Article: Property Investment
Pursuing Rogue Tenants with Frank Newman
One frequently hears landlords complaining about the difficulties they face recovering rent arrears and costs from tenants. Here’s a case of a landlord putting the system to the test and coming out with a good result.
The saga started in January 2010 when the tenant moved from Whangarei to Queenstown. They left the property in a filthy state, had rent arrears of $360, unpaid water rates of $350, and there were various items requiring repair. The total came to $1,345.
The tenant had paid a bond of $825 which was held by the Bond Centre. The landlord generously offered to call it quits if the bond money was transferred to them, which would have left them out of pocket to the tune of about $520. The tenant refused that offer and instead insisted on a full bond refund and no other liability.
After the landlord repeated the offer a number of times they gave up communicating with their former tenant and in May 2010 filed an Application for Order with the Tenancy Tribunal, and paid a filing fee of $20.44. The matter was heard in Whangarei in August.
The Tenant failed to take part despite being offered teleconferencing, and gave no reason for not attending. The hearing continued in their absence. All of the expenses were scrutinised by the adjudicator and accepted with the exception of the cost of having the interior of the property cleaned. This was reduced by 25% because the adjudicator took the view that cleaning a property to a standard for re-letting was a higher standard than would be expected of a tenant on vacating the premises (an illogical interpretation in my view). Costs of $20.44 (the filing fee) were awarded to the landlord and added to the claim.
The adjudicator ordered that the bond money of $825 held by the Bond Centre be paid to the landlord and a balance of $436.88 be paid by the former tenant immediately. Within a week the landlord received the $825 bond refund.
Various requests for payment and offers of repayment by instalment by the landlord went unanswered, so in September they commenced enforcement proceedings in the District Court. An Order for Examination was filed in Whangarei. The filing fee was $108.80, which was added to the claim. Court officials in Queenstown served the Order on the former tenant which required them to attend a hearing in late October at the District Court in Queenstown (not Whangarei where the debt was incurred).
The landlord was denied the right to appear at that hearing by teleconference and was advised that if they did not attend or did not have a legal agent acting for them then they could not proceed with the debt recovery. They engaged a solicitor in Queenstown to attend the hearing on their behalf, which cost $162.64. A further $153.33 was added to their outstanding debt, which is the maximum that can be claimed by the landlord where they engage a solicitor to act for them at the hearing. That took the total debt owing to $699,
This time the tenant did attend the hearing (knowing that a warrant for their arrest would have been issued had they not attended) and a court official scrutinised their income and expenditure to see what they could afford to pay towards the debt. Following the examination the tenant was ordered to pay off at $50 a week and an attachment order was issued instructing WINZ to make the payment directly to the landlord.
And so ends the matter. The landlord expects to have the debt (including most of their costs) fully repaid by February 2012. On the other hand the very foolish tenant will pay about $700 more than they needed to, they have a judgement against their credit record, and they have a Tenancy Tribunal decision against them which may make it harder for them to find rental accommodation in the future. It’s a long process and requires a certain determination and persistence but it can work for those who have been taken for a ride by tenants.
Frank Newman is the author of numerous books on investment matters and the creator of the NZ Investment Game which may be ordered at http://www.investmentgame.co.nz. He is a director of the accounting firm Smart Business Centre. He may be contacted at .(JavaScript must be enabled to view this email address).
