Tips on Handling Late Rent Payments
If you own or manage a rental property and take care of collecting the rent, there will be occasions that you will have to deal a late rent payment. In this case, you should be consistent in your actions when you deal with the collection of the rent. Establish procedures and policies for rent collecting and put them in writing to give to your tenants.
To avoid unnecessary stress and maintain a healthy relationship with your tenant, here are a few tips on how to handle late rent payments.
1. The first time a rent is paid late, you could set a precedent. You can make your tenant pay promptly by making a schedule of discounts for payments made on time and a corresponding late charge for late rents. In this way, your tenant will try to pay on time to avoid additional late fees charges.
2. All communications with your tenants should be in writing. This will help eliminate a miscommunication and is important if you end up in court with your tenant. You should be able to send a letter to the tenant the day after the rent is due.
3. Do not allow your tenants to make partial payments. If a tenant requests to pay a part of the rent, you could consider this, but make it clear that this is a one-time deal. Have him or her sign an agreement to pay the balance at a scheduled time or a legal rent demand notice.
4. Provide small incentives for rents paid on time. It may not be a good idea in a down economy, but this will be beneficial to your business. Rewarding your tenants by buying them pizza or a movie pass could encourage your tenants to pay the rent promptly.
5. Be reasonable in making late charges and charges on check returned. Many states have strict limitations on how much a landlord may charge for late fees. Be aware of the local laws. Returned checks fees should be based on the charges that your bank makes. Keep in mind that if your tenant makes good on a bounced check after the grace period, they are also responsible for late fees.
6. Be aware of the state laws with the eviction process for non-payment of rent. Several states require you to send a “Notice to Quit” to your tenant before you appear in court. You may start your eviction proceedings as soon as the law permits. It is important that make your tenant be aware that you have every intention of following through on their failure to pay the rent. The court could order your tenant to pay the rent owed or else move out from the apartment.
7. If a tenant is a consistent late payer, you could try to keep him or her for reasons that if he is also paying the late charges along with the regular monthly rent, he is actually giving you a percentage in rent increase in exchange for a few days late. You also have to consider the consequences of keeping the apartment empty until you find a new tenant. You could consider a tenant who informs you ahead that the rent will be paid late. He or she could be out of cash or short of cash, and if the lateness is not excessive, you should not make a big deal out of it.
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