TABLE OF CONTENTS
- General Information
- Quick Reference - Time Frames - All States
- Head Office Best Practice Policy on Timeframes (including formal notices)
General Information
Typically speaking, dealing with arrears is one of the worst jobs in Property Management. It is never nice for an agent or PM to have to speak with a tenant about why they have fallen behind in rent. Likewise, most tenants don't like speaking about the fact they are not in a financial position (no matter the reason) to pay the rent for the home they live in.
Some things to consider when dealing with rent arrears:
- Stepping outside of the noted timeframes and notice periods in your geographical location could jeopordise your owners ability to make a claim on their Landlord Insurance down the track (if the tenancy turned sour and there is a debt owed at the end of it). If the Landlord was to make a claim on their insurance and the claim was not approved on the basis that notices were not issued on time or an action was not carried out by the agent when it should have been, the Landlord may have rise to a claim against the agent for any financial loss.
- Tenants should be reminded that they need to do everything they can to keep their rent up to date at all times. This will assist them in securing a new rental property down the track and can also have an impact on whether or not a financial institution or lender feels they are fit for a loan application (when purchasing a home or looking at a new car they will potentially ask for payment records to show good character and timeliness or rental payments).
- An agent and property manager should always ensure the tenant is made aware that if they cannot make their normal rental payment throughout the tenancy, they should reach out and discuss this straight away.
- Where a tenant is unable to pay their rent, an agent should encourage them to pay as much as possible, even if its not the full payment. It is far easier to catch up on a part payment than a full payment.
- At the point that the arrears process may trigger an "end of tenancy" an agent should always ensure they have the owners written approval to issue such a notice. For example, in Queensland if a tenant doesn't remedy the initial breach that is issued and pay their rent up to date, the next step is issuing what is known as a Notice to Leave. This essentially can end the tenancy as the agent is asking the tenant to leave the property, having not remedied the breach.
- Landlords should also be educated that if they were to allow leniency at a time that the tenant falls behind in rent (e.g. not issue a breach notice when they have the opportunity to) this could also jeopordise their chances of a successful insurance claim down the track. It could also impact their ability to end the tenancy and have the Tribunal order in their favour if the matter gets out of hand and is not addressed. We have witnessed cases that the Tribunal has allowed the tenant to stay on and initiated a payment plan instead of evicting them. The grounds were thta the owner had allowed a number of "exceptions" in the past and didn't see why they now want to get them out for failure to pay rent when it had been overlooked in the past.
Please refer to the following article if you need assistance with reading rent arrears on a tenant ledger:
https://www.atrealtysupport.com.au/support/solutions/articles/14000164626-reading-a-tenancy-ledger
Quick Reference - Time Frames - All States
Queensland
Legislative/ Statutory Body:
RTA - www.rta.qld.gov.au
When to issue a breach notice:
On day 8 - Tenants must be 7 clear days in arrears before any notice can be issued
When to issue a termination notice (or follow up after breach):
If the tenant has not remedied the breach (paid the amount owing at the time that the Notice was issued - not the additional week that has accumulated) then you have the ability to issue a Form 12 - Notice to Leave (subject to agent and property owner prior written approval).
This would be on the grounds of “failure to remedy breach”
Under these grounds the notice period for the Notice to Leave is 7 days
If a tenant chooses to hand keys in on or before the expiry of the Notice to Leave, the tenancy has effectively come to an end on the expiry date of the notice. No further rent would be owing after the expiry date under these terms.
Tribunal:
Following expiry of the NTL if the tenant has not returned possession of the property to the agent / owner then there is an ability to apply to QCAT for a Termination Order under the grounds of “Failure to leave”.
Please note: the application at this point is not to chase rent arrears or any potential debt incurred with the vacating and tenancy process. The RTRA Act doesn’t allow for this to happen at this stage of the process.
It is important to note that an application to QCAT must be done within 14 days of the Notice to Leave expiring.
New South Wales
Legislative/ Statutory Body:
Office of Fair Trading - www.fairtrading.nsw.gov.au
When to issue a breach notice:
No statutory timeframe or form at this point.
Recommended to email tenant when they miss a payment.
