*Help!* - Landlords advice required

[Cazz2269]

I've been managing a rental property and the tenants (a family - husband, wife and child) have been residing in the property for approximately 6 years and there has never been an issue with non payment of rent. Due to work and family pressures, I took my eye off the ball and did not check that their rent was being made.

 

I recently check the account and realised that last months rent had not been paid. Having contacted my tenant he apologised and informed me he had been experiencing some financial difficulties and would be making the payment. However when I went into the bank, they informed me that the last payment that had been made was back in OCTOBER 2013!! So as at this month the amount owing is £12,000!!

 

I immediately went to see the tenant, he explained the reason why payment had not been paid (there was an issue with his business). (The thing that really annoyed me was that he had not made any attempt to contact me (his wife was annoyed as she said she kept telling him to) - but I do accept responsibilty that I should have checked). I had no option but to immediately served him and his wife (they have both signed the tenancy agreement) with a Section 21 Notice - which means they should leave the property at the end of September.

 

The tenants wants to remain at the property and have presented me with a payment plan where by they agree to pay £500 every week from 1st of september 2014and £1,000 from 6th october 2014 everyweek untill the arrears of rentis clear and uptodate.

I'm unclear what I should do:???:. I clearly NEED to get the money that is owed and am worried that if I evict I will not see it again.

I think I have three options:

1. As this is the first time they have been in this situation, do I inform them that if they negate on the payment plan then I will evict at the end of September - but then risk losing what is owed? (plus at the end of September they would only have paid £2,000 and by the end of September the arrears will be £11,200).

2. Do I let them stay and register a default against them until the amount is paid off? (If so, how do I do this?)

2. Do I evict and register a default?

:???:My feelings would be to opt for option 2 but as I've never done this before would really appreicate the advice asap.

[maroondevo52]

Hi,

 

I've moved this thread to a more appropriate Forum, hopefully you will get some advice shortly.

 

Regards,

 

Scott.

[Cazz2269]

Thanks Scott.

[flynnsmum123]

i know this probably really isn't helpful but if it was me i'd be asking if they are/were having financial difficulties can they really afford £2000 for the first month and £4000 for the rest of the months. i'd question whether they could stick to that kind of arrangement.

 

if they can't,i'd be giving them the section 21,i understand missing 1-2 months rent but nearly 12months,seems a bit dodgy to me

[Cazz2269]

Hi Flynnsmum123 - this is actually helpful. The tenant explained and showed me evidence of why there was an issue with his payments - it was the result of a business transaction that hadn't gone through. I don't have a problem with that but I was a little annoyed that they had not said anything.

 

The question still remains...I'm not sure what I should do .

[mariner51]

Are you the LL also or just the LLs agent?

Are you charging LL for your services?

What is LLs opinion of Ts repayment plan and your plan to serve s21?

It is LLs decision finally.

[Cazz2269]

Hi mariner51

 

In response to your query, I am the landlord so there are no LL charges for my services. There is no plan to serve the Notice - I've already done it. I'm just not sure what landlords do in this circumstance. Is it possible to register a default until such time as the arrears have been cleared? if so, how do I do it? I'm just looking for some security against the Tenant to ensure there is a way I get the money back. Can't really think about what else I can do. If I evict then what incentive would they have to pay what they owe?

[Steve__M]

Given the amount of money involved I'd be inclined to consult a solicitor. Personally, I have legal cover where I can call qualified solicitors for advice in circumstances like this.

 

In your view what is the risk of them doing a runner. Does tenant own a company or is he a sole trader. If he owns a company, you can look up information to see how the company is doing.

 

If he is a sole trader, would you be able to track him down if he did a runner - i.e. does he have a settled business that would make it hard for him to move 300 miles away.

[Cazz2269]

Thanks Steve_M. I'll check to see if I have legal cover with my insurers (it never occured to me). I suspect the risk of him doing a runner is pretty slim. He's got a wife and small child plus he has a business, although I'm not sure if it is a registered company or what name he trades under. I do however have his solicitors details as he was very forthcoming providing me with proof of why he got into this mess in the first instance.

 

All very helpful tips but nevertheless still a huge mess!

[Cazz2269]

Scott - I've just posted another question and its totally disappeared. Is there any way of tracking it? Its a query on registering a CCJ.

[mariner51]

What Notice did you serve #7, s21a or SCC papers for recovery of debt?

 

 

If you served a valid s21a there is no default to register as it won't have gone to Court yet and you cannot apply for rent arrears via s21.

 

 

Did you append your recent CCJ query to this thread?

[Cazz2269]

Hi mariner51. I served a S21. I wasn't aware of the S7 or SCC papers for recovery of debt.

 

I understand that the S21 is really the first step to informing the tenants that they have to vacate the property and if I want them out its likely that I would need to go to court to get an eviction notice. If however they keep to their payment plan then I would allow them to stay (mainly as I need to try and get back the money they owe) but as some security I was hoping that I could arrange for a default notice to be registered against them - which I would then remove once the arrears are cleared.

 

As for the CCJ - this was relating to another query that I was posting through CAG.

[Cazz2269]

Steve M. Having checked my policy - I'm not covered for legal fees or rent protection This is going to be a costly lesson learnt

[maroondevo52]

Scott - I've just posted another question and its totally disappeared. Is there any way of tracking it? Its a query on registering a CCJ.

 

Can't find it Cazz ?

