Tenant defaulting on rent

Discussion in 'Property Management' started by 212, 13th Apr, 2017.

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  1. 212

    212 Guest

    Dear PC gurus,
    I have a tenant who got into 6 months rental agreement. met the tenant while doing routine inspection. Lovely small family, with 1 kid, and 1 on the way. Looking well after the house, nice expensive furniture, 2 nice cars (each one is 10 times the price of my car).

    After 3 months of paying rent on time, they started to be one week late, but they pick up and pay before the mid-month transfer.

    Spoke to PM, she said that payment cycle has changed for the husband, and she is working with them on catching up with the rent. this happened around 4 times, but this time, I received the statement with zero payment.

    The PM is going to get back to me today with explanation. What do you guys think from your experience. I have already rejected to renew the lease (they asked for 1 year lease). checked with my insurance, and all covered.

    I don't want to be a bad landlord, and at the same time, I don't want this to be a habit, and i might end up with loss of rent and damage to property.

    Please advice from your experience
     
  2. thatbum

    thatbum Well-Known Member

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    Either move to terminate the lease, or don't.

    Isn't it as simple as making a decision one way or another?
     
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  3. D.T.

    D.T. Specialist Property Manager Business Member

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    Depends on how the chat goes with them. If the rent day can be changed sometimes it makes all the difference. For example I had one tenant change jobs and getting paid monthly now instead of weekly. We changed his rent to monthly as well to match and it took him a cycle or two to get used to it but all is perfect again.

    At the same time, can't let it get on too long. Obviously you can only breach them if a certain number of days reached, but renewing the lease is enabling it to continue which just brings more headaches. As cruel as it might sound, its best to just be rid of them and get someone else in who will pay on time. This is why you need a property manager on your side that can make these calls.
     
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  4. jim1964

    jim1964 1941

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    Zero tolerance,i would agree with above and expect my PM to alsothink along these lines,i have been doing this for so long now, if they dont pay, it makes you look bad, and it will come out of your pocket.Time to get hard my friend.
     
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  5. Cimbom

    Cimbom Well-Known Member

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    I would it allow it maybe once or twice for that kind of a reason but after four times, it's probably not worth the hassle
     
  6. Xenia

    Xenia Well-Known Member

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    If they are one week behind, why is your statement zero balance?
     
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  7. wylie

    wylie Moderator Staff Member

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    I have a tenant who is a few days late every fortnight due to her pay cycles. Very early on she asked if I wanted her to pay a couple of extra days so that she isn't two days late. I said no need to do that, and I'll look for the payment two days after it is due.

    She's been there about seven years and never missed a rent payment.

    It simply comes down to her pay cycle not matching up with the lease start day.

    So, if it is indeed this simple, I'd try to get them to catch up the time they are behind. However, if the last payment is zero, that is a different thing altogether.

    I'd try to find out if it is indeed mismatched pay cycles and if they can catch up quickly, and don't fall behind again, I'd keep them.

    But I'd also issue a breach notice (or your PM should) so that if things head downhill, your insurer can see all breaches were issued on time.
     
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  8. Lacrim

    Lacrim Well-Known Member

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    What I don't like is how they make their problem your problem. They have a lease obligation, and you have an obligation to the bank - simple as that.

    I'd recommend giving them one, nice friendly warning/request and then breach notice if it happens again. You have to stay on top of it. It can (and does) escalate to 2 then 3 then 4 weeks of non payment etc. and if the problem is ignored, the behaviour of them playing the late rent game entrenches itself.
     
  9. 212

    212 Guest

    Thanks for all your responses, PM spoke to me twice and said that the tenant sent her a print shot of the transfer, but Easter holidays are delaying the payment. That's not correct. I have an email from her on 6 April for the same, and still no payment. Here is her email

    "Your tenants have 2-3 weeks paid via bpay however there is some banking delays already with the Easter break. I will monitor this next week for you have a great weekend!"

    What is 2-3 weeks?!!. Even 2 or 3 or nothing.
     
  10. D.T.

    D.T. Specialist Property Manager Business Member

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    We received rents this morning (good Friday) from tenants who paid during business hours yesterday, I've just sent out all the receipts just now.

    Here's the info on it from our bank, obviously yours might be different:

    Announcement
    Please be advised that due to the Easter public holidays, payments and requests will not be processed on 14 April and 17 April 2017. Payments that need to be received before the Easter public holidays must be submitted by 6.30pm (Sydney time) on 13 April 2017.
     
  11. dabbler

    dabbler Well-Known Member

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    I wonder if someone was updating payment details and accidentally changed yours ?

    Ask them what acc it was sent too and that no money has hit your account.
     
  12. KayTea

    KayTea Well-Known Member

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    I've got the same issues, but have only just now gotten a PM who's onboard with trying to deal with this issue (I've had over 18 months of rental arrears and problems getting them to pay outstanding water bills etc). The 2 previous PMs did very little to chase up late/non-payments, or issue notices (and I was constantly having to get in touch to see what was happening). Their approach was very much one of "well, even it the tenants are paying late, at least they still get around to paying at some point" (I wonder if I could use that excuse with the bank?!)

    It's made 10 times worse as the tenant constantly doesn't answer her phone (then blames being out of credit.....), and they don't have an email address, so everything has to be done via snail mail.

    But, thankfully, this new PM is all over it, and has given the tenants a very clear outline of what must happen, moving forward. And the tenants have now been told that, come lease renewal time, if they are not completely up to date on all payments, their lease won't be renewed.
     
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  13. dabbler

    dabbler Well-Known Member

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    Yep, that is the way you must deal with things, in a clear and professional manner, everyone has responsibilities, the other way is never acceptable.
     
  14. 212

    212 Guest

    Spoke to the PM again, and the tenants are 3 weeks in arrears. She said that she speaks to them everyday. And she said to me that I should not worry, the tenants are genuine, and the transfer will be cleared early next week.

    The PM is quite responsive, and always available on the phone, email, even on weekends. So I kind of trust her.

    She said to me today, that she deals with so many tenants who are in arrears, and she can tell from experience that the tenants are facing this pay cycle change and are going to pay.

    All the paper work is issued on time, so no issues with insurance.

    Fingers crossed next week. This is my 4th property, but first tenant to default on rent
     
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  15. marty998

    marty998 Well-Known Member

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    How awful it must be to be living week to week, paycheque to paycheque, and to have no buffer at all.

    Always wondered how the stress doesn't seem to take its toll... maybe it does.

    If I were in that position I would have gone grey years ago.
     
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  16. Tanya1335

    Tanya1335 Well-Known Member

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  17. Tanya1335

    Tanya1335 Well-Known Member

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    What ever decision you make with regards to renewing the lease, you need to ensure your current PM is issuing the correct breach notices on time, otherwise this could carry on much long than necessary and cost you more than necessary.
     
  18. 212

    212 Guest

    Hi Tanya,
    I have got auto emails from the REA mentioning that the tenant has been sent form 11 and form 12. REA told me today that she is expecting the transfer tomorrow. Fingers crossed, but looks like I will not sign any renewal once the 6 months are finished.
     
  19. TMNT

    TMNT Well-Known Member

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    Your ip is a business. You are not a charity.. You need to do what's best for you!

    Will your bank give you a break if you keep falling behind???
     
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