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Landlords: How to Proceed when The Rent is Late?

by Peter Giardini on May 20, 2011 · 12 comments

  

Hmmm… you are probably wondering… what is this a trick question?  Well, that could be a correct assumption if your only action is to post a “notice to quit” and head to court.  But is that the only action you should be taking when the rent is late?

Not a chance!

Based on my experiences, once a tenant has missed their rent payment, an entire repertoire of actions must be taken to ensure your tenants know you are serious.  And, in addition to using late rents as a “training the tenant” opportunity you can many times get the tenant caught up on their rent as well.

The key though is that once your tenant is late you must spring into action and do everything you can to protect both your rental income and your property. 

And… here is why!

For many tenants, once they start that long slow slide of late rents it is extremely difficult for them to get caught up.  But, and every tenant knows this, once they get behind they know they will not get caught up and they know they are on their way out.  It is just a matter of time.  And, once they come to that realization they start to care less and less about YOUR property and they start to make preparations to move out.

As a landlord, don’t you think it would be a good thing to know what your tenant is up to during this time period?  Especially if you own property in a location where it can take months and months to get through the actual eviction process?

As a responsible landlord what do you do?

Below are my step-by-step recommendations for managing this process from start to finish.

How You Should Proceed when the Rent is Late

1.  On the day following the rent due date take whatever action is required in your municipality to start the eviction process.  If that means posting a “notice to quit” or heading off to Rent Court, or both… do it!  Remember that you are accomplishing two things here… a. starting the process to evict if the tenant doesn’t pay the rent as due, and b. sending a message to the tenant that you mean business and you consider their missing the rent a very serious situation.

2.  Start the Safe and Clean Inspection process.  Once the tenant’s rent is late you need to get into your property to ensure the following: a. that the tenant is still there, b. that they are not destroying your property, and c. conveying to the tenant that you are now paying very close attention to their actions.

3.  Conduct the formal inspection process.  Take pictures.  Document everything.  In addition to the deficiencies you SHOULD find that are the tenants responsibility to correct, make sure that you identify those deficiencies that you need to correct.  The last thing you want is a tenant who heads to court for some property issue while you are trying get your rent from them.

4.  Follow-up the initial inspection by correcting those deficiencies that are your responsibility and rescheduling another inspection  to ensure the tenant has corrected theirs’. Continue the inspection process as often as needed until the tenant is caught up with their rent or you have evicted them.

5.  If you make any arrangements with the tenant to get caught up on their late rent be sure to document everything, but don’t stop the inspection process.  

The entire concept behind this process is to let the tenant know that when their rent is late they have placed themselves onto your radar screen and they will stay there until their rent is paid.  While this process takes time and effort on your part, it helps to both protect you and your property and is a great way to ensure the tenant is not destroying your property.

Good Luck!

Image: healingdream / FreeDigitalPhotos.net

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{ 12 comments… read them below or add one }

bridget magnus May 20, 2011 at 10:32 am

Honestly, I think there’s a step zero here: “Call the resident and find out what’s going on.” It might be that they forgot, their paycheck was a day late, or something else easily remedied. I remember one case where at the first whiff of eviction proceedings, the resident didn’t say a word, just moved out all their stuff and dropped off the key! If a simple phone call can save you a vacancy and make-ready, that sounds like a good investment of your time.

Reply

Peter Giardini May 20, 2011 at 3:02 pm

Bridget,

You have a great point… and I should have started the article there. Assuming that the tenant is willing to communicate with the landlord many, many issues can be dealt with before you end up in court.

Thanx for the added insight.

Pete

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Denise May 20, 2011 at 10:43 am

Great article! Just read a two full-page cover article in my local paper regarding the “tenant who never pays.” This guy is apparently a pro-se professional since he’s been running his game for nearly 19yrs getting away with living rent free for 2-3yrs at a time; all the while tangling up the courts with all sorts of tactics to delay a ruling. In the meanwhile, the poor-sap landlords have had to shell out upwards to 60k in legal exp alone! Who knows? Many of this leech’s tactics may have been thwarted by due diligence in following your process as outlined…

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Joshua Dorkin May 20, 2011 at 11:01 am

Denise – Can you point us to the article?

