Tenant Has Not Paid Rent. My Landlord Insurance Doesn't Cover Rental Loss!

Lcccc81 on 12/12/2015 - 09:01
Last edited 12/12/2015 - 10:05 by 1 other user

Got a investment property in different state. The tenant has not paid rent regularly for past 6 months.
There already has been one tribunal case against him and my real estate agent has been very helpful. In the tribunal hearing, he got told to pay off the amount he is owing.

But again he hasn't paid rent regularly and now there is going to be eviction notice early next week.
My landlord insurance is with Real Insurance but they don't pay for rental loss(tenant not paying rent).

Can you please suggest any other way of recovering the owing debt?

Any help would be appreciated

Financial

Comments

  • Diji1 on 12/12/2015 - 09:21

    Presumably you can sue him in a civil suit and get paid back at 20 bucks a fortnight if they're unemployed.

    You might get lucky and he fails to maintain that arrangement so the court rules that assets can be seized and sold to recover the costs.

    Please note that I'm unqualified to offer any advice you should take not take the above seriously.

    • cccc81 on 25/12/2015 - 09:35

      any idea of do I need to pay any legal costs for the above?..
      if i get lucky atleast would be able to recover some money back.
      the property is in VIC, so is it the VIC civil court.?

  • jnewau on 12/12/2015 - 09:26
    +5

    Your tenant has already ignored orders to pay off rent. You could take legal action but given their previous history what chance would there be of them ignoring more orders and how much will it cost you to pursue it and will it cost more than the lost rent?

    Some landlord insurance does cover legal costs up to an amount for recovery of costs, have you checked if yours perhaps includes coverage of that?

    When I compared all the policies for my IP insurance coverage for non payment of rent was always included as a basic part of the policy. I never looked at Real, but if you shopped for the cheapest policy perhaps you're finding out now why they are cheap….

  • oscargamer on 12/12/2015 - 09:26

    Small claims court. In reality you'll never get your money.
    Next time get the insurance that covers rental payment.

  • altomic on 12/12/2015 - 09:50
    +10

    bikies

  • [Deactivated] on 12/12/2015 - 09:51
    +2

    I would say take it as a learning experience and don't bother filing a civil suit. They just drag on and on.
    If they don't leave next week, don't be afraid to call the police.
    Next time have a meeting with any prospective tenants. Don't lease to any losers

  • Cheeper on 12/12/2015 - 10:14
    +1

    You will never get your money. Best to focus on getting him out, that is all you can do.
    LL's have little rights as you are finding out.
    Chances are your next tenant may pull the same stunt as they know they can get away with it.

    • Diji1 on 12/12/2015 - 17:17
      -5

      You mean other than all the rights that come with owning the property I'm assuming lel?

      • Cheeper on 12/12/2015 - 23:19
        +1

        If you ever get to lease a property out as an owner you will know what I am talking about.

  • kipps on 12/12/2015 - 10:24

    Which state are you in? You're going to need to take the tenant to whatever small claims court/tribunal applies.

  • bigticket on 12/12/2015 - 11:32
    +17

    Don't bother wasting you time and money recovering rent. Its a dead end.
    The agent that you have found "very helpful' most likely does not deserve to be praised. They did not check this tenants history and now you are dealing with the aftermath.

    • PVA on 12/12/2015 - 12:47
      +9

      I was going tosay much the same.
      the agent hasnt relly done their job at all, how much rent did they let slip by before they started doing something?

      • SlickMick on 14/12/2015 - 18:18
        +2

        I think finding a new agent should be 1st priority.

        If I was king, agents would be required to take tenant to caught to recover THEIR loss because THEY would be responsible to you for the loss.
        There is so little for agents to do, yet they don't perform those functions.(Keeping property maintained, handling disputes etc.)

  • Mumbles on 12/12/2015 - 12:30
    +7

    Sorry to hear that you are out by so much money. Unfortunately chances are extremely low that the tenant will repay you. Most renters don't have big dollars saved up and sitting in their bank account. Its the people with the worst finances that tend to take advantage of free rent. Australian laws protect renters more than landlords and repeat offenders know it.

    In terms of recovering a little money. You should get 100% of the bond.

    Ensure that you are insured for damage because its likely your property has not been looked after. Expect the following:
    - damage (eg. holes in wall, door, cracked windows)
    - items have been stolen (eg. washing machine, fridge, light bulbs)
    - requires professional cleaning (eg. carpets, chairs, walls)
    - garbage removal services (eg. dumpster bins, towing truck for car bodies)

    Prepare yourself for more pain. If the damage is high then you will have to pay the insurance excess to put in a claim. Best to write off your losses and move on.

    Sophisticated options for recovering dollars:
    - check with an accountant if possible to use the losses as a tax write off.
    - sue the real estate agent. They may have not fulfilled their their responsibilities.

    A standard disclaimer is that I am not a property lawyer, property investor or property manager. Best you seek advice with your own professional.

  • timetoquit on 12/12/2015 - 12:42
    +4

    As some have said, forget trying to recover the loss rent. Its all too stressful, you appear to be the stressful type, just like me :)

    Learn from mistakes, take up EBM or Terri Scheer insurance, scrap your current insurer.

