New year, new rental arrears
- Screen tenants
Background checks on prospective tenants are crucial (but make sure any checks you do comply with your state’s tenancy legislation). Check industry databases, call up referees, speak to previous landlords and PMs, and verify employment and income. Once a tenant has moved in, conduct regular property inspections.
- Communicate with the tenant
A good rapport with tenants can often mean that they notify you of payment difficulties and a plan to tackle the arrears can be created to keep everyone happy.
- Put systems in place
Having procedures in place to deal with unpaid rent means you’ll be on top of the issue. Subject to the laws in your state, contact tenants immediately when they are in arrears and request payment. A documented plan of addressing arrears should include timeframes for action (e.g. phone calls, letters, formal notices, tribunal/legal proceedings) and take into account the legislative requirements.
- Show some empathy
Good tenants are worth their weight in gold, so if they are having temporary difficulties consider lending them a helping hand (if it is economically feasible). There are circumstances that can legitimately impact a tenant’s ability to pay (job loss, relationship breakdown, illness, unforeseen expense), but don’t accept just any excuse.
- Keep records up-to-date
If you end up needing to evict or go to court over the matter, having all your paperwork in order will help your case.
- Know your rights and responsibilities
You need to understand the legislated procedures and also why and how you can seek restitution or eviction.
Landlord insurance policyholders should also be aware that the eviction process needs to take place prior to lodging a claim. With eviction usually taking weeks, it’s important for landlords and PMs to act quickly in rent arrears cases to limit the financial impost endured before claiming and to also meet their obligation under the policy to prevent further loss. It’s also important to know that most policies will cover up to 52 weeks of lost rent depending on the circumstances (to a maximum of $1,500 per week).