payment plans
📖 What is payment plans? Meaning and definition
In New Zealand tenancy law, a payment plan is a structured arrangement for a tenant to pay money owed to a landlord, or vice versa. This can include rent arrears, filing fees, or compensation for damages. The plan specifies the amount of each payment, the frequency (e.g., weekly, fortnightly, monthly), and the due dates. It provides a clear schedule for settling a debt.
Payment plans are often established by the Tenancy Tribunal, either through a consent order where both parties agree, or as part of a conditional order. For example, if a landlord applies to terminate a tenancy due to rent arrears, the Tribunal might order a payment plan for the tenant to clear the debt while continuing to pay current rent. This allows the tenancy to continue as long as the tenant adheres to the plan.
A key aspect of many payment plans is the consequence of non-payment. If a tenant fails to make a payment by the due date, or within a specified grace period (e.g., 2 working days), the entire outstanding balance of the debt may become immediately payable. In some cases, failure to comply with a payment plan can also lead to the immediate termination of the tenancy and the landlord regaining possession of the property. The Tribunal may also specify the order in which payments are allocated, such as current rent first, then arrears, then filing fees.
Payment plans can also be used for future rent payments, where a tenant and landlord agree to a modified schedule for paying rent in advance, accommodating the tenant's income cycle. This demonstrates flexibility and can be formalised through a consent order from the Tribunal.
📋 Requirements
- A debt is owed (e.g., rent arrears, filing fees, compensation for damages).
- Agreement between parties or an order from the Tenancy Tribunal.
- Clear specification of payment amounts, frequency, and due dates.
- Stated consequences for failing to adhere to the payment schedule.
📝 Procedure
- A party applies to the Tenancy Tribunal (e.g., for termination due to rent arrears or for compensation).
- Both parties attend a hearing.
- The parties may reach an agreement on how the debt will be paid.
- The Tribunal issues an order detailing the payment plan, including payment amounts, dates, and allocation order.
- The order specifies the consequences if payments are not made as scheduled, such as immediate termination of tenancy or the full debt becoming due.
💡 Examples
- A tenant owes $1,627 for rent arrears and a filing fee, and the Tribunal orders them to pay $770 weekly, comprising $670 for current rent and $100 towards the debt, with payments due every Thursday.
- A tenant is ordered to pay $1,899.85 for carpet treatment, repairs, and a filing fee at a rate of $40 per fortnight, with the first payment on a specific Wednesday and continuing every second Wednesday.
- A landlord and tenant agree that the tenant will pay rent differently due to their pay cycle, making an initial $1,000 payment, then $2,000, followed by monthly payments on the 25th for at least one month's rent in advance.
- If a tenant fails to make a scheduled payment within 2 working days, the tenancy will terminate, and the landlord will have immediate possession, with the remaining debt becoming instantly payable.
❓ Frequently asked questions
What kind of debts can be covered by a payment plan?
Payment plans can cover various debts arising from a tenancy, such as rent arrears, filing fees, and compensation for damages to the property, as determined by the Tenancy Tribunal.
Who decides the terms of a payment plan?
The terms of a payment plan can be agreed upon by both the landlord and tenant, often resulting in a consent order from the Tenancy Tribunal, or they can be ordered by the Tribunal itself as part of a decision.
What happens if I miss a payment on a payment plan?
If you miss a payment, especially if it's not made within a specified grace period (e.g., 2 working days), the entire remaining debt may become immediately payable. In some cases, the tenancy could also be terminated, and the landlord might regain possession of the property.
Can a payment plan include future rent payments?
Yes, a payment plan can be used to modify how future rent payments are made, such as adjusting the frequency or dates to align with a tenant's income schedule, provided both parties agree and the Tribunal issues a consent order.
Does a payment plan stop a tenancy from being terminated?
A payment plan can prevent a tenancy from being terminated if it's part of a conditional order from the Tenancy Tribunal. As long as the tenant adheres to the plan, the tenancy may continue. However, failure to follow the plan can lead to immediate termination.
Are there any extra costs associated with a payment plan?
The payment plan itself doesn't typically incur extra costs, but the initial debt might include a filing fee which is often incorporated into the plan for reimbursement to the applicant.