When a tenant is in rental arrears, it can be rather costly for the landlord. Particularly, if the appropriate rental arrears procedures are not followed by the property manager.
A good Property Manager will ensure all tenants sign a rental payment agreement form at the beginning of their lease and understand their rental payment obligations. Should your tenant fall into arrears, under the Residential Tenancies and Rooming Accommodation Act (RTRA Act), action can only be taken against a tenant when they are seven clear days behind in their rental payments. Best practice for an agency is that they contact the tenant prior to this time and advise them of the rent payment being overdue. Section 280 allows your agent, on your behalf, to serve a breach notice to the tenant on the 8th day of arrears. Under legislation the tenant is then given the allowed remedy period of 7 days to pay the rent owing. They should then advise you promptly if rent defaults occur and keep you informed of the developments until there is an outcome.
Senior Property Manager at Calibre Real Estate, Kathleen Gillard, tells us why it’s crucial your property manager is on-top of rental arrears, “it is important to ensure rent arrears procedures are checked, followed and actioned daily. With each day that passes, the tenant is falling further into arrears. Issuing notices late or repeatedly, can cause issues when trying to make an insurance claim. If the matter ends up in QCAT (Queensland Civil and Administrative Tribunal) property managers must be on the ball with best practice procedures, legislation and what tribunal can take into consideration.”
Recommended Action For Rental Arrears
- Day 1
Property Manager to print out rent arrears daily
- Day 4
Property Manager calls all tenants who are four days in arrears and diarise each conversation.
Advise tenants that they are four days overdue and if they reach 8 days they will be issued with a breach notice.
- Day 8
Property Manager to issue a Form 11 Notice to Remedy Breach.
Phone lessor and provide a copy via email of post to lessor.
- Day 9
Property Manager to phone tenant to enquire about rent payment and diarise.
- Day 10
Property Manager to advise licensee/manager if required.
- Day 18
Property Manager to contact lessor to seek instruction and potentially issue Form 12 Notice to Leave
- Day 26 (or Day 29 if posted)
If tenant has not vacated, Property Manager is to lodge QCAT Form 2—urgent application for termination warrant of possession. Discuss with lessor.
Here are some other articles with property management tips that could also help with rental arrears :
- How Much Should I Pay In Property Management Fees?
- How to Choose the Best Property Manager Made Easy
- How To Choose the Right Landlord Insurance For You
- Insider Advice To A Quick Tenancy Turnaround
- Top 8 Stress-free Property Management Tips For Landlords