Have you ever had that experience where someone turns out to be the exact opposite of who you thought they were? They introduce themselves with an innocent smile but, somewhere down the track, their smile turns into a menacing grimace. It’s too late now, you’ve fallen hook, line and sinker. And now they are destroying your house. We’re not talking romantic dalliances turned sour here; this is a case of tenants gone bad.
Tenants from hell
When you agree to rent out your property you have to put a lot of trust in the relationship. Often everything will go off without a hitch. Rent will be paid (hopefully on time) and tenants will care for your home as if it were their own. Unfortunately, as a thread on Reddit shows, renting out your property does not always go so smoothly.
“[We rented out our] top floor 1 bedroom apartment of about 650 square feet. We got complaints about the smell emanating from this apartment. Upon inspection, we found a sea of cats living there with two people. Dozens of cats. When we called animal control, it tool every truck in the city several trips. The final count? Sixty-two cats. I love cats, but that’s too much,” shares Reddit user “DjQball”.
And check out this landlords’ tale for size, it’s a doozy.
“I rented my house to two adults with two kids. They stopped paying their rent so I had to sue to evict them. Once I got the place back it was completely filthy. There were beer bottles, food containers, and cigarette butts littering every room. They had flushed so many tampons down the toilet that the sewage line was backed up. On top of that, there were dog faeces on the carpet, and the place was infested with mice. I believe I caught 18. And to add insult to injury, they stole my dryer,” Reddit user “the stilt” says.
So what do you do as a landlord if something like that happens to you?
To get the ball back in your court, it pays to know what your rights are as a landlord regarding unruly tenants. This is particularly important if you’re new to the investment property game.
When the landlord has to pay
Figuring out who foots the bill for property damage often comes back to the cause of the destruction. Was it intentional? Did it happen after a natural disaster?
According to the Government’s tenancy services guide, tenants are required to let the landlord know about any damage – regardless of how it happened.
Any repairs to your property following a natural disaster are at your expense; the tenant is not liable for any damage following a storm, earthquake or flood. The landlord also has to mop up costs of repairs following a burglary, or from any fair wear and tear.
When the tenant has to pay
If a tenant, or their guest, intentionally damages the property, the onus falls on the tenant to remedy it – as dictated by the landlord. This means the renter has to pay for the damages, or repair the damages themselves. However, if the damage is caused by carelessness and is covered by the landlords’ insurance, the tenant is off the hook – unless it was the result of an imprisonable offence. The landlord has to cover the insurance excess costs and cannot pass these costs on to their tenants.
Before entering any discussions with the tenant on payment for damages, landlords should review their insurance policy. As of 1 August, the Tenancy Tribunal issued a practice note which details information about tenany liability for damages and landlords’ insurance.
This note follows confusion following an Appeal Court ruling.
Landlords Andreas Holler and Katherine Rouse rented their house to Kenji Osaki and Tieko Osaki. Mrs Osaki left a pot of oil on high heat and unattended for five minutes, which later caused a fire leading to substantial damage to the home.
The landlord’s insurance covered the $216,413 repair costs, but then the insurer tried to reclaim the costs from the tenants. However, the court ruled against the tenants being liable for the costs.
What about if your tenant skips rent?
The tenancy agreement will stipulate how the rent is to be paid and when it is due. If the payment is not made by this date, it is known as rent arrears – overdue rent – and is a breach of the tenancy agreement.
In the first instance, a landlord should always contact the tenant to check whether they are even aware they have missed rent. Then, talk to them about how they plan to bring rent up to date.
Here are some further tips if the payment process gets a bit complicated:
- If your tenant is having difficulty paying rent, consider a repayment plan. For example, allow them to add an amount to their regular rent until they have paid off any outstanding debt. Make sure you put any agreement in writing.
- If it looks like there might be an ongoing problem with overdue rent, check to see whether the tenant can realistically afford to keep renting the property.
- If you reach an agreement with your tenant and want to formalise this with a mediator, consider using a FastTrack Resolution. A FastTrack Resolution is a quick way to confirm agreements reached between landlords and tenants and encourages the parties to work out the issue between themselves (rather than through courts).
However, if you are unable to resolve issues with your tenants, you can contact the Tenancy Tribunal for a hearing. This is really a last resort option, but it is there if required. The Tenancy Tribunal can formalise what is agreed at mediation, or can make a ruling on an issue that can’t be resolved and can issue a legal order. More information on the disputes process is available on the Ministry of Business, Innovation and Employment website.
Tips to help avoid picking dodgy tenants
Unfortunately, regardless of how hard you try, it’s impossible to completely eliminate the chance of picking dodgy tenants. But there are some steps you can take to at least increase your chance of renting to responsible tenants. Here are a few tips to help with the selection process:
- Ask them to complete a pre-tenancy application form, to help gather information to decide if they are a good fit for your property.
- Interview them to find out what they are looking for in a rental property, and let them know your expectations.
- Find out a bit about their renting history and why they have moved previously.
- Check their references e.g a co-worker or employer.
- Check their credit history. This will let you know whether they have defaulted on payments.
Don’t get discouraged by landlords’ horror stories. Having tenants can be a great way to bring in some cash and help you pay off the mortgage. Just make sure you enter any rental agreement with eyes wide open. And do your homework on how to deal with a rocky rental relationship.