From this email a 14 day window of time must be provided to allow tenants to rectify arrears
When to issue a termination notice (or follow up after breach):
Non-payment Termination Notice
If a tenant does not pay their rent arrears within the notice period noted the left of this column then you have the ability to issue a Non-payment Termination Notice (subject to agent and property owner prior written approval).
There is not a statutory form for this however a template can be found here:
https://www.fairtrading.nsw.gov.au/__data/assets/pdf_file/0006/369978/Notice-to-terminate-tenancy-agreement-landlord-agent.pdf
Tenant is provided a 14 day period to vacate and end the tenancy.
The Tenant Information Statement attached must be included in order for the termination notice to be valid.
If the tenant makes payment of the outstanding rent or has entered into & is following an agreement payment plan, the notice will have no effect
Tribunal:
Apply to NSW Fair Trading for termination of failure to vacate
Victoria
Legislative/ Statutory Body:
Consumer Affairs Victoria - https://www.consumer.vic.gov.au/housing/renting
When to issue a breach notice:
No breach notice required under this state legislation
When to issue a termination notice (or follow up after breach):
The tenant must be at least 14 days in arrears before a Notice to Vacate can be issued.
Please note: If the tenant pays their arrears before the expiry date of the Notice to Vacate the notice is considered revoked unless it is notice 5.
This notice must be a minimum of 14 days notice period.
Should the tenant repeatedly be issued Notice to Vacate and rectify the arrears, there is a provision for the Agent / Lessor to apply straight to Tribunal if 4 Notice to Vacates have already been issued within a 12 month period (that the tenant has rectified their rent for).
Tribunal:
Application to VCAT is made simultaneously as the Termination Notice number 5.
South Australia
Legislative/ Statutory Body:
Consumer & Business Services - www.sa.gov.au
When to issue a breach notice:
Rent must be at least 14 clear days in arrears before an Breach Notice can be issued
https://www.sa.gov.au/__data/assets/pdf_file/0005/18446/Notice_to_tenant_to_remedy_breach_of_agreement.pdf
The notice period required for this notice is a minimum of 7 days
When to issue a termination notice (or follow up after breach):
Should the tenant not rectify the breach and pay their arrears by the expiry date of the notice you have the ability to apply to SACAT for a termination.
Please note: the tenant could also hand possession back and the tenancy would be at an end on the expiry date of the notice.
Please visit the link to the left for further information and advice on how to claim possession
Tribunal:
Apply to apply to SACAT if failure to vacate for non payment
Western Australia
Legislative/ Statutory Body:
www.commerce.wa.gov.au
Residential Tenancies Act 1997
When to issue a breach notice:
https://www.commerce.wa.gov.au/consumer-protection/breaches-tenancy-agreement
The lessor / agent can issue a breach notice if the tenant reaches day 15 of rent arrears.
Notice period for this notice is 14 days
When to issue a termination notice (or follow up after breach):
If the tenant does not rectify their rent arrears under the Remedy Breach provisions a Notice to end the tenancy can be given.
This notice must have a notice period of at least 7 days for the tenant to return possession of the property.
Notice of termination must be used - https://www.consumerprotection.wa.gov.au/system/files/migrated/sites/default/files/atoms/files/notofterminationfornonpaymentrentform1a.pd
Tribunal:
If tenant fails to leave by expiry for the Form 1C agent / lessor can apply to Court to end tenancy
Tasmania
Legislative/ Statutory Body:
https://www.legislation.tas.gov.au/view/html/inforce/current/act-1997-082
When to issue a breach notice:
No breach notice required under this state legislation
When to issue a termination notice (or follow up after breach):
A notice of termination can be issued if the tenant falls behind in their rent. The notice is considered revoked should the tenant rectify the arrears issue within the timeframe of 14 days (the notice period).
https://www.magistratescourt.tas.gov.au/about_us/civil/residential_tenancy/property_owners
Tribunal:
If the tenant does not rectify rent and does not vacate the property by the expiry date of the notice of termination you can apply to Court for a “Vacant Possession” order to end the tenancy.
If you don’t apply within 28 days of the Notice to Vacate taking effect, the notice lapses and you must start the eviction / arrears process again.
Head Office Best Practice Policy on Timeframes (including formal notices)
Western Australia
Victoria
Tasmania
South Australia
New South Wales
Queensland
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