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Denise May 20, 2011 at 11:12 am
Peter Giardini May 20, 2011 at 3:06 pm

Denise,

Thanx for the article post…

This story is just incredible. And, even as shocking as the story is, I took a few moments to read the comments and all I can say is we are in big trouble in this country.

To Josh… is there any way this article can get better visability? And, you can be sure my article next week will be on this character and his antics.

Pete

Shae Bynes May 20, 2011 at 3:36 pm

Thank for this post, Pete! I really appreciate these additional ideas because I’ve done some..but not all of them. I’m actually dealing with this right now so it’s timely :-)

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Phillip Gainey May 21, 2011 at 2:37 am

I am an out of state investor who fell for the marketing hype put out by a Mempis wholesaler about what a great place Memphis was for rental cash flow. Anyway, I’m going through an eviction of tenant in a nicer area of SE Memphis right now. I’ve had to take this tenant to eviction court in January. On the court date (start of the following month), they showed up and paid the rent and the eviction was dropped. Decided to give them another chance. But my radar was up! Then they paid the rent late in April and we started eviction again. The end of the month came by and still no rent. Got an eviction judgement last Friday.

Incredibly, the property manager tried to talk me out of evicting them so long as they paid up. Even after two trips in 4 months to eviction court. However, I wanted nothing to do with them. The property manager just couldn’t believe I wanted them out, and said complacently that who cares so long as they pay up after each trip to eviction court.

Then I found out the wife (who works for the IRS!) had a horrible rental history. She was taken to eviction court in 2008 five times! And guess what? The property manager didn’t even put her on the lease!! He put only the husand on the lease (had no hits on his rental history). I canned the property manager for letting the deadbeat wife fly under his radar.

Now I have to get them out with a new property manager. Old pm is mad that I fired him and has admitted to no wrong doing.

I can see now why screening tenants is so important!

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Stan May 24, 2011 at 10:49 pm

Thanks for this insightful article. I think it’s essential we let the tenant know that we are serious about timely rents and the approach we take is crucial.

I personally feel that as a landlord our objective is not to kill the tenant as we do not want to end up with a void period of a few months where end up losing even more passive income as we still need to consider the time needed to find a new replacement tenant.

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Anonymous June 9, 2011 at 10:36 am

How many days late do you think is too many to accept payment? I usually give tenants 2-3 day leeway.

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Windbrand June 19, 2012 at 4:41 pm

Landlord/tenant laws try their very best at protecting tenants. Under these sets of moronic laws:
– Tenants are encouraged to NOT pay rent, because there’s not a single f*cking thing landlords can do about it. Why should they pay if they can get a few months for free? Hearing? You gotta be joking. Yeah good luck with a hearing that is scheduled 6 months later, with another 6 months appeal period, blablabla. By the time the judge orders an “eviction”, the tenant will have lived in your home for a year for free and the landlord is forced to provide everything in the rental contract, eg utilities, internet, etc. In other word, landlords are not allowed to break the contract in any way, tenants are ENCOURAGED to break them in any way possible
– Tenant are encouraged to do anything they want in the unit without paying any attention to the rental contract, simply treat it like garbage. Contract says no smoking? Smoke all you want. Contract says no pets? Bring a dozen pets. Contract says no loud sex? Go and f*ck 100 times a day. There’s not a single f*cking thing landlords can do about it
Landlord/tenant laws are the most stupid, unreasonable, unfair, and moronic laws I have seen on this earth.

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Joshua Dorkin May 20, 2011 at 5:00 pm

Pete – I posted about this in the forums and shared the story on FB, Twitter, etc . . . here’s the thread:
The “Professional Tenant” from Hell: BEWARE ALL LANDLORDS!

I’m looking forward to your analysis….

Reply

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