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What to do when tenants don't pay their rent: Landlord Guide

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Unpaid rent is a challenge and concern for landlords of rental apartments in France, mainly since French law protects tenants almost exclusively (23% more than in 2022 according to Anil). In this blog, Paris Rental addresses the complexities of the unpaid rent dilemma, offering owners a comprehensive step-by-step guide on dealing with rent arrears, terminating leases, and ultimately initiating eviction proceedings.

Steps to take when a tenant fails to pay rent

1. Claim rent payment from the tenant

If a tenant fails to pay their rent on time, the first thing to do is to contact the tenant through a phone call. A simple, polite reminder can sometimes solve the problem, as the tenant may have forgotten.

If this step is insufficient, then send a late rent notice by email or a simple letter. Remember to keep a professional tone and avoid emotional reactions for a more effective resolution.

If there was a discussion, summarize the points in a formal email or letter to keep a written record of the communication. It could be helpful for future disputes.

2. Favour amicable solutions and negotiation

Amical solutions to resolve the unpaid rent problem

Always try to find an amicable arrangement with your tenants for unpaid rent. Here are several amicable solutions which can help to resolve the issue:
- Payment plans:Offering structured payment plans allows tenants to pay the unpaid sum gradually, relieving financial pressure for both owner and tenant.

- Extended payment terms:Owners may consider granting tenants extended deadlines, giving tenants extra time to make their rent payments, and helping them cope with temporary financial difficulties.

- Temporary rent reductions:

Temporary rent reductions can also be a solution, especially if tenants face short-term financial difficulties.

All in all, an amicable resolution for unpaid rent benefits both tenants and landlords. For tenants, it secures their lease, ensures stability in financial difficulties, and preserves the relationship with the owner. For landlords, it avoids legal costs and maintains occupancy, fostering trust and cooperation with the tenant.

3. Send tenant a formal notice to claim unpaid rent (mise en demeure)

Suppose the first attempt fails and communication with the tenant remains challenging. In that case, the owner can initiate the rent collection procedure and send the defaulting tenant a formal overdue payment reminder letter by registered letter with acknowledgment of receipt, which we call "mise en demeure" in French.

What should be included in the formal notice letter for unpaid rent?

How do you write a formal notice for unpaid rent? Unlike the first reminder, this late rent notice must be clear in form and content, as it has legal weight. The formal notice letter for due rent must be date-stamped and specify the subject and the recipient to whom it is being sent (tenant) and the sender's contact details (owner). 
The letter of formal notice for unpaid rent must include the following essential details:

  • the amount of rent due (rent and rental charges)
  • the amount overdue (number of months)
  • the payment deadline.
  • Penalties incurred

The letter should also give clear notice of the potential consequences of non-payment, such as:

  • the landlord's right to terminate the lease ;
  • expulsion of the tenant;
  • legal action to recover the sums due if the tenant fails to pay within the deadline.

It's advisable to have a professional lawyer draw up the formal notice for unpaid rent. In the meantime, here is a free template of a formal notice letter for unpaid rent.

Why does the owner need to rent a formal notice for unpaid rent?

Only after sending out this formal notice can the owner take legal action to collect the unpaid rent and end the tenancy.

4. Contact the guarantors

From the 1st unpaid rent, the owner can claim due rent from the guarantor specified on the lease. The owner has to give the tenant's guarantor a simple reminder letter within ten (10) days of the first non-payment. Then, notify the guarantor within 25 days of the first non-payment.

Also, the landlord should contact his “Unpaid rent insurance”, if any.

5. Protecting yourself against unpaid rent through insurance

How does unpaid rent insurance work? What does it cover?

