One of the most significant risks associated with renting out a living space is that the tenant will not pay the rent and utility bills. Even worse, what if the tenant disappears after becoming a debtor?
Lia Siht, Head of Legal and Compliance and lawyer at Rendin, give recommendations: where to turn about debts and how to get a hold of the money.
The first and most common option is to ask for the money owed through a rent committee. 'A great advantage is that addressing a rent committee is free, and the landlord isn't required to pay state fees. But, at the same time, it is worth knowing before applying that the limit for claims processed by the committee is 3,200 euros. Therefore, this option is not very useful in case of larger claims,' explains Lia Siht. Another problem is that, at the moment, the only functional rent committee in Estonia is only in Tallinn.
If you turn to the rent committee, you must clarify what needs to be written in the submitted application. In addition, it is necessary to submit a claim with supporting evidence. You can find more information on the rent committee on the city of Tallinn's website.
According to the lawyer, it is worth knowing that if the tenant's debts exceed the amount mentioned above, it is still possible to collect them in some instances. 'If the debt consists of several parts, for example, a claim for rent and ancillary costs and a separate claim for damage in case of damage to the interior, the committee can be approached with several separate applications,' she reveals.
After submitting the application, the case will be processed, and the tenant will be asked if they are agreed with the claims against them. If they are not, they have the right to go to court. If they are or if they do not respond to the committee's inquiry, a decision confirming the debt will be made, which can be enforced with the help of a bailiff.
In the case of this option, the final search for the tenant that has disappeared without a trace and caused damage will become the bailiff's task. 'Compared to the landlord, they have more opportunities and means to find the seemingly missing tenant and hold them responsible for their actions,' says Siht. 'For example, in my experience, a bailiff delivered the documents to the debtor through their parents.'
Another way of dealing with an indebted tenant is to make an application for processing a payment order in the form of an expedited procedure. In such a case, the court will resolve the matter within ten days of receiving the payment order application. 'In the case of a payment order, submitting a debt claim with a value of up to 6,400 euros is possible as an expedited procedure. Moreover, the location of the rental home is not relevant,' comments Siht. However, a state fee of 3% of the amount of the claim (minimum 45 euros) must be paid when making an application.
It is possible to submit an application for an expedited payment order procedure to the court on the E-toimik website. Particular info and data are required for the application, and if it is correctly completed, the court will deliver a payment proposal and an objection form to the alleged debtor.
If the debtor submits a reasoned objection to the court, the case will be processed further at the petitioner's request, but this is not an obligation. At the same time, it should be noted that if the court completely rejects the application, the applicant will not be able to appeal this decision to the court.
If the debtor has no objections or does not use the opportunity to present them, the tenant is obliged to pay their debt. If they do not do so, the landlord can once again turn to the bailiff, who will take action to find out the location of the debtor and collect the debt.
The third option is to go to court, but this should only be done once other options are already tested. Or, in case the financial loss is so significant, it exceeds the specified damage limit for alternatives. 'Going to court is the most time- and money-consuming option. So it makes sense to consider several times whether to do it at all,' Siht believes. State fees accompanying court action and the calculation table can be found in Riigi Teataja.
Siht warns that in addition to the financial costs, the claimant must thoroughly explain to the court the previously tried options that did not help. For example, if the debtor's location is unknown, the court must be informed of steps the landlord has taken to contact the indebted tenant,' she says.
The court can determine the debtor's location and/or make a default judgment, which cannot be done in the case of a payment order. In such a situation, the journey continues the same way: the debtor's information will be forwarded to the bailiff, who will keep an eye on their finances and recover the debt if possible.
If even the thought of an indebted tenant gives you chills, search for your next tenant through Rendin. We find quality tenant candidates who have passed background checks for the landlord. The chosen person can enter into a secure Rendin agreement, which includes a payment guarantee and asset protection for the landlord. Our rental and legal experts are always available to help with any concerns.