    You have an agent, its their job to go to tribunals. You're paying the agent to manage your property. Nothing additionally 'helpful' about that- when agent gets your money back then you can start praising the PM.

  • try2bhelpful on 12/12/2015 - 12:51
    +4

    I don't understand why, if you go through a Real Estate Agent, they wouldn't be held liable if the tenant didn't pay the rent; otherwise what is the use of them? Sounds like a change is required to the law. I also wonder what sort of background check the Real Estate agent did. When I was renting I was scrupulous with paying rent on time and cleaning the place really well before we left. It was important to me I had a good reputation for when/if I needed to rent elsewhere. We never had an issue renting anywhere and we had cats in all the places we rented.

  • AMLagonda on 12/12/2015 - 13:04
    +2

    Yer I dont get it either, isn't that the point of having a real estate agent? Don't they have a legal contract to act on your behalf and get you your money?

    • Cheeper on 12/12/2015 - 23:20
      +4

      Good luck with that. Some REA's are more problem than bad tenants. They just do as little as they can to get their fee.

  • chill on 12/12/2015 - 14:06
    -6

    This is the problem when you dabble in Rent-Seeking

  • [Deactivated] on 13/12/2015 - 09:52
    -8

    I think investment properties are immoral

    • woteva on 13/12/2015 - 10:16
      +2

      Without investment properties, there would be no rentals.

      • Spending2Much on 13/12/2015 - 12:33

        Yep, imagine the homelessness when there's no rentals……

        Then again, at least there`d be no bad tenants.

    • brotherfranciz on 13/12/2015 - 18:42
      +1

      Immoral? I get what you mean, as I am looking to buy my first home, but I think that is stretching it a little… the real immoral practices are: foreign investors who take money out of the country, and banks that loan money to people who have no hope of ever making repayments.

  • blindwilly on 13/12/2015 - 12:05

    If they run a business from home or work from home you may be able to take legal action against the business they own or operate. I have seen this done in the past in Victoria a few years ago so you may need to check the law in your area.

  • Spending2Much on 13/12/2015 - 12:40

    Maybe you should seek advice from the sympathetic renters in this post…..
    https://www.ozbargain.com.au/node/224530
    The ones who suggest and support the actions of wilful damage against some else's property…..
    Apparently the general consensus is that you don't own the property while they are paying rent…….or as they would believe, they are supporting your global real etstate empire.
    The ones who think yearly inspections are interfering.

    Perhaps those commenters think you deserve it……

    Yeah, unfortunately, landlords have little to no rights at all.
    Good luck, best case scenario is they vacate leaving you out of pocket with rent, but no damage.

    I feel for you in this situation, wishing you all the best

    • ms_caz on 13/12/2015 - 16:35

      It's not just the damage - heartbreaking though it is, at least it is something that can be claimed for against your insurance (although in my experience, this fell woefully short of the actual cost of repairs). It's the filth and rubbish and vermin and associated cleaning and maintenance costs to make the property habitable that are the killer. "Wear and tear" shouldn't mean urine soaked and flea ridden carpets and a thick layer of grease covering everything. not to mention an entire backyard filled with rubbish. It's taken us months to get it to a state where we might be able to rent it out again IF we find suitable tenants.

      Unfortunately our insurance company has now declared us to be a bad risk and declined to renew our policy - we made one damage claim and one rental arrears claim - both claims about the same tenants and in effect the same incident as we only discovered the damage once the tenants were evicted. This was apparently too much of a risk - the landlord insurance we had taken in case of just such a situation was apparently not really meant to cover anything at all. Now, with a bad insurance history, we are facing an uphill battle to find an insurer. So it's not just the immediate loss of rent, damage costs but there are other consequences as well.

      good luck with it.

  • mini2 on 13/12/2015 - 16:21
    +1

    Claw money from the bond (and hopefully they haven't completely screwed the place up in the process) and anything else, well chalk it up as a lessons learned. Try EBM or Terri Scheer next time.

  • SlickMick on 14/12/2015 - 18:22

    Each state has a system in place to "ensure" you get your money back… unfortunately such tribunals are notoriously inefficient.

    However, as a tenant, a landlord tried to make me pay $1000s to lay new lawn when I was leaving. The tribunal ensured I got my bond back, so was glad it worked for me.

    The problem is, you need to be there. I'd try telling the agency to do their job and be your agent at the tribunal. Good luck with that happening!

  • Aust on 20/12/2015 - 08:48

    Try EBM or Terri Scheer next time.
    or Aon if your only after rent default or malicious damage/theft by tenant, https://business-insurance.aon.com.au/professions/real-estat…

  • cccc81 on 25/12/2015 - 09:33

    thanks all for your input..the property is in VIC..

  • cccc81 on 25/12/2015 - 09:39

    and you guys are correct..the real estate agent hasnt done a proper job checking rental history..apparently the tenant was at a different property with the same agent and paid money on time..this time he got two of his friends with him ..so all three were on the lease and 2 of other abandoned him..and he cant pay the total rent now..

    probably need to be careful next time..try to choose a family ..
    yes and it is surprising that the real estate agent is not liable for anything!

Login or Join to leave a comment
Login Join