Residential Rent Collecting – The Endless Rent Recovery Cycle

agreementLandlords should check their bank account every morning before the start of business. Any missed rent payments should be dealt with immediately. Failure to act immediately might result in the tenant thinking they have a bonus or spare money and spending it before you get it. Missed rent falls into two main categories.

Day One

New tenants
If a payment in say the first three weeks is missed then urgent action is required. This has the purpose of impressing your tenant that you are the landlord and bringing them into line. Often early action like this will be all that is needed for the rest of the tenancy.

Send the tenant a text message saying rent has been missed. If you do not get a response to this text by say 10 am send a second one stating that a 10 Day Notice to remedy (section 56 notice) is about to be issued that day.

If still no response by the end of that day issue the notice. This notice should be personally handed to the tenant or stuck with adhesive tape to the front door of the rental. A photo of the notice stuck to the door might be useful.

Existing tenants
Hopefully the tenant has been good in the past and just misses one payment. Send off a mild text message or make a pleasant phone call informing the tenant that the rent payment has been missed for some reason and politely ask that they can look into the problem and let you know the result.

The Next Day

Check the bank account again

New tenants
If you have had no response to your texts and 10 Day Notice then send a third text message. “Court action about to commence. Please contact me urgently.” If by say the end of that second day the response has not been positive then lodge your tribunal application. It is critical to act decisively on tenants that miss the first automatic rent payment. These are the most dangerous cases and usually indicate you have made a serious mistake in choosing your tenant. If it has all been a terrible mistake and they pay you then withdraw the tribunal application. All you have lost is the $20 application fee and a bit of time making the application out. Note: you are permitted to re activate this application within one month if they miss the following week’s rent payment.

Existing tenants
Polite persistence is often needed. Push too hard and you will offend a good person that has a small crisis in their life. Phone them to discuss the issue if they have not already responded. Often they will promise to pay double the next week. Suggest they might like to pay what they can afford this week. Suggest that they might like to pay say an extra $20 per week in addition to the rent till they have caught up.

If next week all you get is the normal rent and no catch-up then send a text asking about the catch up. If the second week is also missed, or no catch up paid then issue a 10 Day Notice. If the written notice falls on deaf ears then lodge a tribunal application.

Generally, lodge a tribunal application if two weeks rent payments have been missed. Note: At this stage, two weeks rent missed will only be one week in arrears, because rent is paid in advance.

10 Day Notices. (10 working days, excluding . . . . . Xmas/New Year)

It is possible to get sample forms off the DBH web site. However, the best system is a duplicate self carbonising book that is with the LL (or in the car), all the time. The original is given to the tenant or stuck to the front or main entrance door of the rental.

Write the following on it:

(as shown on the tenancy agreement)

The rent payment of $ scheduled to be paid last night has not been received. This is a breach of your tenancy agreement. Failure to immediately remedy this breach will result in an application to the Court.
Signed

If you make statements like, “you will be evicted,” or “it will be bad for you if you do not pay,” or similar, these can cause trouble at the Tenancy Tribunal. I use the word “Court” rather than Tribunal, because it sounds more significant even though they are one and the same thing.

Tribunal Applications For Rent Arrears

Application forms can be obtained off the DBH web site or from their offices. Applications can be by fax or via the Internet. If you are making an application for rent arrears you need to ask for only two things.

  1. Money order for rent arrears of $xxx
  2. A termination order

Applicants need the Money order to enable them to recover the rent arrears with assistance from the Court system. As a separate issue, you need a possession order to recover the rental dwelling. This is called an eviction or distress warrant.

Reason given

  1. Rent owed to date xx-yy-2007 equals $xxx – Note: always make the amount / date of the rent owed to date up to the end of the next rent period. At the mediation or tribunal this figure can be updated.
  2. 10 Day Notice issued on date such and such and personally given to tenant or stuck to door. The Tenancy Tribunal application has to say how the notice was served because this affects the day that the 10 day period will expire. For instance, if you posted the letter, then a Section 56 / 10 Day Notice effectively becomes a 14 Day Notice to allow for the time it takes for a letter to be delivered.

Attach a copy of the tenancy agreement, schedule of rent payments received, 10 Day Notice and fax off.

Note: do not forget to pay first. Your local branch of Westpac will accept the $20 fee and stamp your application form, so don’t forget to take the application form to the bank for stamping.

An applicant can only expect to have the Tenancy Tribunal award what has been applied for. It’s unreasonable to expect to introduce new claims at the time of the Tribunal hearing and have them approved.

This means if the tenant vacates before the hearing, then it is better to withdraw the application and submit a new one, including any other costs that have occurred such as cleaning and repairs. There are minor differences from one Tribunal to another and not all offices of the Department of Building and Housing interpret the RTA the same way. Some areas will let applicants change the application after it has been lodged but before the hearing.

Mediation

This can be by personally attending or by phone. Some of the best and most effective mediations can be by a one-to-one conversation with the Tenancy Mediator. The mediator is permitted to talk separately with the tenant and if both of you agree to the amount owed and the consequences then the mediator can type up the order and sign it on everyone’s behalf.

Normally however it is a good idea to meet fact to face with the tenant along with the mediator. Especially for new landlords

Always attempt to resolve the matter in mediation even if you have to compromise. Stick to the issue of rent. Be realistic about the amount of catch up payment per week. Demand a consequential clause. A consequential clause will say the tenant must pay the rent and catch up each and every week until caught up or the tenancy will end. Many new landlords overlook this and leave with no useful outcome. Having a conditional termination order is a very powerful ongoing incentive for the tenant to pay or be immediately evicted.

Make sure the tenant’s phone number is supplied to Tenancy Services. They will need this to contact the tenant. Often if the tenant does not attend, it is possible to contact the tenant by phone from the Tenancy office and conduct the mediation by phone.

Mediated orders are normally forwarded to the Court and the Tenancy Adjudicator will seal them making the Order fully enforceable.

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