Unpaid rent: what should I do if my tenant does not pay the rent?
A tenant who does not pay the rent on time is certainly one of the most distressing problems for many landlords. However, the situation can be avoided or circumvented. This article sets out the landlord’s rights and responsibilities in Luxembourg. With best practices, legal recourse and unpaid rent insurance, here are a few ways to avoid unpleasant surprises.
First and foremost: select the right tenant
Don’t just go with the first person who applies, choose your tenant carefully. Generally speaking, the more information you have about a potential tenant, the less likely they are to be unable or unwilling to pay their rent.
In Luxembourg, lease agreements are regulated by Articles 1708 et seq. of the Civil Code, and are defined as follows: a contract by which one of the parties undertakes to provide the other with the enjoyment of a thing for a certain period of time, in return for a certain price which the latter undertakes to pay them. The amended law of 21 September 2006 on residential property leases regulates the letting of residential property more specifically. Note that rent may be increased every two years.
Asking for references from your tenant’s current or previous landlord is a good place to start, so take the time to review them thoroughly. In addition, check the employment status of your potential tenants as well as their income and financial capabilities by asking for proof of income and pay slips.
You are of course strongly recommended to request a rent guarantee (in the form of a deposit or bank guarantee). Legally, this can be equivalent to a maximum of three months’ rent. This will allow any unpaid rent to be deducted from the deposit.
Unpaid rent, step 1: try to negotiate amicably
Before taking legal action before the Justice of the Peace, it is always best to try to negotiate amicably with your tenant. This of course depends on the reason why the tenant hasn’t paid and the relationship you have with them.
Unforeseeable circumstances, such as illness, redundancy or a car accident, can cause late payment beyond your tenant’s control. In these situations, try to negotiate amicably as soon as possible to avoid accumulating too many rent arrears.
The more you are able to resolve problems before they escalate, the better for both parties. If all attempts at negotiation are unsuccessful and the unpaid rent continues to accumulate, it is then time to take legal action.
Unpaid rent, step 2: take legal action
The Justice of the Peace in Luxembourg
Applying to a Justice of the Peace is a slightly more formal attempt at conciliation. However, it does not yet necessarily involve the use of a lawyer.
To start legal action in Luxembourg, you must first send a request to the Justice of the Peace in Luxembourg, Diekirch or Esch-sur-Alzette, depending on the location of your home.
- The cantons of Luxembourg, Remich, Grevenmacher and Mersch as well as the municipalities of Garnich, Hobscheid, Kehlen, Koerich, Kopstal, Mamer, Septfontaines and Steinfort are under the jurisdiction of the Justice of the Peace of Luxembourg.
- The municipalities of Bascharage, Clemency and Dippach and the canton of Esch-sur-Alzette are under the jurisdiction of the Justice of the Peace of Esch-sur-Alzette.
- The cantons of Diekirch, Clervaux, Echternach, Redange, Vianden and Wiltz are under the jurisdiction of the Justice of the Peace of Diekirch.
Once the location of the Justice of the Peace has been established, a request should be sent to the clerk’s office of the Justice of the Peace on plain paper (the number of copies should reflect the number of parties). The request must state the reasons in fact and/or in law (“the grounds”) for the application, the subject matter of the application and the surnames, first names, professions and residences of the parties. A summons will then be sent to the parties by registered letter.
The Guichet.lu platform details the entire application procedure.
Court proceedings on the day of the case
There are two possible scenarios on the day of the case:
- If the defendant does not appear (in this case, your tenant), the case is heard in absentia (i.e. in the absence of the defendant) on the same day.
- If the defendant is present, another date is set for the case to be pleaded.
The time frame is generally quite short and allows the opposing party to be notified of the documents that will be presented for the pleadings before the judge.
You are strongly recommended to make a list of the documents you have retained and send them to the defendant by registered mail with acknowledgement of receipt to avoid any dispute over the transmission of the documents on the day of the hearing. These documents must be provided within a reasonable time frame before the hearing (generally eight days). Only those documents provided in advance will be taken into consideration by the judge.
During the pleadings, it will then be time to explain and justify the application to the judge. It is then the other party’s turn to defend themselves, knowing that it is always possible to respond to the opponent’s arguments.
Once the pleadings are over, the judge takes time to deliberate and indicates the judgement date (the date on which the judgement will be delivered). Finally, the court clerk sends the judgement to the parties by registered mail.
Emergency procedure and appeal
In all cases where the situation requires urgent intervention, the Justice of the Peace is empowered to implement interim measures by means of an order. The measures taken must not give rise to a serious dispute and may concern, for example, the drawing up of a fixtures inventory, the fixing of a provisional rent or the appointment of an expert.
Regarding the judgement of the Justice of the Peace, it is possible to appeal through the competent district court in the region (Luxembourg or Diekirch). The time limit for appeal is 40 days after notification of the judgement.
In the case of a judgement in absentia (given in the absence of the defendant), the 40-day period starts once objection is no longer admissible, i.e. 15 days after the judgement.
An alternative to this obstacle course: unpaid rent insurance
Unpaid rent insurance will cover your rent regardless of your tenant’s situation. It will reimburse you for any rent not collected and will cover any legal costs.
At Foyer, unpaid rent insurance is optional mozaïk cover. Specifically, it covers up to 12 months’ unpaid rent (including charges) as well as damage caused by the tenant noted at the time of the fixtures inventory (for an amount of up to six months’ rent). It is also advisable to take out legal protection insurance covering your costs (legal fees, expert fees, bailiff’s fees and any eviction costs), as well as assistance in dealing with your tenant.