"Unpaid rent" insurance can be a vital guarantee for landlords when their tenants fail to meet their rental obligations—this type of unpaid rent insurance refunds due rent to landlords and also provides other warranties in addition to financial coverage, such as:

  • Legal protection: the insurer handles rent collection and eviction proceedings when inevitable; also, it covers the legal costs, such as lawyer's fees, bailiff's fees, and eviction costs.
  • Eviction costs: The insurance covers the price of a locksmith, removals, and furniture storage; 
  • Damage waiver: It covers damage caused by the tenant on departure. However, the compensation amount is often capped according to the insurance contract.
  Insured Rent
Allianz Insured Services
GLI Équité
Sacapp-SAA
Formule complète
Solly Azaz
Mila GLI
Mila
Visale
Action Logement
Locataire de 18 à 30 ans
Annuel fees 2,69 % of rents  2,70 % of rents 2,50 % of rents 2.55 to 2.80% of rents, depending on the formula chosen Free
Warranty period: Unlimited 24 months   30 months Unlimited 36 months 
Ceiling on unpaid rent:  70 000 € 80 000 €   90 000 € No  54 000 € (Ile-de-France)
46 800 € (in regions) 
Limited monthly rent:  3 100€   3 500€  5 000€   1 500€ (Ile-de-France)
1 300€ (in regions)
Waiting period between first non-payment and compensation :  110 days  2,5 months 30 days  32 days   2,5 months
Deductible*:  No 1 month's rent excluding charges No  No   No
Damage compensation: 10 000 €  7 000 € 10 000 €  10 000 €   2 months of rents

Deductible*: Amount to be paid by the policy-holder after a claim.

When to contact your unpaid rent insurance?

Upon noticing a late rent payment, the owner must send the tenant a reminder letter and keep a copy. Without a response or rent payment within 15 days, the owner must send a formal notice to the tenant via registered mail and retain a copy. If the tenant remains unresponsive after the second notice, proceed with a summons through a bailiff.
If the issue persists, it is time for the landlord to contact their unpaid rent insurance company for assistance.

How do you initiate an unpaid rent claim with the insurance company?

To initiate a claim for unpaid rent insurance, the property owner should send a detailed letter to the insurer, including the following information:

  • Policy number
  • Address of the insured property
  • Description of the situation, such as unpaid rent, etc.
  • All correspondence.

Upon receiving the letter, the insurance company will review the tenant's file for eligibility. Once validated, the owner doesn't need further action, as the insurance company will handle the process. 
Depending on the chosen insurance, compensation for the initial three unpaid rents will be reimbursed to the owner within 90 days, followed by quarterly payments

6. Lease termination procedure in case of non-payment

The landlord can initiate legal proceedings if none of the steps above resolve the rent arrears. 
The owner must request a judicial commissioner (formerly a bailiff) to send the tenant and their guarantor a summons to pay (commandement de payer). The summons letter (commandement de payer) is a written document issued by a judicial commissioner ordering the person to fulfill their obligations to pay unpaid rent and rental charges within two months to regularize the unpaid rent situation.

The summons for unpaid rent must include the following information, or it would be worthless:

  • The deadline for payment (2 months)
  • Amount of monthly rent and rental charges
  • A breakdown of the debt

If no rent payment occurs within two (2) months, the lease can terminate automatically if the lease includes a resolutory clause

7. Take the tenant to court for rent arrears

Two months after sending the notice to pay, if the tenant made no payment and the landlord and tenant reached no agreement on a repayment schedule, the owner can take the case to court (Tribunal d'Instance) for expulsion. 

The owner can ask the judge to order the tenant to pay the rent debt and related legal costs, to terminate the lease, to evict the tenant, and to compensate by an "occupancy indemnity," a sum to be paid by the tenant once they become an occupant without a legal right to the accommodation following the termination of their lease. 

The hearing generally occurs six weeks after the tenant receives the summons.

8. Implementing the court decision

Applying a debt repayment schedule (maximum three (3) years)

If the tenant has paid the current rent before the hearing and has the financial means to repay the debt, the judge may decide to impose a debt repayment schedule.

Applying the resolutory clause 

If the tenant fails to cover the unpaid rent of the total amount before the hearing or cannot repay their debt, the judge can order the lease's termination and the tenant's eviction.

9. Issuing an evacuation order to vacate the premises

Once the judge has decided to terminate the lease and evict the tenant, the owner should instruct a court commissioner to issue a “summons to leave the premises,” such as an eviction notice. 

