If you own a rental property, it’s important to avoid a default tenant to protect your income and property. Discover best practices to prevent tenant delinquency and make sure your rental agreement is well structured.

The default tenant: How to avoid it

The rental of flats is a very current and growing market in which the tenant must pay the imposed rent monthly and take care of his home. However, in some cases, these payments are delayed or not made.

When the owner of a property decides to rent it, one of his biggest fears is the problem of non-payment or abuse of housing.

When renting a property, it is necessary to know how to choose a non-default tenant. And to achieve solvent tenants, you have several options:

• Search for executives of solvent companies
• Search for customers through the personnel departments of large companies
• Renting your home in season (contrato de temporada)
• Know the person’s salary and debts
• Inform you of the financial situation of the paying company

If you opt for idealist tenants, you can ask for several months of deposit, but this will also reduce the options of renting your home and, obviously, the price they will accept.

The DFLAT Madrid owners department avoids defaulting tenants easily because we usually rent to companies, business schools, or embassies, and we also use seasonal rental.

How should I act in the event of tenant defaults?

Experts recommend preventing tenant defaults. At DFLAT, we consider that the customer profile is the most important thing.

It is advisable to ask in advance for a deposit from the tenant, with which you will have money that can be very useful if there are problems. Once the contract is adapted to all the requirements, both the owner of the house and the tenant can begin the rental process.

The ideal and fair rule is that the tenant pays the rent monthly, always on the date that has been set in the contract. But what if these payments start to be irregular or even non-existent? Then you can act in several ways, depending on different factors.

What should I do when facing a default tenant?

If you already have a default tenant, you should evaluate the situation well. Although the easiest thing seems to be to take legal action, it will not always be the most effective. Depending on how the tenant has behaved during their time in the house, you can act in one way or another.

If you have been a paying renter and have always paid on time, this could be a case of timely non-payment. In this case, it is advisable to talk to him and try to solve the situation. Perhaps you are going through an economic slump that will be solved the following month.

If you are a full-fledged defaulter, the sooner you start the legal process, the sooner you will end the problem. It is a hard and expensive decision, but time plays in its favor.

The ideal before a default tenant is to solve the situation with dialogue and through an agreement between both parties; it saves a lot of time and money.

You can offer a seasonal contract to replace a housing contract in better economic conditions, but only for a certain time. You will probably get a “no,” but you will be able to press his will.

If the above fails, consider claiming it to be a habitual residence, and therefore, for your personal use, the law favors you in those cases.

If it is impossible to contact the tenant, either through phone calls, messages, or letters, a more important notification must be sent. For example, a good option would be a burofax.

Take legal action

If, despite this notification, there are still no answers from the new tenant, it is time to take legal action.

The judicial process begins with filing a lawsuit against the tenant who carries out the defaults. It will require that the property be vacated within about ten days, and the payments owed to the owner must be paid.

On many occasions, the debtor opposes the lawsuit, alleging that he has not paid the rent. That is when both parties go to trial.

Finally, the judge will issue a sentence, and normally the debtor must end up paying the amount he owes, but only if he has funds for it.

Unfortunately, this type of defaulting tenant usually has no savings or assets against which to claim.

The judicial path is exhausting and unsatisfactory for both parties. Sometimes spending even more money on this process than it should. That is why a bad agreement is always better than good judgment.

DFLAT as a solution to avoid a default tenant

We like to host company executives, diplomats, business school students, and those dealing directly with the human resources departments of companies, expatriates of multinationals, and high-end master students. We also prefer seasonal rentals over habitual residences. If you need our advice, contact the owners department.