[Cazz2269]

:-)Thanks for getting back to me maroondevo52 - I thought it had disappeared so I've just posted another question. Hopefully is in the correct forum.

 

Thank you.

[maroondevo52]

:-)Thanks for getting back to me maroondevo52 - I thought it had disappeared so I've just posted another question. Hopefully is in the correct forum.

 

Thank you.

 

[raydetinu]

I would suggest two options if you are inclined to let them stay, get a legally binding agreement regarding the arrears and future rent drawn up and for them to sign, then if they default you can take them to court.

or serve a section 8 notice for repossession and let the court agree a repayment plan, then if they default, you can evict and then sue for the rent.

either way it will come down to trust!

It would appear they have not been up front initially when they had this difficulty. Don't forget the interest on the arrears; you have been supporting them for the last 13 months!

[Cazz2269]

Thank you raydetinu - this is really helpful. Are you aware if there are templates for legally binding agreements or do I have to approach solicitors?

 

At the moment the S21 takes them up to the 28 September but their tenancy agreement runs out on the 3 October. If they agree to sign the agreement for the outstanding rent (which I suspect they will) am I legally obliged in the meantime to renew their tenancy agreement?

[raydetinu]

That would be your choice, if you WANT them to stay. It may be an incentive for them to keep paying off the debt if they do.

They owe you the money, so they have to pay that back anyway.

As for the agreement, as long as they sign, and preferably witnessed, you should be OK.

you need to include; late payment penalty with a maximum time or the balance will be become due immediately.

I would suggest payments made by DD or SO, so it is regular.

[Cazz2269]

Thank you. This is definately an expensive lesson learnt! I would prefer them to stay mainly as they have been fairly good tenants to date AND most importantly, I want them to have an incentive to pay the money that is owed. I've taken on board your suggestion about the late payment penalty so will factor that in.

 

Thank you once again.

[Lea_HTH]

Your s21 is invalid. You state their tenancy ends on 3rd October, which means that the s21 cannot expire until that date - yet you state it takes them to 28th September. You would not be able to use that to proceed to court.

 

The better option is to serve a s8 notice, using grounds 8,10 and 11, and explain to your tenants that although you intend to take them to court, you will be 'dropping' the g8 claim once in court and asking the judge to give a suspended possession order on discretionary grounds 10 and 11 on the basis that they pay current rent, plus whatever monthly amount they have agreed to pay towards the arrears. You can sign an agreement with the tenants to show that this is your intent if they feel unsettled by this, and explain that you are merely securing your position at this stage as the arrears are so high.

 

Serving a s8 notice, using aforemention grounds, means that you will be able to proceed to court after 14 days (plus two for service), which should have you in court within three or four weeks of that date. This is far quicker than re-serving the s21 notice and has the added benefit of allowing you to obtain a money judgment for the outstanding rent, and getting a court ordered payment plan, which, if breached, means you can proceed to evict without further delay.

 

Once you have the suspended possession order, the minute they miss the first payment under the order, you can proceed to a warrant of execution and will be able to have them out within a further two or three weeks (depending on how busy your local county court baliffs are).

 

There is no need for you to draw up another agreement regarding the rent - they already owe it to you under a legal contract - a further contract does not detract from that, however what it might do is release the arrears from the tenancy, rendering you unable to serve a s8 as they could claim that the arrears were wiped out by the new agreement. SO DO NOT DO THAT UNDER ANY CIRCUMSTANCES.

 

You are correct to allow them to stay because that is the most likely way you will get your money, BUT do it under the s8 procedure referred to above, which means that further non-payment will be dealt with immediately.

 

Do not renew the tenancy agreement - allow it to go into a periodic tenancy until you have your money back; again, this is because creating a new tenancy means the rent arrears belong to the old tenancy and you will be unable to serve a s8 notice on the new tenancy because of them (though you can of course still file an ordinary money claim).

 

Incidentally, my strongest suggestion would be for you to instruct a solicitor to do the work above regarding the s8 claim - you stand to lose far too much money by attempting to do it yourself, particularly since you appear to already have served an incorrectly dated s21 notice. Don't take any more changes.

Edited August 21, 2014 by Lea_HTH
Added two paragraphs.

[raydetinu]

Totally agree with Lea.

S8 route and court the route to go, to give you the most protection and the tenant the incentive to pay as they can stay in the property.

[Cazz2269]

Thank you Lea_HTH. This is all very helpful - I'll action immediately but will take your advice on instructing solicitors to handle it.

 

With regard to the S21. Just so that I understand....I thought that a S21 could be served at any time during the tenancy agreement period?

 

If the tenancy had had another six months to go would the notice have been correct? Was it invalid because the tenancy is due to end on the 3 Oct?

[Cazz2269]

thanks Raydetinu.

[Lea_HTH]

Thank you Lea_HTH. This is all very helpful - I'll action immediately but will take your advice on instructing solicitors to handle it.

 

With regard to the S21. Just so that I understand....I thought that a S21 could be served at any time during the tenancy agreement period?

 

If the tenancy had had another six months to go would the notice have been correct? Was it invalid because the tenancy is due to end on the 3 Oct?

 

It can be served at any time during the tenancy.

 

It was invalid because you cannot end a fixed tenancy with a s21, you can only serve it - the tenancy has to run its course before you can action the s21, therefore the dates have to be correct and end on the date the tenancy ends, or on the last day of any tenancy period once the tenancy is periodic, so long as two clear months notice is served. As you got it wrong, it's invalid and you have to start again.