Tenants in arrears.

Hi there, I'm a first time poster. Please be kind

I own a 4 BR property in Vic. It's currently let to a family for $350 pw. I have a PM who manages it for me. The lease was signed in June this year. I currently have Landlord insurance with Suncorp. There was nothing in the PDS but I remember when I sign up they mention that they only pay loss of rent if the tenants have not paid for 12 weeks.

The tenants have been difficult from the start. They were late for rent every month, paying partial rent here and there. They were served notices to vacate twice but they paid some (1.5- 2 weeks worth) after the notices so we can't apply for repossession with VCAT.

They are now about 3.5 weeks in arrears. My PM advised me that what we can do is wait until next week and she will apply with VCAT and hopefully evict them but the process is painful and can take very long.

I have no experience dealing with this so I am hoping forum would share some of your story. I'm interested to know the VCAT process. My PM said she will tell me what to do once we filed with VCAT but for now just hope the tenants pay. I would love to hear your experience with claiming for insurance as well.

Thanks!

 

It's in the PDS, page 29. It says they'll cover you up to 14 weeks rent up to a maximum of $5K

Each state is a little bit different, so perhaps @Lil Skater is best to tell you about Victoria but it can unfortunately be a bit of a long winded process.

This is because there are legislated time frames on when notices can be sent, when tribunal hearing can be organised. There's also a delay on when the tribunal will actually hear your case as they are quite booked out. At the tribunal, as long as all the evidence and documentation is displayed correctly, there's essentially 2 outcomes - 1) They get told to leave on X date and then you (or your PM) can do the finalising and then the finding of a new tenant, or 2) They get put on a payment plan which means pay $X extra until they catch up.

Insurance will not cover you if you don't follow the procedures properly. You jeopardise the success of your claim if it was filed incorrectly, or procrastinated on it as they see that as not mitigating / minimising your own losses.

 

It seems like the process of trying to get bad tenants out once they moved in are very difficult. Laws seems benefit the tenant.

Just wondering what checks did your PM do to ensure the tenants were good tenants (able to pay rent) during the application process?

Or are you in a position were you don't have that many choice in tenants so you have to "dice it"?

 

Thanks for replying guys

My PM said the notices to vacate are moot when payment is made and the tenants have been very smart, paying a few hundreds to make us issue them notices after another.

I will try my best to follow the procedures but at the moment I only follow what is advised from my PM and it all seem heavily favoring the tenants. I have read and heard of many cases where PM are not experienced and miss the steps so I want to also be informed. I read a bit of VCAT website info and it does say what she said, 14 days notice following another 14 days to remedy, following application for repossession. It does not state the "moot" notices however.

@fullylucky
My PM did her due diligence. The guy made 85k pa and his partner gets 1800 per fortnight with centerlink. They had a good reference from the previous tenancy. Although they were from the country and it was privately rented, the ex landlord gave them a very good recommendation.

 

In my experience, you can do all the screening you like. Thankfully 99% of people are fine, and things like insurance / bonds wouldn't exist if that number were 100%. People who are fine at the start can soon have things happen to them, eg lose job, lose spouse, etc and things start going down hill from there.

Sometimes landlords will give great references so that their bad tenants can find a new home. I'd weigh agency references much higher than landlord ones - or sometimes ask for a rent ledger as proof as part of the due diligence phase.

Yea it absolutely is in this country unfortunately. Combat this by knowing the system well, playing the game by the rules, not taking any excuses, sending the notices on the right dates and the tide turns in your favour soon enough. Anyone can collect rent every week, but takes a certain personality in a PM or Landlord to get to task when needed.

 

I know it won't help this time around but next time see if you can also get employer references. I found these really useful when I had a PM find me tenants in Melbourne.

 

I don't know how she would be getting $900 a week from Centrelink if her partner was on 85k. Did they provide Centrelink statements and payslips? Unless the have a heap of kids it sounds dodgey to me.

 

$3000 income but not enough to pay $350 rent...? sounds fake also fake reference probably got friend to say they are good tenants?

 

@Tomodachi and other respected members, I am sort of sailing in a same boat.

End of July this year settlement happened for the our IP in Vic.

As per the settlement we suppose to be gerring a vacant home but it came with tenants who are in arrears....i spoke to couple of legal adviaors regarding poor dealing of realestate and vendor. I also speke yo vic consumer law, but definately there is no straight up help available for people like us.

Tenants doesn’t have to pay rent regularly if they can make some payment within certain days then Vic rules on favour of them.

We want to do our own process of selecting tenants and that was our original plan but our PM told us eventhough the property suppose to be vacant and there is no lease between vendor and trnants we still have to give 120 days notice and during this time tenants can leave with 14 days counter notice.

We decided to give them a go and ask them to sign a 6 months lease but they didn't so we have issued a 120 days notice.

We are hopi g to pay $9-10$ fees to check the history of the tenants when we will be doing our own due deligence for new tenants.

 

I'm surprised you allowed it to settle if it wasn't vacant.

 

@Tomodachi a quick run down on the laws in Vic.

• Notice to vacate when tenant reaches 14 full days in arrears (day 15) giving 14 days to vacate, plus postage (which is now about a week!!)
• Once postage time is taken up, you can apply to VCAT for possession (day 21-23)
• VCAT hearing is usually about 2 weeks away
• If possession is granted at the hearing, it's usually a 14 day warrant executed by the police

By the end of it you're usually faced with a tenant ~8 weeks in arrears, bond will cover about a month of that.

If you issue a notice to vacate and the tenant pays enough to bring them less than 14 full days in arrears within the postage time (ie. before you've applied to VCAT) you need to start the process again. However, if the tenant pays AFTER you apply to VCAT you can proceed with the hearing as they were in breach at the time of the application.

If they pay a small amount and are still more than 14 days in arrears, you carry out procedure as usual. If you go to VCAT and they are not in breach as of the VCAT hearing you can request a payment arrangement - basically enforcing that rent is to be paid in full by X date and if it's not (even by just one day) you can immediately skip the NTV procedure and go straight to VCAT.

 

Added to this, make sure your PM checks ownership data and makes sure they're actually talking to the owner and not just a friend (which is often the case with "private" landlords).

 

We live in nsw and our conveyancing firm and real estate agent all.in melbourne, it was a very challenging process.

I do not want to label anyone bad but it wasn't a pleasant experience.

 

Good luck with the process.

 

Just ensure all legal forms are served on time, losses are mitigated quickly through marketing and bond refunds include loss of rent from lease to lease.

This is a no brainer for any property manager. Industry standard.

 

Why not just give notice that as the owner you wish to move into the property ?
(Once they're gone your circumstances may change, and you can no longer move! )

 

Though, would you have to compensate the tenant for breaking their lease?

 

Yes but if it goes really bad and you need to make an insurance claim, you must show the insurer you have done everything straight away by the nook to mitigate losses. If you don't send notices then your insurer will not back you.

 

Even good tenants can go bad due to changes in their circumstances.

Then you get the sneaky ones who know their way around the tenancy laws and how to play the system.

All you can really do is make sure your PM is meticulous in issuing breach notices as soon as legally allowable and also book tribunal appointments knowng that the tenant will make a payment to begin the process over and over again.

It will play havoc with your cash flow as rent will be paid erratically.
Marg

 

That's where the problem is we have one just like that ,was leased for one year about 4 months ago,problems from the start ,never paid the correct bond -never paid rent for 5 weeks ,served first notice then next day pays for 2 months rent, so the notice you serve means nothing just goes in your files,it's not a easy game to play sometimes and from the few private landlords who self manage i talk tooall are starting too experience the same problems,it was not always like that..