Three Ways To Collect Rental Arrears
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Defaulting tenants can be a nightmare for landlords. Through this guide, we help landlords like you act on non-paying tenants to collect rental arrears.
Collecting rental arrears
It's one of the most common headaches for landlords: non-paying tenants can be a nightmare, and collecting rental arrears can become a drawn-out process that costs you more energy, time, and money than you have to hand. We've outlined three different scenarios that may be applicable when trying to collect rental arrears, but there are some guiding principles that apply to all three scenarios. These include:
The lease
The lease between landlord and tenant is not just a contract; it's an outline of responsibilities and rights too. A good lease outlines each of the rights and responsibilities as they pertain to tenant and landlord. Once that lease is signed and secured, it becomes an effective tool for ensuring that the tenant-landlord relationship remains robust. Make sure you're abiding by the terms and conditions of the lease, and don't skip on renewing the lease every year.
Tenant history
Consider the relationship between yourself as the landlord, and the defaulting tenant. A good tenant who, usually, dutifully pays on time, keeps your rental property in good condition, and abides by every other condition listed on the lease...is worth their weight in gold. If your relationship with your tenant has been fraught and worrisome, it may be worth sacrificing the relationship to begin the process of collecting rental arrears, and eventually evicting them.
The law
Your lawyer could be your best friend in this unfortunate situation, and getting legal advice on how to deal with collecting rental arrears may be your best bet towards success. Rental agreements are governed by the law, and disputes can be resolved through the Rental Housing Tribunal. As a landlord, you are afforded a level of legal protection, and although invoking these can become a tedious process, the rental law must be followed when dealing with a defaulting tenant.
Keeping all these factors in mind, let's examine three scenarios where you will need to act, to collect rental arrears:
Scenario 1: The good tenant falls on bad times
You feel so lucky in having found the greatest tenant. They've rented your property for more than a year, and have never given you a day's hassle. They've stuck to the terms of the lease, kept you up to date with anything that needs attention within the property, and they've always paid their rent on time. Suddenly, they've stopped paying rent. We recommend:
- Communicate: Get in touch with your tenant, and ask them why they've skipped this month's rent payment. If they've lost their job, or suddenly fallen on hard times, they may be feeling too embarrassed to tell you. Of course, we always recommend that a tenant in trouble talks to their landlord immediately, but they may be feeling overwhelmed. If they are seven days past due on their rental payment, it's time to get in touch with your tenant and follow up on payment. Acting quickly can save you and your tenant a whole bunch of hassles.
- Plan: Once you know where you stand, work together to figure out a way forward. If their job loss has affected their family this much, it may be time for them to consider alternative accommodation, and look towards moving on from your property. If this is just a temporary blip in their budget, ask them for assurance that the rental arrears will be repaid. Maintaining a good tenant-landlord relationship relies on transparency and communication.
- Write it down: Figuring out how to collect rental arrears could include renewing the lease, and having the monthly rental amount increased, to enable your tenant to pay back the arrears over a year. Don't forget to inform your tenant in writing that you are aware they are in arrears. If reconfiguring the monthly rental amount will work for you and your tenant, sign a new lease with them that details the new amount.
Scenario 2: The difficult tenant
The relationship between you as the landlord and this particular tenant has been difficult. They're constantly complaining that you're not maintaining the property as outlined in the lease agreement, and you're being driven round the bend by their 10pm phone calls. And, now that it's seven days past the rental amount's due date, you're noticing a hole in your bank account, where their payment is supposed to be. Here's what to do, to collect rental arrears:
- Get it in writing: Inform your tenant within seven days of their default in payment, that they have not paid their rent on time. It is essential that you do this in writing, and follow due process.
- Find out the real reason: It's all too common that the complaining tenant is covering something up. Take the time to find out the real reason behind their non-payment, and figure out if they've fallen on hard times, or there really is a rental dispute.
- Invoke the lease: The rental of your property is governed by the rights and responsibilities of both the tenant and you, as the landlord. If your tenant has skipped a rental payment, it's time to invoke the terms and conditions of the lease.
- Launch a rental dispute: If your tenant is seriously concerned that you are not maintaining the property in terms of the lease, they do have the right to launch a rental dispute. And, as with all things, there's a right way and a wrong way to act on these. The Rental Housing Tribunal should be your tenant's first port of call if they are concerned, and it exists to help you settle rental disputes too. Ultimately, however, tenants cannot withhold their rental payments.
Scenario 3: The non-paying tenant
It's happened: despite your best attempts not to, you've ended up with a dud, non-paying tenant. It's caused you endless headaches, and you're done with the ridiculous reasons they've put forward for non-payment. Don't delay on this one, and make sure you follow due process to ensure you're able to collect rental arrears. We recommend:
- Put it in writing: Inform your tenant within seven days of non-payment that they have not paid rent. Legally, your tenant then have twenty days to remedy this problem. If, after twenty days, your bank balance is still looking dire, it's time to act.
- Follow due process: Your next step may be to cancel the lease, owing to your tenant's breach of the terms and conditions listed in the lease. You can't just boot your tenant out of the property and you're not legally -
- Follow the rules: If the rental payment is still not forthcoming, and negotiations have hit a stalemate, it's probably time to initiate the uncomfortable, but necessary, eviction process. Read more: How to lawfully evict a non-paying tenant.
- Get legal help: You may need the help of a lawyer to legally pursue your ex-tenant for the rental arrears. Alternatively, pursuing the collection of rental arrears through the Small Claims Court is possible, so long as the rental arrears amount is less than R20000.
No matter which of the scenarios apply for your collection of rental arrears, keep in mind one important thing: to always follow the rules and act in accordance with the law. There's no better way to ensure you'll be able to collect rental arrears as a landlord.
Author: Cath Jenkin
