Hopefully you never have to find out, but if you find yourself in this situation, it is important to note that there is a process that your property manager has to follow.

The process is designed to give the tenant a chance to remedy the breach.
It gives a little regard to the fact that the landlord still has to pay the mortgage. This in itself can be disappointing news to bear.
Generally the arrears are managed on a daily basis, and best practice is to call, text and email the tenant. If we can have a conversation with them, then we can understand the situation and prepare for any speed bumps along the way. Generally if someone is experiencing financial stress, they tend to avoid the phone as if they haven’t paid rent, theres usually other bills not being paid also.
I personally discuss this with tenants at the commencement of the tenancy. I let them know that it’s always better to communicate through any issues, and will be more likely to reach a successful outcome if the landlords know what is going on, than hiding and then the only possible outcomes are breach notices.
We all know life happens, job loss, illness, caring for others, etc but avoiding the problem makes it 10x worse.
I can’t recall a situation with tenants over the years where I have had this discussion at the commencement, and ever had an issue with repeated arrears. The arrears is usually when I have an inherited tenant that not only did I not place into the property, but I did not get the chance to have that conversation in the beginning.
The expectations can be clear from the beginning but equally some kindness and understanding goes a long way.
Rent arrears Day 1-14
Let’s say that the property manager has had discussions with the tenant, and keeps getting excuses about when it will be paid, and yet the money doesn’t arrive.
Legally, nothing can be done until the tenants are 15 days in arrears.
Rent arrears Day 15-22
At this point, a Form 2 breach notice can be served. This gives the tenant 7 days to ‘remedy the breach’ or the agreement is terminated.
However, only SACAT have the power to end a tenancy in this scenario.
Rent arrears Day 22-45
If rent is still unpaid, then we apply for vacant possession through SACAT.
This application costs approx $80, is not able to be passed on to the tenant, and it can take 2-4 weeks to get a hearing.
Given the current housing crisis, SACAT will not terminate a tenancy at the first hearing. (Sometimes not the second, third or fourth, but that’s a story for another day!)
They will set up a formal payment plan for the arrears to be paid as additional payments on the existing rent amount.
Formal payment plan via SACAT order
Depending on the amount of arrears and the situation, it can sometimes be that if a payment is missed, the PM can go back to SACAT with an urgent hearing (within a week or so) and the tenancy ‘may’ be terminated at that stage.
This is rare and will depend on the severity of the arrears.
Generally a tighter payment plan will be given and an eviction may occur if this were to fail again.
Failed payment plan
If the tenant were to fail to make payment and there is an eviction order at that stage, it can still take 1-2 business days to secure a date/time with the bailiff to physically take back possession.
Locks will also need to be changed, and the locksmith coordinated to attend with the bailiff. This is at additional cost to the owner, and may not be covered by landlord insurance as its expected to come from the bond, but typically the bond is now exhausted in rent arrears at this stage.
Potential Outcomes
Very occasionally I have seen a SACAT ordered payment plan, and the tenant catches up and continues to pay rent on time in the future.
Depending on the situation, this does not always mean you need to consider not renewing to the tenant.
In most cases, this is a frustrating process for the owner, and the property manager, and generally the PM will recommend not renewing if this has been an ongoing and repeated pattern.
I truly hope you never have to go through this process. I trust that your tenants will always pay rent on time, and if they did have a life blip, they are able to get back on track without too much fuss.
However if you find yourself in this scenario, I hope that you have an excellent property manager who is familiar with the process and knows how to get you the best outcome, whilst ensuring none of these vital deadlines are missed.
You know who to call if you ever find yourself in this situation and need help!
0426 241 676 or hello@tayloredproperty.com.au
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