What Should Landlords Do If Tenants Stop Paying Rent?

In a bid to generate income, a large number of property owners rent out their property. Sometimes disputes between landlords and tenants arise due to differences in expectations, communication gaps, or failure to fulfill legal or contractual obligations. Most disputes typically emerge because tenants either deny paying rent or postpone the payment process.

Landlords need to understand their legal rights and available solutions when their tenants fail to pay rent. First, they should be aware of the state-specific requirements and the applicable laws applicable to the property and the state in which the said property is situated. Primarily, the Transfer of Property Act, 1882, and the respective state Acts governing rental agreements, eviction grounds, notice periods, and dispute processes vary across states.

Rental Agreement And Security Deposit

First, the landlord should enter into a rental agreement and ensure that it is executed for a period of 11 months. If the agreement is made for a duration exceeding 11 months, the law requires it to be registered, and the applicable stamp duty and registration charges must be paid accordingly.

Landlords can also ask for additional security deposits or post-dated cheques as a preventive measure. For instance, "in Maharashtra, it is common to collect 3–6 months' rent as a security deposit and post-dated cheques for monthly payments. Both are legal if mutually agreed and documented. Also, police verification and checks on employment and rental history help prevent renting to unreliable tenants and ensure legal compliance. They reduce the chances of defaults and disputes," says Suresh Palav, Partner, IndiaLaw LLP.

Landlords Are Entitled To Receive Rent

Landlords are entitled to receive rent on the due date as per the rental agreement. When a tenant defaults or refuses to pay rent, the agreement between the landlord and the tenant is to be reviewed to determine the rental amount, due dates, and the duration of continued non-payment of rent specified in the agreement for consideration of issuance of notice for termination of the rental agreement.

"Landlords can adjust unpaid rent against the security deposit paid by the tenant, subject to the terms of the agreement and by providing proper notice to the address specified in the agreement. In the event the agreement is silent on the address for service, then the same can be sent to the premises where the tenant is residing," says Smita Paliwal, Partner, King Stubb & Kasiva, Advocates and Attorneys.

Issue A Legal Notice

The landlord may initiate eviction proceedings on the ground of non-payment of rent, which is a valid and legally recognised reason for eviction. To begin the process, the landlord must issue a legal notice and/or written communication to the tenant's last-known address, typically the rented premises, as outlined in the rental agreement.

"Most states require landlords to issue a legal notice before initiating eviction proceedings, except in certain cases like trespass or explicit legal exceptions. The notice must contain the names and addresses of the landlord and tenant, the reference to the rent agreement and relevant dates, and the specifics of the rent default insofar as the duration and amount payable by the tenant, the deadline for compliance (payment or vacating) and must also specify the consequences of non-compliance of the notice by the tenant. The notices should be written, sent via registered post, or personally delivered with acknowledgement," says Paliwal.

Landlords can file for recovery of unpaid rent through a civil suit, if needed, post issuance of the legal notice.

Can Essential Utilities Be Disconnected?

It must be remembered that landlords cannot legally disconnect essential utilities (like water, electricity, gas) or change locks, even for non-payment. Tenants may claim civil or criminal damages against landlords for "constructive eviction" or harassment. Further, Courts may impose penalties, fines, and order the restoration of services. All remedies against non-paying tenants must proceed through the Courts.

Approaching Rent Control Boards or Housing Societies for help

Landlords, under various Rent Control legislations such as the West Bengal Premises Tenancy Act, 1997, are permitted to approach statutory forums such as Rent Controllers or designated civil courts for adjudication of tenancy disputes. These forums operate with partial legal authority to resolve matters about determining appropriate rent levels and eviction cases based on established legal standards and claims for profit from tenants. The Rent Control Authorities function as the primary legal body that landlords must use to settle tenancy disputes through official and legally binding decisions.

"Landlords can alternatively resolve disputes through available ADR (alternate dispute resolution) mechanisms. Rent Controllers, together with courts, can send disputes to Lok Adalats that operate under the Legal Services Authorities Act 1987 when authorised by law. Such forums offer pre-litigation conciliation and can culminate in a consent award, which is executable as a decree under Section 21 of the Act. Though non-adjudicatory in nature, Lok Adalats can significantly reduce litigation time if both parties are willing to explore settlement," says Amit Kumar Nag, Partner, AQUILAW.

However, the role of housing societies, whether cooperative societies or Residents' Welfare Associations (RWAs), in dispute resolution is strictly limited to the administration of common services, enforcement of bye-laws, and internal discipline. Societies have no statutory authority to adjudicate landlord-tenant disputes regarding eviction, rent, or possession. They may, at best, serve as mediating bodies in cases of nuisance or rule violations, but their decisions are neither judicial nor enforceable in law.

The legal system denies housing societies any power to rule on eviction cases or rent disputes or possession matters between landlords and tenants. The organisations function as temporary mediators for nuisance cases and violations, and their decisions lack both legal authority and enforceability.

"The preceding discussion shows that societies function as internal grievance platforms for landlords who face tenant misconduct or nuisance complaints, although they lack the power to settle disputes through binding decisions. Any substantive tenancy-related issue such as eviction or rent recovery must be pursued through the Rent Controller or the competent civil court. Societies are not empowered to evict tenants, enforce rent payment, or pronounce upon the validity of tenancy agreements," informs Nag.

File Eviction Suit Before The Jurisdictional Court

After the period specified in the notice for the tenant to vacate the premises expires, despite which the tenant continues to reside in the rental premises without payment of rent, the landlord can file an eviction suit or relevant legal complaint before the appropriate authority or civil court.

“The landlord should present all documentation, including agreements, payment records, and notices, along with its suit/petition seeking eviction of the tenant and recovery of the arrears of rent,” says Paliwal.

If the court rules for eviction, the tenant is ordered to vacate, and the landlord may also claim compensation for unlawful occupation.

Options For A landlord If A Tenant Vacates Property Without Paying Arrears

The landlord maintains full authority to collect outstanding rent payments after tenants move out of their rental units. The departure of the tenant from the property does not eliminate their responsibility to pay outstanding rent amounts accumulated during the tenancy period or any unauthorised dwelling costs. This is a settled position under general contract law and tenancy jurisprudence. The obligation to pay rent or damages survives and can be enforced independently of the possession status.

"Landlords can file a civil suit to recover arrears of rent and damages (mesne profits) even after the tenant has vacated the property. The suit must be properly drafted with supporting evidence and filed before the appropriate civil court. The right to recover dues is not extinguished by the act of vacating, and courts have repeatedly upheld this principle in both statutory and contractual contexts," says Nag.