In Canada, 46% of landlords experienced late rent payments of more than 3 weeks. Unpaid rents are the biggest fear of landlords, but they remain the major reason of dispute between them and their tenants.
Here are our advices to avoid those unpaid rents :
1st step : select your tenant wisely
As a landlord, you want to rent your dwelling as quickly as possible. However, selecting your applicants is the key to avoid unpaid rents. Do not make the same mistake as other landlords and gather all the needed information!
Once an applicant shows interest in renting your unit, you are allowed by the tenancy board to require various information such as his employment situation, his ID as well as his references.
If you want to be sure to select the best tenant, read more about the information you should ask your applicant before renting.
Then, do a small investigation :
- Do a credit analysis
- Contact his employer to confirm his position and income
- Contact his previous landlords to make sure that he is trustworthy
By screening your applicants prior to renting your dwelling, you reduce the risks of unpaid rents and can start building a good relationship with your tenant!
2nd step : The lease agreement
In order to avoid unpaid rents, we advise that you write clauses on the lease agreement. Indeed, after filling out the lease criteria such as the amount of the rent and the payment method, you can decide if you want to charge your tenant a fee for delayed payment.
For example, this clause can state that if the rent is not paid before the 1st day of each month, the tenant agrees to pay a fee per day until the rent is fully paid.
If you are not aware of the clauses that you are allowed to add in the lease, you will find more information here.
3rd step : Be proactive
As a landlord, it is your duty to remind your tenant to pay for the rent and collect the due amount if you live in the same area. If you notice that the tenant is late according to the lease, contact him to have more information. In most cases, it is just an oversight.
If you have not heard from your tenant, do not hesitate to go visit him. The law states that you can visit your tenant between 9am to 9pm, except if another time was agreed by both parties.
In case the rent is not paid and that you have not heard from your tenant, you can contact the tenancy board and fill out a complain form.
4th step : unpaid rents insurance
The nightmare of all owners is tenants who do not pay their rent. With APRIL Rental’s unpaid rents protection, you will not need to empty your vacation savings to cover your rental’s mortgage payment in the event of rent arrears. Example: With APRIL insurance, one month’s rent would apply as a deductible: if the tenant does not pay 2 months, the landlord will get 75% of a month’s rent.
In addition, if your tenant is on the run: this would be paid if your tenant vacates without giving you the mandatory notice under the lease, or leaves at the end of his lease leaving unpaid rents. The coverage will start from the day after the date the tenant’s rent is due, until one of the following events occurs first:
- The property was re-rented;
- The tenant’s lease has expired; or
- The amount of the guarantee has been reached.
Unpaid rents insurance protects you against a possible violation of the lease agreement from your tenant. The principle is simple: in the case of unpaid rents, the landlord informs his broker of the situation and the insurer will settle the claim.
Estimate here your Unpaid Rents insurance.
To avoid unpaid rents, some steps are important to follow prior to renting the unit as well as alongside the duration of the lease agreement.
Do not forget that one of the key to avoid unpaid rents is to have a good relationship with your tenant. A relationship of mutual trust and respect will help you to maintain good contact with him and avoid unexpected situations.