Protection

How to evict a tenant

Evicting a tenant is not usually something landlords or property managers enjoy – but sometimes they have little choice. One of those times is when the tenant hasn’t paid their rent…

It’s not a decision to be taken lightly, but sometimes it’s the only option. We’re talking about saying goodbye to your tenant because they haven’t paid their rent.

Tenants defaulting on their rent is one of the main reasons landlords need to claim on their insurance. Rental arrears can fast spiral out of control – one missed rent payment, leads to two, three, four…and before you know it the tenant owes thousands. But it’s also something which landlords and property managers (PM) can wield some control – by getting on top of arrears quickly.

And because there is some degree of control afforded to the landlord or PM, addressing rent arrears is a requirement of insurance. It falls under the ‘act to prevent further loss’ obligation. This means you must address rent arrears in a timely manner. If you’re slow to act, you can find that it may impact an insurance claim.

Issuing breach notices for rent default

If you’re at the stage where eviction is on the cards, then you’ve likely gone through the breach notice process. However, this isn’t a requirement in all jurisdictions – in some states and territories you can go straight to issuing a notice to vacate.

The breach notice lets the tenant know what they have done wrong and what they need to do to remedy that situation. Essentially it gives the tenant time to catch-up on what they owe and avoid being evicted.

If they catch-up, great! If they don’t, then the next step is likely issuing a termination notice.

Issuing termination notices for rent default

While there are numerous reasons why a landlord may wish to serve their tenant with a termination notice (and in most jurisdictions there needs to be valid grounds for eviction), we’re looking here at cases of rent default. Different reasons for terminating a lease may have different requirements, so always refer to your state or territory legislation or tenancy authority for details.

When it comes to issuing termination notices, there is a process that must be followed – just like when issuing breach notices. Failing to follow the process, including issuing the notice incorrectly, can see the eviction overturned by a tribunal if it is disputed by the tenant. This prolongs the whole process and increases the amount of time that rent is being lost – and possibly unable to be recouped through insurance.

If the tenant fails to comply with the breach notice and does not pay their arrears, then you can take action to terminate their tenancy. For the eviction to be lawful, you must follow the relevant procedures for your state or territory:

• Australian Capital Territory – the notice to remedy gives the tenant seven days to remedy; if they fail to do so, a notice to vacate/termination notice can be issued giving the tenant at least two weeks to vacate
• New South Wales – a termination notice for non-payment of rent can be issued once the tenant is 14 days in arrears; at least 14 days’ notice to vacate is required
• Northern Territory – the notice to remedy breach of agreement for unpaid rent gives the tenant at least eight days to remedy; if they fail to do so, the landlord can apply to NTCAT for a termination and possession order; if the landlord is granted an order for possession, the tenant will be given up to a maximum of five business days to vacate
• Queensland – the notice to remedy breach gives the tenant seven days to remedy; if they fail to do so, the landlord can issue a notice to leave giving the tenant seven days to vacate
• South Australia – the notice to remedy a breach gives the tenant at least seven days to remedy and/or vacate; if they fail to do so, the landlord can apply to SACAT for an order of possession
• Tasmania – a notice to vacate can be issued once the tenant is 14 days in arrears; the tenant then has 14 days to remedy
• Victoria – a notice to vacate can be issued once the tenant is 14 days in arrears; the tenant has until the termination date in the notice to remedy
• Western Australia – the breach notice for non-payment of rent gives the tenant 14 days to remedy; if they fail to do so, the landlord can issue a notice of termination for non-payment of rent giving the tenant seven days to vacate.

Next steps

After issuing the tenant with a termination notice, in general, one of three things could happen.

The tenant may pay the arrears before the date they are required to vacate. If they do this, in some jurisdictions this automatically invalidates the termination notice and the tenancy continues. In other cases, the tenant may choose to vacate, or you can insist they do so. Alternatively, you may mutually agree to continue the tenancy.

Another possibility is that the tenant does not pay the arrears and vacates the rental as per the termination notice. Once you have possession of the property, you can re-let it and then submit an insurance claim for loss of rent if your policy has this provision.

The least palatable option is that the tenant doesn’t pay up and also refuses to leave. In this case, you’ll have to escalate the matter to the tribunal or court by applying for possession. Again, there are different procedures in each jurisdiction which must be followed so you don’t end up being the one in hot water for unlawful eviction:

• Australian Capital Territory – if a notice to vacate has been issued and the rent is not paid within two weeks, the landlord can apply to ACAT for a termination and possession order; if the termination and possession order is ignored by the tenant, the landlord can apply to ACAT for a warrant for eviction, which can ultimately be enforced by the police
• New South Wales – if the termination notice for non-payment of rent issued is not complied with, the landlord can apply to NCAT for a termination and possession order; if the tenant does not comply with the tribunal order, a Sheriff’s Officer can remove the tenant from the rental property under a warrant for possession issued by the tribunal or a court
• Northern Territory – once NTCAT has issued a termination notice and order of possession, if the tenant fails to vacate the premises by the date specified in the order, the landlord may then apply to the Local Court to engage the services of a bailiff to forcibly remove the tenant
• Queensland – if a notice to leave has been issued and the tenant fails to do so, the landlord can apply to QCAT for a termination order and warrant of possession; if a warrant is granted, it will authorise a police officer to enter the property and give possession of the property back to the landlord
• South Australia – once SACAT has issued a warrant of possession, it can organise a bailiff to enforce the order if necessary
• Tasmania – if a notice to vacate has been served and the tenant fails to do so, the landlord can apply for an order to vacate from the Magistrates’ Court
• Victoria – if a notice to vacate is served and the tenant has not paid the late rent by the due date, the landlord can apply to VCAT for a possession order which can be enforced by the police
• Western Australia – if a notice of termination for non-payment of rent has been issued and the rent is not paid within seven days, the landlord can apply to the Magistrates’ Court for an order to terminate the agreement.

Claiming for rent default

In an ideal world, the termination process would go smoothly – possession would be given, any damage fixed, and any rental arrears brought up-to-date before the tenants move out on good terms with the landlord and property manager. But the world isn’t always ideal, and landlords can find themselves out-of-pocket when their tenants fail to make good.

This is where having landlord insurance covering tenant-related issues can prove invaluable. Landlord insurance policies can not only provide cover for loss of rent due to default/arrears, it can assist with legal expenses incurred during the eviction process (including the cost for a warrant of possession in some jurisdictions).

If the landlord has insurance which includes cover for rent default, a claim may be able to be lodged after the tenant has been legally evicted. The landlord will need to provide evidence of the loss and the actions taken to remedy the situation. The period for which the loss of rent will be covered is determined by the nature of the claim and the lease agreement in place.

We know this can be complicated and confusing. So, if you have questions about the ramifications of eviction on your landlord insurance, please get in touch and a member of our Expert Care team will be happy to help – 1800 661 662.

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are there, contact 1800 661 662 if you have any questions.