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How to Deal With Rent Arrears?

November 19th, 2013.

One of the main frustrations of being a landlord is something called ‘rental arrears’.

Pedersens Property Management rental arrears for last week was 0.65%, in this article we talk about how we keep our arrears at record lows with good Tenant selection and a very strict and hands on process for handling any Tenant that does get into arrears.

The Residential Tenancies Act states that rent must be paid in advance (one or two weeks depending on your Tenancy Agreement). Having to chase your tenant for the rent is very frustrating and time consuming.
 
Most of us understand it is a given that if you rent a property, you have to pay your rent regularly and on time.  For some however, it is difficult to keep payments on track.

How can a property manager ensure regular rental payment and what do they do if a tenant falls behind in their rental payments?

The best way is to take a preventative approach, thorough tenant screening before a Tenancy Agreement is offered is the most effective way of ensuring that you choose someone that has a proven record of meeting their financial commitments. That said, sometimes peoples situations can change, and what was once a good paying tenant can become a bad one when a life event like a job loss occurs.

Setting up an AP (automatic payment) at the start of the tenancy can ensure that rent is paid regularly and on time. Also setting the expectation right from the beginning that you have a zero tolerance to rent arrears and that strict procedure is followed in the event of any rent being missed.  

So what does Pedersens Property Management recommend when the tenant stops paying their rent or is proving difficult to contact? As soon as the tenant is 1 day in arrears a 14 Day Notice should be issued as a precautionary measure, in addition from day 1 you should also be placing calls and texts to the tenant. If you are unable to make contact with the tenant then this should be promptly followed up with house visits and phone calls to the tenant’s workplace and calling emergency contacts noted on their application form. If this fails an application can be made to Tenancy Tribunal or phone mediation to resolve outstanding arrears. Depending on the extent of the arrears, we use several different approaches to get our Owners the best result from what is often a system that is very much in the Tenants favour.

The formal process that needs to be followed can be quite lengthy, often taking as long as 6 weeks to get a result should it need to go to the Tribunal Court, so the sooner you get the process started the better.

Last resort, should the tenant vacate the premises still owing money, is to engage a debt collector, make sure that your Tenancy Agreement provisions for these collection costs to be charged to the Tenant. 
 

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