Tips for landlords when their tenant does a disappearing act.
Everyone who has let out property knows that sickening feeling when you find out that your tenant has disappeared.
Most of the time there are signs—usually unpaid or late paid rental. Some tenants plan to go without paying, while others just cannot pay.
What should you do? Check on any municipal accounts, especially water and electricity accounts, if these are to be paid by the tenant. If the tenant does not pay, legally the landlord will have to. Also, check with the Body Corporate about their own accounts, because your tenant may owe them for services or (in some cases) for body corporate fines. Finally, don’t forget to check the building for any damage that your tenant is responsible for.
Once you know how much is outstanding in total, you are in a position to decide how to proceed. If the amounts outstanding are small, it may cost more than you will recover, unless you go to the Small Claims Court. If the amounts are substantial, it will be worthwhile proceeding legally, provided that you are reasonably sure that your tenants have assets.
First find out how much deposit is available, and deduct this off the outstanding amount. Next, have a look at the tenant’s application form. You will often find all sorts of helpful information, such as their previous address, relative’s address, work and home telephone numbers, etc. These will all help you to find your tenant.
If you or your letting agent has access to ITC, you would also be able to do a check there, and this will give you further information.
It is also possible to use tracing agents. An attorney can give you the details of one in your area. However, whether you find these tenants or not, it is important to have your attorney sue them for the outstanding amounts. If they have vacated your property, they are unlikely to defend the case.
Once the amounts owing have been confirmed by the courts by way of a judgement, you have 30 years to collect this money if and when you find them in the future. If you don’t do this, then the amounts prescribe (lapse) within three years.
To help prevent future lettings from ending in tears, it is important to know your tenant before you let to them. Do proper credit checks, take full deposits, and never allow tenants to pay off their deposits as this indicates that they are financially weak.
Good credit control at the beginning of each month is important, and tenants must understand that if rent is not received by the owner / agent by the first day of the month, not only will there be a late payment penalty in terms of the lease, but that legal action will be taken immediately.
For the most part, as soon as tenants realise that you are serious about them paying on time, they will give you little trouble.
WRITTEN BY MIKE SPENCER
Published in Personal Finance Issue 334 (November 2008).
While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither writers of articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes and should not be construed as financial advice.