Generally, the tenant has two months to leave the rental property after receiving the “summons to leave the premises.” 

10. Initiate eviction procedure

If the tenant refuses to leave the rental property, the owner has to initiate an eviction procedure with a bailiff ("huissier" in French). It's essential to remember that eviction procedures are the exclusive responsibility of a public official. Owners can not evict the tenants themselves!

Additionally, evictions come to a halt during France's 5-month winter truce (November 1 to March 31).

Generally, the tenant has two months to leave the rental after receiving the eviction notice. However, the judge has the right to reduce or eliminate this period in the case of a non-cooperative tenant.

During this period, the tenant may apply to the court for an extension ranging from one month to a maximum of 1 year. The judge will decide based on the tenant's situation (age, state of health, etc.) and goodwill.

Strategies for preventing rent arrears?

Practical tips to prevent rent arrears

Prudent tenant selection:

The first and crucial step to reduce the risk of rent arrears is carefully selecting a responsible tenant with a stable financial standing. Collaborating with a trustworthy Real Estate agency, such as Paris Rental, which has rich experience in the field, can facilitate finding a quality tenant.

Requesting a guarantee:

Ask for a rental guarantee, such as a physical guarantor, a contract from a guarantee company such as Garantme, or a bank guarantee to secure the payment of rent in the case of unpaid rent.

Clear and comprehensive rental agreement:

Draw up a clear and detailed lease agreement specifying rent payment terms and the consequences of late or non-payment.

Subscribe to unpaid rent insurance :

Subscribe to unpaid rent insurance for extra protection in case of non-payment by the tenant.

Consider Professional Property Management:

Consider professional property management services to manage tenant relations and financial matters effectively.

Understanding legislation and landlords' rights faced with unpaid rent

Overview of landlords' legal rights concerning unpaid rent 

  • The landlord can claim the amount due and refuse partial payment (article 1342-4 of the French Civil Code).
  • In the event of non-payment of rent, the landlord may claim damages if provided for in the lease contract (article 1343-1 of the French Civil Code).
  • The landlord may claim payment of rent and maintenance charges in arrears for three (3) years following the tenant's departure.

When dealing with unpaid rent, landlords need to respect the law. Compliance with the law ensures a fair and legal solution -although it can be long and tedious- and protects the landlord's rights.

FAQ about rent arrears and overdue rent :

1) Who pays the bailiff for dealing with unpaid rent?

The landlord or the tenant will pay the bailiff's fees for addressing unpaid rent notice, depending on the situation:

  • The landlord is responsible for the bailiff's fees if there is an amicable agreement.
  • The judge can decide if the debtor tenant must pay the bailiff's fees.

2) Why is evicting a non-paying tenant in France so difficult?

It is becoming much more difficult to evict a bad-paying tenant, as many laws in France, such as the Winter Truce, protect the tenant. Also, evicting a tenant tends to be time-consuming, complex, and costly; on average, it takes two years to evict a tenant.

3) Within what timeframe can the owner claim unpaid rent?

The landlord can claim any outstanding rent or maintenance charges for up to 3 years. 
For example, landlords can reclaim unpaid rent from May 2023 until June 2026.

4) What is the new law on unpaid rent?

In compliance with the July 27, 2023 law, all lease agreements executed since July 29 must now incorporate an automatic termination clause for non-payment of rent, charges, or the security deposit.

Tenants who persist in occupying rental accommodation more than two months after a legal eviction order can now be fined €7,500 (Law n° 2023-668 du 27 juillet 2023). However, this penalty is not applicable during the winter break or if the tenant has been granted a deferment of eviction.  

Conclusion and final recommendations

In conclusion, handling unpaid rent requires a strategic approach, from clear communication to legal recourse. Landlords can limit risk by carefully selecting reliable tenants, understanding their legal rights, and taking advantage of their insurance coverage. If you need help finding a serious tenant, do not hesitate to contact the Paris Rental Agency for your long-term furnishd rental in Paris.

 

Editor: Siyi CHEN

Credit Photo: SORTIRAPARIS

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