Having to face a delinquent tenant is one of the biggest concerns for owners who rent a property. Appearances can be deceiving, and a tenant who seems formal at first could become a real problem later.
According to data provided by the General Council of Economists, in Spain there are 2.43 million properties under rental regime, and rising. More and more homeowners decide to rent to prevent the risk of squatting and make their property profitable.
However, what at first was a brilliant idea can end up becoming a headache if the tenant defaults on the payment agreements. And after this problem others could come: the refusal of the tenant to leave the property and the risk of causing damage to the property. Given this reality, what can the landlord do to avoid defaults and other possible inconveniences?
The saying goes that prevention is better than cure, and in the real estate rental market it is essential to learn to identify risks before handing over the keys to a tenant. In addition, if certain recommendations are applied, it is possible to recognize the delinquent tenant from the one that is not. Among the measures that can be taken to avoid non-payment of rent and other inconveniences, it is worth consulting a file of delinquents, including clauses in the contract that penalize late payment and taking out non-payment rent insurance.
One of the most effective preventive measures to avoid non-payment of rental income is to consult a file of defaulters. These records contain updated data on the credit history of natural and legal persons. For example, they indicate whether a person has outstanding debts or a high delinquency profile. With this information, companies and individuals can identify those customers who will not be able to meet their payment obligation.
The Delinquent Tenants File (FIM) is especially useful, a database that is fed with the incidents that other users have reported. For example, if an individual or professional in the real estate sector had problems with a certain delinquent tenant, she can report it to the file. With this action, you are not only putting pressure on the insolvent tenant to pay off his debt, but you are also warning other landlords to avoid renting you a flat or property.
How does a delinquent file help an owner to avoid non-payment of rental income? On the one hand, the owner of the property can consult the file to see if the name of the future tenant appears on the list of defaulters. Another option is to include as a mandatory requirement the presentation of a FIM reliability certificate for those interested in leasing. This document accredits its holder to be a solvent tenant who has not had problems with the payment of rent in the past. Be that as it may, using a delinquent file reduces the chances of renting a property to the wrong people.
Needless to say, no landlord should accept an oral lease to lease their property, no matter if the tenant is a friend, relative, or close relative. There must always be a written rental contract that complies with the provisions of the Urban Leasing Law. In this sense, the lessor can include various clauses in the contract to increase the guarantees and reduce the risk of non-payment in the future.
For example, it is common for landlords to request the deposit of a bank guarantee or a deposit of two months as a condition in the contract, instead of one. In this way, less creditworthy candidates are avoided, who are usually the most prone to default. Another clause that can be included in the contract is the clear indication that the non-payment of a single monthly payment will be sufficient cause to dissolve the rental agreement. In this regard, it is essential that said condition be expressly noted in the contract to be able to invoke it if necessary.
Lastly, and together with the previous two recommendations, it is a good idea for the landlord to contract the services of rent non-payment insurance. These financial products protect the owner and the tenant in case of non-payment, as well as other eventualities that may arise in the contractual relationship.
Currently there are options that allow you to secure your rental income and have peace of mind with the rental of your property.
