wouldn't bother with small things like that.

 

The $100 outstanding water invoice would be deducted from bond - if there is a dispute and the landlord is willing to pay the fee to take it to tribunal it will be awarded as tribunals understand water invoicing well.

It can't normally be claimed from insurance and you are right Nick, it is unlikely to be listed on a tenant database as the cost to list it would exceed $100.

 

There are charges involved in listing tenants on a black list so we don't normally list every single thing, in my office, we choose to list only claims where there is outstanding amounts owning to the landlord and the landlord.

Here are some real case studies:
1. 2010 - a tenant was listed for around $4000 being a claim for arrears and also cleaning expenses and break lease charges as they absconded a property and were uncountable.
We claimed the bond and some insurance - the landlord had the wrong type of insurance so only a partial claim was awarded.

The entire amount was listed on the database with references to what it was for.
This tenant made contact in 2014 to cover negotiate a payment plan so that her name gets removed. She is paying something like $100 a month - this will go to landlord and insurance in the next 1000 years when it's eventually paid off.

Case 2. -2012
House rented for $300 per week by a young migrant couple - these were friends of the landlord and landlord really wanted them in one of his property (landlord owns 6 properties).
When payment was late a few months later, the landlord did not want us to issue a breach notice because the tenant was a friend - very frustrating.
Tenant caught up but fell into arrears again and again.
9 months later, I rang the landlord and told him that he needs to back off and allow us to do our job, friend or no friend we need to issue a breach notice, the tenant was now $5000 in arrears and this was a joke.
Tenant was taken to tribunal and evicted with around $7000 owing to landlord - damage to bench tops, gardening needed to be done, cleaning etc...
Tenant black listed for entire amount.
This was not covered by insurance.

2015 - tenant asked me to meet him at one of his restaurant chains, he now owns restaurants and doing well. At the meeting, he asks how much was owed - waits till I phone the office to find out, then writes a cheque to the landlord for entire amount - amazing.

He then tells me that he is building 4 new investment properties and wants us to manage them.

I go back to office and ask 2 of my staff to guess who our new landlord is. - they almost faint! LOL

People's value is not financial - people are not money, people are people and I do not believe that people should be punished for getting into financial trouble. Is there anyone here who has NOT EVER had any financial problems of any sort? Everything has always been handled perfectly in your life? I know that's not my life -mine is not perfect so I am not one to judge others by any means. If I had judged the above tenant would never had become a new client years later.

I don't believe in listing things that have been paid off, it's just my choice, if a tenant had fallen into arrears or did some damage that has been covered fully by a bond or insurance then they do not get listed because to me it's been sorted and done - move on!