If you’re a landlord, you don’t have an easy job. You already have to look for tenants, make sure your properties are clean and presentable, manage maintenance staff, and deal with people who believe that all landlords are terrible people. You also have to go about collecting rent. This can be anywhere from easy to extremely difficult — especially when a tenant is late on rent.
What do you do when a tenant has trouble paying rent when rent collection time comes around? Should you evict them, or give them a second chance?
This article will walk you through everything you need to know about late rent payments and how to manage them.
1. Make Sure the Rent is Late
This one should seem obvious, but you’d be surprised by how many people don’t, in fact, check to make sure their tenants are late on rent.
Humans are fallible, and there could be a chance that you’re remembering incorrectly. This is not your fault, you have a lot of things on your plate. Make sure that you’re sure that this tenant is late on rent to save yourself some embarrassment.
To check this, make sure you look at your payment records and lease document. See if there’s a clause in there you might have forgotten about that allows a client to pay a certain number of dates after the specified due date.
Remember that if your lease doesn’t specify a late fee, you can’t turn around, change your mind, and charge your tenant a late fee.
If you’re a first-time landlord who intended to have a late fee in your contract double-check to make sure you remember you put it in there. (If you forgot too, don’t worry, we all make mistakes!) If you charge your tenant with a fee that isn’t in your contract, you could get into serious legal trouble.
2. Sent Your Tenant a Notice
Once you’ve confirmed that your tenant is, in fact, late on rent, the next step is to send them a late payment notice. This is a piece of paper you’ll use to politely remind them to pay their rent.
Don’t assume malicious intentions right away. They might be on a strange schedule and have forgotten what time of the month it was. There’s a good chance that once this notice is given, the issue will resolve itself.
If you do wind up having to evict your tenant and take legal action, late payment notices are important to have. With them, you can show that you gave a fair warning. If it happens multiple times, you can also prove to a court that your tenant has a history of payment problems.
3. Talk To Your Tenant
If the payment notice isn’t answered quickly, the next step is to talk to your tenant. We recommend doing this over the phone, so it doesn’t seem as though you’re barging in on their personal space.
Talking to your tenant will help you understand why they’re late on their payments. If you show them you’re sympathetic to their plight, but stay firm about the fact that they have to pay their rent, they might be able to make something happen for you. Don’t give them a reason to spite you so that you have to take further action.
In certain cases, your tenant might have lost a job, suffered an injury or illness, or experienced a loss in the family, which is causing a brief interruption in their stream of income. It would probably account for their lack of response to your notice as well. In these cases, you’ll likely be able to set up a payment plan for your tenant and get the issue resolved.
Reputation is important in business — especially a business as interaction-based as that of being a landlord. If you establish yourself as an understanding but firm person, you’re more likely to attract more people to your properties.
4. Send Your “Pay or Quit” Notice
In most states, you’re legally obliged to send a “pay or quit” notice before you can terminate their lease and force them to move out.
This “pay or quit” notice, should, hopefully, inform your tenant of how serious the issue is. It should let them know how much money is due, when the money is due by and which date you will be forced to terminate their lease.
5. Consider Final Measures
Consider your relationship with the tenant. If this is a tenant you’ve had for a while, who’s always been good about paying their rent before, it might work in your favor to offer partial payment (if it’s legal in your state), offer cash for keys program, or even suggest government aid.
Evicting, at the end of the day, isn’t fun for anyone. It will cost you significant time and energy, and you’ll have to search for a new tenant again.
However, if this is a new tenant or a tenant you’ve had problems with them before, it might be best to simply get rid of them now, so they don’t cause you problems in the future.
6. Take Legal Action
The final set of the process is to hire a property manager or lawyer and pursue eviction.
Eviction is its own complicated process — too complicated of a process to get into here in our limited space. However, check out this other blog post we have written on how to pursue eviction if worse comes to worst.
Deal With a Tenant Who is Late on Rent
There are more steps to the process than you might think when you’re dealing with a tenant who’s late on rent. Start out by making sure that their rent is really late, sending them a notice, and talking to them, and if this does not work, move on to sending a “pay or quit notice” and working out a payment plan with them.
If all else fails, it’s time to move on to eviction.
For more information, contact us today.