Don't lose your home in the rent receiver muddle
The number of tenants getting caught in the crossfire between lenders and heavily indebted landlords is on the increase. There has been a big pick-up in the number of rent receivers appointed by banks to take control of rented properties - as there are almost 40,000 properties out there whose landlords are struggling to repay mortgages on. So far this year, the housing charity Threshold has acted on behalf of 270 tenants who ran into problems when a rent receiver was appointed to a property. In 2011, such problems were unheard of.
Rent receivership is relatively new territory here. There is therefore a lack of clarity about the rights of the tenant when a rent receiver is appointed to a property - as well as the role of the receiver himself. This has left tenants unsure of their right to stay in a property and confused about who they should pay their rent to, particularly when they are getting demands for rent from both landlords and rent receivers.
"Tenants are very often in the dark as to whether a rent receiver is legit," said Stephen Large, Dublin services manager with Threshold. "They might try to contact the landlord to check if a receiver is genuine but the landlord often either can't be contacted or he says to ignore the receiver's instructions."
When a rent receiver is appointed to take control of a property, the tenant must usually pay rent to him. However, even when they do so, landlords have sometimes arrived at the tenant's doorstep demanding rent.
The Free Legal Advice Centre (FLAC), which offers advice on tenancy law, has received a number of calls from concerned tenants who have paid rent to a rent receiver only to be later pursued by their landlord.
One caller to FLAC, for example, started to pay rent to a receiver several months ago after she was notified that a rent receiver had been appointed to collect her rent in place of her landlord.
Her landlord, however, recently visited her, stating that he hadn't been receiving rent from her and that he was owed several months' rent. The landlord was not entitled to claim rent in this case.
Landlords have also put pressure on tenants to pay their rent directly to them rather than to the receiver. Some landlords have threatened their tenants with eviction when they refused to do so.
"The difficulty is that the landlord and the lender are often at odds with each other," said Paul Joyce, senior policy analyst with FLAC.
Lack of security of tenure can also become an issue, even when a landlord is cooperating with a rent receiver.
The rent receiver himself might dismiss the validity of a lease. "The receiver is appointed initially to get the rent but he may also be looking to sell the property," said Joyce. "Issues have arisen around the honouring of leases. The landlord's arrears may get so bad that a lender may move to repossess a property. That could lead to the eviction of a tenant."
Tenants are often in limbo when it comes to repairs once a rent receiver steps in. Under law, landlords must repair and maintain the interior of the property to the standard it was at the start of the tenancy. They must also repair and maintain the structure of the property.
"However, if a landlord has gone into receivership, he often does not have the money to do the repairs," said Large. "It is very common for a rent receiver to say that the repairs have nothing to do with him. The receiver's only interest is often to get the income from the rent. We are looking for an amendment to the Residential Tenancies Act (the law which sets out the obligations of tenants and landlords) to clarify the position in relation to repairs once a rent receiver is appointed."
So if you're a tenant who has been caught in the rent receiver minefield, what should you do and where exactly do you stand?
Once a receiver informs you that he has been appointed to collect rent for the property in place of your landlord, request a copy of the receiver's deed of appointment or get a letter from the relevant bank or financial institution confirming that he has been appointed to the property. Once you get this letter, you can take it that the receiver is within his rights to collect rent from you so you should pay your rent to him rather than your landlord.
Once you have paid your rent to the receiver, you have met the conditions of your lease or tenancy - and the landlord is not entitled to ask you to pay further rent. However, ask your rent receiver to give you a receipt and hold onto it as proof of payment. Once you can produce this receipt, your landlord cannot pursue you for further rent.
Notify the receiver immediately if a landlord puts pressure on you to pay rent directly to him. Do not pay rent to your landlord. Get in touch with gardai should your landlord start to harass or threaten you. In some cases, the receiver may seek a court order directed to the landlord to stop him interfering with the collection of rent.
A rent receiver is not legally obliged to carry out repairs on a property. However, you should contact the receiver if repairs are necessary as he may, with the bank's permission, use rent to carry out repairs. "The terms of the Land and Conveyancing Law Reform Act 2009 have set out some obligations on rent receivers to use funds in order to carry out maintenance works; however the Act only requires this where the receiver is directed to carry out the works by the relevant bank," said a spokeswoman for the Private Residential Tenancies Board (PRTB). "Best practice would be for the receiver to do so as it protects the value of the asset and ensures the tenant is happy to continue to pay rent."
A rent receiver may try to sell the property you are renting. Some receivers have dismissed the validity of leases when trying to do so. Contact Threshold or the PRTB if this happens to you - or should a receiver try to throw you out of a property. You have rights under the Residential Tenancies Act but there are some circumstances where a bank can terminate a lease.
In general, it is the landlord who must refund a deposit to a tenant as the receiver is not liable to repay a deposit paid to a landlord. You should however ask the receiver if it is he who returns your deposit as some will take on the responsibility to do so.
Remember, this is uncharted territory, so it is particularly important to know where you stand - in case you end up with a fight on your hands.
WHERE THE LANDLORD STANDS ONCE THE RECEIVER STEPS IN
When a rent receiver is appointed to a property, a landlord loses all control, according to Jim Stafford, partner with the insolvency experts, Friel Stafford.
"The landlord is not entitled to collect the rent," said Mr Stafford. "All decisions about the property are made by the receiver."
A rent receiver can decide to sell a landlord's property - even if the landlord believes it is not the best time to do so. "The rent receiver has a duty to obtain the best price for the property," said Mr Stafford.
"He does not have to wait for the property market to improve before selling the property. The landlord has no say over which auctioneer is appointed or how the property is sold. However, the receiver may listen to any suggestions made by the landlord."
Some banks could be more likely to write off a certain amount of a landlord's mortgage debt if he cooperates with a rent receiver, according to Mr Stafford.
"In many cases, it is in the landlord's interest to fully co-operate with the receiver," he said. "The receiver needs the co-operation of the landlord in determining the VAT status of the property, as well as details of tenancies and deposits paid."
It is usually the landlord's responsibility to return a deposit - unless that deposit has been passed on to the rent receiver.
"Whoever is holding the deposit is the one who should give it back to the tenant once the tenant leaves the property," said a spokesman for the Irish Property Owners' Association, which represents landlords.
"One of the main responsibilities of the landlord, following the appointment of a rent receiver, is the return of the deposit," said a spokeswoman for the Private Residential Tenancies Board.
Although it is unclear under law who a tenant can turn to for repairs when a receiver takes control, the PRTB says that "in the majority of cases, repairs and replacements remain the responsibility of the landlord".
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