Past due rent before current rent?

Question

Do you apply a rent payment to past due rent before applying it to cyrrent rent?

Annette Hibbler · Answer

I live and work in Michigan. We manage properties here. So, in answer to your question... Past due rent must be satisfied first. Therefore, your tenant's rent payment must be applied to Feb rent plus the late payment. If she doesn't want to incur another late payment, then she has to cough up March's rent as well. She can't pick and choose which month her rent payment is applied to.

Greg M. · Answer

Yes, I always apply it to the oldest debt. That's standard business.  Otherwise there is no incentive to pay off old debts and it becomes an interest free loan.

In addition to specifying how payments are applied in your lease, you need to have reasonable accruing late fees. Something like rent is due on the 1st, $25 late fee on the 5th, and $5 each day starting the 7th.

Bruce Woodruff · Answer

No way.  She actually has the nerve to be late and then try and stick you for a few bucks? I'd say adios to her....

Drew Sygit · Answer

@Gary Smith this is what we have in our lease:

The Payment Location may be changed from time to time, by Agent for purpose, with notice under Michigan Complied Laws (“MCLA”) 554.631 to 554.641.  Agent also reserves the right to assign or transfer Payments.  Lease payments received shall be applied in the following order: outstanding dishonored check fees, outstanding late fees chargeable to Tenant, outstanding legal fees & court costs, outstanding utility bills that are the Tenant’s responsibility, damages caused by Tenant, collection agency fees, and lastly rent.

Matt M. · Answer

As usual, I couldn’t agree more with Bruce

Nathan Gesner · Answer

Absolutely. All payments are applied to non-rent charges first (utilities, late fees, etc.), then rent, and from the oldest charge to the newest charge.

Example: Tenant owes $800 rent, $100 utility, and $50 late fee. They pay $800. I apply it to $100 utility, $50 late fee, and then $650 towards rent. This leaves them owing $150 rent and they are subject to eviction for non-payment of rent.

Past due rent before current rent?

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