CategoriesRental Property

What Should You Do if Your Tenant Can’t Pay Rent?

Nearly 6 million American households are behind on rent. As we all try to navigate an unstable economy, tenants and landlords alike have to deal with each other’s money problems. If you’ve got tenants that can’t pay rent on time, your instinct might be to threaten eviction – this is not the right way to go about it.

Remaining calm and calculated is the best path forward with these kinds of financial issues. If you approach your tenants with compassion and understanding, there’s a greater chance that they’ll always try to get the rent in your hands on time.

When you start to notice patterns, however, it may be time to take more severe action. In this post, we’re going to walk you through the necessary steps to take when a tenant repeatedly can’t pay rent.

There’s a fine line between being understanding and being taken advantage of. You should never have to take on someone else’s financial issues, so keep reading and learn how to deal with a delinquent tenant.

If They Can’t Pay Rent Regularly

Before you have a strong reaction to your tenant not paying their rent on time, it’s best to look at their past behavior. If this is a relatively new phenomenon, there could be something going on. Perhaps they were fired or have had an emergency that has caused them financial stress.

It’s when it becomes a monthly issue that you need to start worrying about their reliability. Even still, it’s important to approach the whole situation with a degree of calmness – at least in the beginning.

Did You Offer a Grace Period?

Take a look at your rental agreement prior to contacting the tenant about the late rent. In particular, look to see if you’ve included a grace period and denoted any late fees in the agreement.

Much of the time, grace periods of between 3-5 days are included in rental agreements to support the financial needs of your tenants. Another common practice is to include late fees when the grace period is exceeded.

Applying a late fee helps to discourage late rental payments, but you can’t retroactively add one to the rental agreement. As for grace periods, some states require them – Tennessee law dictates that landlords must give tenants a 5-day grace period at the start of each month.

Reach Out With a Reminder

Once you’ve reviewed your rental agreement, you can reach out to your tenant to remind them that rent is due. If there’s a grace period – or late fee for exceeding it – you can inform them of this as well.

This will be a formal reminder. It’s not required of you prior to sending a pay or quit notice, but it’s a recommended step to take. Doing so shows that you’re understanding of tenants’ rights and gives the tenant an opportunity to let you know if there’s something more serious going on.

In your reminder, make sure to note the current date, the rent due date, how much is overdue, any extra fees, the property address, and their name. Keep a record of these reminders each time you send one, as they’ll come in handy down the road.

Follow Up With Your Concerns

If they fail to respond to this reminder, or it continues to happen on a regular basis, reach out in a less formal way. Let them know that you’re concerned about their continued late payments and let them know that this is the final reminder before you’re forced to give them an eviction notice.

So long as you’re not in financial trouble yourself, it’s in your best interest to give your tenant as many chances to catch up as possible. Not only does it prevent you from having to find new tenants, but the eviction process can be lengthy and stressful.

Notice to Pay or Quit

After all of these efforts to allow your tenant to catch up on rent, there comes a time when you have to serve an official notice. Posting a notice to pay or quit is effectively the first step in the eviction process. In Tennessee, the pay or quit is 14 days.

What this means is that your tenant officially has 14 days to pay all of the overdue rent and any fees. If they fail to do that, you can file eviction papers with the court and get the ball rolling.

Start the Eviction Process

You won’t be able to remove the tenant from the rental unit until the eviction proceedings are complete. This process generally favors landlords, but it can still take months.

Start by paying your court fees, then find an attorney to help you understand the process and the paperwork involved. If you’re going to win your case, you need to have thorough documentation of the tenant’s inability to pay rent on time.

Provide any correspondence with the tenant, including the reminders that you sent earlier on. The clearer you can make it that the tenant has been given ample opportunity to rectify this situation, the more open and shut the eviction case will be.

After you’ve filed the paperwork, you’ll be given a hearing date where your legal team will present its case. If you’re successful, the tenant will be given a date that they absolutely have to be out of your rental by. Should they fail to vacate at this point, you’ll have to get the police involved to remove them.

How a Property Manager Can Help

When you hire a property manager, they’ll help you screen tenants so that you’re only getting the most qualified ones. You can avoid most eviction scenarios with strong tenant screening.

However, should you need to evict a tenant who can’t pay rent, your property manager will handle the entire process for you. Having a property manager like Reedy & Company means that you’ll be able to sit back and enjoy all the perks of property ownership without any hardships.

To learn more about our services and how we can help you maximize your rental property, contact us ASAP.