How to collect rent arrears from a tenant?

When a tenant fails to make payments, the issue is not simply one late transfer. The landlord must decide how to recover the rent arrears from the tenant in a way that keeps the claim provable, maintains proper communication, and avoids obstacles later when terminating the agreement or initiating court proceedings. A quick emotional reaction can make the situation considerably more complicated. A clear plan of action, however, provides the opportunity to recover the debt or at least to limit one's losses.

When recovering rent arrears, much depends on whether the situation involves a single late payment, a recurring problem, or a case where the tenant has already vacated. It is also necessary to distinguish between bringing a monetary claim and demanding the vacation of residential premises. These may go hand in hand, but legally they are separate matters.

Start by reviewing the agreement and the evidence

Before sending a letter of demand, review the tenancy agreement. It will set out when rent, utility costs and any agreed penalties are due, as well as the manner in which the parties must give notice to one another. If the agreement specifies an email address or other particular means of notification, it is advisable to follow it.

Gather in one place all documents on which you can base your claim. In practice, the most important are:

• the signed tenancy agreement and its annexes;
• invoices, utility cost statements and payment schedules;
• bank statements or other records of payments received and outstanding;
• correspondence in which the tenant acknowledges the debt, promises to pay, or disputes an invoice.

If the tenant paid part of the sum in cash, this must be accounted for with particular care. You may only claim the amount that is genuinely unpaid. An inaccurate or unsubstantiated claim undermines credibility and may prolong court proceedings.

In the case of utility costs, the landlord must be able to show what the charges relate to. If the tenant disputes, for example, heating, water or repair costs, a single overall figure will often not suffice. The calculation must be clear and consistent with the agreement.

Send a written payment demand

The first formal step is a clear written payment demand. Even if you have spoken with the tenant by telephone, confirm the agreement or demand in writing. This helps to prove, at a later stage, both the amount of the debt and the fact that the tenant was given an opportunity to resolve the situation.

In the payment demand, identify the agreement, the periods of arrears, and the individual components separately: rent, utility costs, agreed penalties or statutory interest. Include a specific payment deadline and the bank account to which payment must be made. The deadline must be reasonable. A deadline of only a few days may be appropriate where payment is long overdue and prior reminders have been sent, but where the calculation is more complex it is reasonable to allow more time.

A letter of demand does not need to be threatening. Its purpose is to obtain payment, not to accumulate sharp-worded messages. If the tenant explains that they are experiencing temporary financial difficulty, a payment schedule may be a sensible solution. This depends, however, on whether the tenant has been cooperative up to that point and whether you have reason to believe the arrangement will be honoured.

Always put a payment schedule in writing. It should record the total amount of the debt, the size and due dates of instalments, and the consequences in the event the arrangement is breached. An express acknowledgement of the debt can significantly simplify the burden of proof in any subsequent dispute.

Do not treat the security deposit as automatically covering the last month's rent

A common misconception is that the security deposit always covers the last month's rent. This need not be the case. The purpose of the security deposit is to secure the landlord's claims arising from the agreement, but its use must comply with the agreement and the law. This is particularly important where the tenancy continues and the tenant is required to top up the deposit to the agreed level following its use.

Do not set off amounts against the security deposit solely on the basis of a verbal understanding. Notify the tenant in writing of which claim is being covered by the security deposit and what amount remains outstanding afterwards. If the tenant has vacated, you must also assess any potential damages, outstanding utility costs, and the obligation to return the security deposit.

When may the agreement be terminated?

Persistent rent arrears may give grounds for extraordinary termination of the tenancy agreement. In the case of residential tenancy agreements, the law provides specific conditions for the protection of the tenant, and the right to terminate should not be assumed on the basis of a single minor delay. What matters is the amount of the arrears, the duration of the default, prior conduct, and whether the tenant was given an opportunity to remedy the breach.

A notice of termination must be in a form that allows written reproduction, and its grounds must be sufficiently clear. Set out which payments were left unpaid, when they were due, and why you consider the breach to be sufficiently serious to justify termination of the agreement. A vague notice along the lines of "please vacate the apartment" may not constitute a valid notice of termination.

It is also important to note that termination of the agreement does not extinguish the debt. The landlord may claim unpaid rent and utility costs, justified late-payment interest, and, depending on the circumstances, damages. On the other hand, the landlord may not claim amounts for which there is no contractual or statutory basis.

You cannot arrange the eviction of a tenant yourself

If the agreement has ended but the tenant does not hand over the premises, the landlord must not change the locks, remove the tenant's belongings, or cut off utilities as a means of pressure. Even where the rent arrears are clear, such conduct may give rise to a new dispute and a claim for damages.

To recover possession of the premises, it is necessary, if required, to apply to the court. If the court has issued a judgment and the tenant does not comply voluntarily, enforcement is carried out by a bailiff. This takes time, but it protects the landlord from a situation where a legitimate claim becomes complicated due to the wrong course of action.

Before going to court, it is also worth considering the practical aspects. If the tenant has already left and it is possible to draw up a handover deed, the main question may be solely the recovery of money. If the apartment is still occupied, vacation of the premises must be resolved alongside the monetary claim.

How to recover rent arrears from a tenant through the courts?

If the payment demand and negotiations yield no result, it is possible to bring a monetary claim before the court. For a clear, liquidated, and substantiated monetary claim, expedited payment order proceedings may be appropriate. This is generally the simpler route where no substantive dispute over the debt is to be expected.

If the tenant raises an objection, the dispute must be resolved through ordinary contentious proceedings. At that point, the terms of the agreement, payment records, cost calculations, and the parties' correspondence become particularly important. The court must be shown how the claimed sum was arrived at, not merely that the tenant is in debt.

A court judgment or other enforcement instrument does not automatically mean payment will be received. If the debtor does not pay voluntarily, the claim may be handed to a bailiff for enforcement. The bailiff may, in the manner provided by law, levy execution against the debtor's bank account, wages, or assets. If the tenant currently has no assets or income, enforcement may take longer. It is therefore advisable to act promptly and to keep all documents in order.

When to seek legal assistance?

Legal assistance is warranted even before terminating the agreement, if the debt has grown substantially, the tenant disputes the calculation, or refuses to vacate the premises. A lawyer can verify whether the amount of the claim is justified, draft the payment demand or notice of termination, and assess which proceedings are appropriate in your situation.

Eurocity Law Office assists landlords in reviewing the situation, preparing the necessary documents, and, where required, bringing a claim or representing them in a dispute. The scope of work and the fees are agreed in advance, so that you know what steps will be taken and why.

When it comes to rent arrears, the landlord does not have to choose between two bad options — waiting indefinitely or acting too hastily. A calmly prepared demand, proper evidence, and the right next step taken at the right time offer the best chance of protecting your rights.