In rental property management, tenant rent delinquency is a major risk. It is said that roughly 5% of tenants fall into arrears, so early resolution is essential. This article explains the conditions, costs, and benefits of working with legal counsel to resolve rent delinquency through litigation.
Why does rent delinquency create such serious concerns for landlords?
Collecting overdue rent from delinquent tenants is difficult, and in some cases payments are repeatedly postponed or the tenant disappears.If the unit is vacant, losses can be offset by the next tenant, but if a delinquent tenant remains in place, there is no rental income and the move-out process does not progress.
What are the three key points for filing a lawsuit?
Litigation requires three stages: meeting the conditions for compulsory eviction, sending a demand letter, and filing with the court.
Meeting the conditions for compulsory eviction
All three of the following conditions are required:
・Rent has been overdue for about three months
・The delinquent tenant has no intention of paying
・The relationship of trust with the landlord has been damaged
Sending a demand letter by certified mail
Once the delinquency has continued for more than half a month, send a demand letter by certified mail.This serves as evidence that collection efforts were made and that the tenant had no intention of paying.
Procedure for filing with the court
The process proceeds in the following order: demand for payment → notice of lease termination → claim for surrender of the property → petition for compulsory execution.
What are the benefits of retaining legal counsel?
You can proceed with confidence
If you retain legal counsel, anxiety about the legal process is reduced and you can entrust the response to a professional.
Your chances of winning increase
Your likelihood of prevailing is higher when you retain legal counsel than when you handle the matter on your own.
It offers strong cost-effectiveness
Typical fees are around JPY 10,000 per hour for consultation, JPY 100,000 to 400,000 as a retainer, and a success fee of 20% to 30% of the amount recovered.Considering the time and effort saved in handling the procedures, the cost-effectiveness is high.
Summary
Resolving rent delinquency requires a step-by-step process. As a property management professional, the best approach is to maintain sound legal knowledge and make effective use of legal counsel when necessary.
Frequently Asked Questions (FAQ)
- Q. Can a tenant be forcibly evicted after one month of rent delinquency?
- A. With only one month of delinquency, it is highly unlikely that a court will approve compulsory eviction. As a general guideline, three months or more of delinquency is the benchmark.
- Q. If a rent guarantee company is being used, is litigation still necessary?
- A. If the guarantee company makes payment on the tenant's behalf, the landlord's direct loss is reduced, but court proceedings may still be necessary to complete the move-out process.
- Q. How long does litigation usually take?
- A. A property surrender lawsuit usually takes about three to six months. If compulsory execution is included, it can take anywhere from six months to one year.
