Amount in default judgement when ongoing rental contract & rent payment received

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    Amount in default judgement when ongoing rental contract & rent payment received

    Hi,

    I'm struggling to find the right search phrase to help me understand the legal situation here. The question is I hope simple, but I'll try to explain the full background just in case.

    We have started the money claim online process against a tenant. The tenant currently still lives in the property. The tenant had some issues that suggest the non-payment is a temporary issue.(We have also issued s8/s21 notices.) Tenant/property/landlord are all in England.

    The tenant has not replied to the CCJ, but has replied to some emails. The amount currently owed is just under 3 months rent (rent is ~£1000 pcm). The tenant is working and we have a good idea where they work.

    If the tenant does not reply to the CCJ, we will be able to apply for default judgement within a few days of the 27th July. (I need to check the exact date the court posted the claim.)

    Tenant made a pretty small payment so far this month.

    The tenant has promised a payment of slightly more than 1 months rent on 31st July. There is a >= 90% expectation they will make this payment, but they have not provided a satisfactory plan to deal with the arrears (they offered to pay it off over 5 years, I am pretty certain they can afford to pay it off faster, but they won't provide any details of their incomings & outgoings).

    The next rental payment is due 7th August.

    If the tenant does make a payment before we apply for default judgement, is that:

    a) deducted from the amount we can apply for judgement for in entirety

    or:

    b) the excess over the rent due on 7th August is deducted from the amount we can apply for judgement for

    Does exactly when we apply for default judgement (i.e. before or after the next rent payment falling due 7th August) make any difference? If the tenant explicitly says the payment is for the upcoming rental period does that make a difference?

    Many thanks!

    #2
    None of the above. The claim is only for the maximum of the amount outstanding at the time the claim was initially placed. You probbaly need to place a further MCOL shortly.

    You did the correct thing to sue them before they leave. Make sure if you do get a judgement that the judge specifically states that the deposit can be used if necessary, otherwise the deposit police and not going to apply it.

    Comment


      #3
      You shouldn't have begun the claim until the amount owing was known.
      And by claiming via MCOL you are also risking causing an issue with your notice under s8 - because you're claiming the same debt in two different processes.

      End the MCOL process.
      Evict using s8 or s21 to put an end to the ongoing loss.
      If you used s21 and accelerated possession (which I'd recommend as long as the s21 notice is valid), when the tenancy has ended use MCOL to recover the rent that is outstanding - which is now a known and fixed figure (and will include your court fees and bailiffs costs.

      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #4
        Thanks Andrew. I missed out that crucial figure. The amount applied for on the CCJ is ~£3000. We deliberately issued it just after a rent payment became due. My question is just whether the ~£1,100 payment they plan to make on 31st July will reduce this figure to ~£1,900 or go against the rent payment due on 7th August with only the excess £100 over the monthly rent reducing the amount we can get judgement on.

        If things go as expected the total amount owed on 8th August will be ~£2,800, so less than the £3,000 amount on initial CCJ, but with the total outstanding dipping to £1,900 between 1st & 7th August.

        The deposit is in the insured scheme; I think this removes some of the worries (ie. the tenant has to actively dispute the payment for the scheme to get involved), but I'll remember to look at that when we make the default judgement application - thanks!

        Comment


          #5
          If the tenant pays £1100 on 31st July, unless they say they're paying August's rent (which isn't due on that date), you should assume that they paying down the amount that they owe.
          Conventionally, the earliest amount owed first.

          However, you don't "apply" for a figure on a Money Claim (it's not a ccj - that's the judgement), you're asking the court to compel a debtor to pay a debt they either owe or dispute.
          If the tenant has never owed you £3,000, they could defend your claim on that basis - it's an abuse of process.
          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            Thanks jpkeates!

            The amount owed (~£3000) when we started the MCOL process is the amount we used on MCOL. The tenant owed ~£3,000 at that time, so that's all fine.

            Does this "earliest amount owed" convention continue to apply? So if the tenant also pays £1,100 on 31st August (£1000 rent + £100 payment against CJJ), and same again on 30th September, then the CCJ would be "satisfied" at that point (if payments are allocated against oldest debt and the May/June/July rent claims via MCOL would all paid), even though £1,000 further rent was due on each of 7th September and 7th October. This would seem to be a surprising result if so, making it very difficult to enforce a CCJ if you also have an ongoing relationship with the debtor.

            The more common sense approach to me would seem to be that if the tenant has stated they're paying £100 towards the arrears each month (and that the rest is the rent for the month), only the £100 is deducted from the outstanding CCJ balance. I fully appreciate that common sense and the law sometimes don't align though.

            The question of whether to enforce the s8 or the s21 is pending; I am not sure if it necessary to if the tenant does restart paying, but if the law effectively makes enforcing a CCJ more difficult against someone you also have an ongoing contract with then that is something I will have to weigh into the decision.

            (It seems like it's pretty unusual to be needing to take out a CCJ against a tenant that's actually in full time employment on a decent salary, where the landlord knows where they work and they are still living in the property. I think the tenant may have been given some bad advice by someone.)

            Comment


              #7
              What's being paid is:
              1 - What you agree with the tenant is being paid or
              2 - What the tenant says they are paying or
              3 - What you reasonably consider to be being paid.

              If 1 and 2 aren't possible or clear, I'd suggest that the payment is to settle the oldest debt, so August's rent is entirely unpaid and the £1100 is allocated to the existing debt.

              If the tenant says they're paying August's rent and £100 towards the existing debt, that's what they're doing.

              If the tenant has offered to pay the debt off at £100 a month and are doing so, even if you haven't accepted the offer, I'd expect the court to confirm the arrangement - which still leaves the tenant with a ccj on their credit record (which they really should be trying to avoid), but you're no better off. You might also pay the court fees if the outcome is one that was already on the table.

              The problem with section 8 isn't that having a contract with someone affects your ability to claim, it's the reverse.
              If the court decides that the issue of the debt has already been settled in a different court, they may simply decline to issue a possession order, and suspend things for a few months to see if the tenant has been keeping up the payments (or issue a possession order and suspend it).

              The reason it's unusual to sue a tenant who is living in the property is that you aren't taking steps to mitigate the debt.
              What you need to do is evict the tenant for not paying their rent and then recover what they owe while they are living somewhere else.

              If the tenant has simply had a financial bump which is now historic, you and they need to agree a repayment schedule.
              The tenant has to know he'll be moving out if agreement isn't reached.
              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

              Comment

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