When your tenant doesn't pay the rent

When you own a rental property, the reasonable expectation is that your tenants will pay the rent – on time and in full. When this doesn’t happen, you have some recourse.

Tenants’ rights and responsibilities

Under residential tenancy laws and regulations of the states and territories of Australia, tenants must pay rent in advance. If they fail to do so, they are in arrears, which is a breach of the tenancy agreement they should have signed upon moving into the property.

Landlords’ rights and responsibilities

As a landlord, if your tenant doesn’t pay the rent, you can send them a breach notice. The tenant has to be in arrears for a certain number of days before you can send this notice; this period varies throughout Australia, so be sure to familiarise yourself with the particular laws of your state or territory.

If your tenants have been otherwise reliable, are taking good care of the property and may be facing some temporary financial hardship about which they have informed you, you might want to try to reach an agreement with them that involves paying off the debt over time. In this case, make sure that you get everything in writing and that each of you has a copy of any such agreement. Further to this, it’s good practice to document any conversations you have and keep copies of all correspondence. Proper documentation will be essential if you end up having to go before a court or tribunal.

Terminating the tenancy

You can issue a termination notice without first asking the tenant to pay the arrears; however, you must follow the process outlined below before you can evict your tenants. Locking out tenants without a tribunal/court order is illegal, and law enforcement can fine you a hefty sum and order you to compensate your tenants if you do not go by the book.

You must issue a non-payment termination notice in writing. This notice must be signed by the landlord or agent and contain all of the following information to be legally binding:

• the grounds for termination (non-payment of rent)
• the address of the property
• the date by which the tenant must vacate the premises (this date must be at least 14 days from the receipt of the letter)
• a statement indicating that the tenancy will not end if the tenant pays the arrears or signs an agreement for payment of the arrears (as outlined above).

You must send or deliver the notice to the tenant in person, by post or by fax. If you post the notice, you must allow an extra four business days for delivery.

Serving a non-payment termination notice still does not officially end a tenancy. It officially ends once your tenants vacate the premises and return the keys to the landlord or the agent. If they refuse to do so, you may unfortunately have to go before a court or tribunal to have them evicted.

With luck (and the right tenants), it won’t come to this. The best way to protect yourself from this situation is to thoroughly screen all potential tenants and to keep the lines of communication between you and existing tenants open and clear.