Recovering monies owed by a tenant
You should always chase a tenant who left owing you money – whether that was rent money or losses as a result of damages they caused.
You owe it to other landlords. I will explain why in this piece.
I am happy to say it has been 22 long years since I or any of the properties I manage had a tenant who left owing us money (or at least more money than was in the deposit). But other landlords seem to suffer this fate.
Recovering Monies Owed by a Tenant
OK, recovering money is not easy and after the stress that usually comes along with months of mental turmoil, if the tenant has been hard to evict and you have had to go through the courts already to secure possession, many landlords opt to just write off the losses and move on.
I understand that, but I would urge them to see the bigger picture.
So, how does the process of getting your money back work?
Well first, if the tenants fail to pay voluntarily, you will have to go to County Court to secure a County Court Judgement (CCJ) for the money you are owed.
To do this you will need to provide all the details substantiating the claim and you will need an address for the tenant too. You could use an employer’s address if say you don’t have any idea where the tenant has gone to – and most will not tell you, so this is one option.
(For this reason, we always keep information on the tenant’s employer, which we have gained as part of our referencing processes. Also, it is useful to have an alternative non-employer address too – this could be a next of kin, for example or just a friend).
You will need permission of the court to use the employer’s address, but this is usually a formality.
Getting your CCJ is usually pretty simple. In fact, most judgement are entered by default, where the defendant (your tenant) does not bother to respond.
But that is the easy bit.
The harder part is getting the money you are owed actually paid – and around one third do not get paid.
Often, the problem is that the tenant has no money, so cannot afford to pay.
Still, even if you know this to be the case, getting a CCJ is, I think, worth it because even if a tenant cannot pay now, a CCJ can be enforced through the courts at any time during the next six years and sometimes for even longer if the court agrees.
So, if you get a CCJ now, you may well get paid later, but you will need to keep a track of your tenant to be able to do this.
As any decent landlord or letting agent worth their salt will be doing proper reference checks, which will follow up all past addresses for an applicant, this will reveal if there is a CCJ – and ought to mean outright rejection for the would-be tenant.
So a tenant who, at this point, suddenly finds out (or remembers) they have a CCJ, might suddenly be very keen to clear it – and may do so. It can be a nice surprise when you find they are in touch wanting to clear the debt.
Of course, tenants who do not want any new landlord to find out about a CCJ may omit to mention their time at an address where they have a CCJ outstanding, but it will still likely still show up on the credit report as a “linked address” that needs investigating. (Landlords and letting agents need to follow these up too). Even if it doesn’t show up as a linked address, any gaps in address history should be investigated too – and ought to send alarm bells chiming, if not ringing loudly.
Recovering Monies Owed by a Tenant – Using a Tracing Agent
You can always hire a tracing agent to find most tenants.
If they are in the UK, tracing agents have a good success rate. The more information you have on your former tenants the better to facilitate this. So, full name, date of birth, past addresses, NI number, passport details and photos all help.
Even if you don’t get your money it is worth doing to stop bad tenants in their tracks and make it harder for them to go and do the same to other landlords.
Sure, it can be a bit of a long exercise and you have to keep on going, when you may think the hassle and sometimes the cost of recovery is more than you might recover, but think about it as “owing one to other landlords”.
Of course, the best advice is don’t get a bad tenant who is going to leave owing you money in the first place. This requires careful referencing, ID, credit and affordability checks.
Both my books for landlords explain how we do this, plus you can learn more too if you book a consultancy session with me.
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