Late Payment Question for Landlords

20 Replies

I'm curious to see how other landlords feel about this. We have a tenant who has paid late the past two months. Between the late fees and penalties, it's been about $200 extra each month (rent is $985)

My partner wants to set her up on a temporary payment plan over the next three months where she makes a mid month payment in addition to the first month payment, which is scaled to help her get back on track to paying full on the first again by July 1st.

I want to help her get back to paying on the 1st but also like getting the extra money in late fees each month. We send out late notices per the payment schedule in the lease so we maintain the lease agreement. When she goes past the 10th we file a dispossessory, which she has to pay for. There is no loan on the house, so we're not fronting any money each month.

She makes good money, so its not a situation where she can't afford the rent. How would you proceed? Thanks.

if they are paying.... i'd let them pay the extra fee too.

ask them if you should move the due date..

Has something changed that makes the rent unaffordable now when it was affordable when she moved in? If so, I'd let her go. A payment plan isn't going to fix an affordability problem.

I would leave the due date as is and let them pay the late fees. As John mentioned, what has changed that the rent is no longer affordable? I had a tenant buy a new car and had asked me if they could pay on the 15th because the car note was due on the 1st. I told them absolutely not and to call the finance company to have them change their due date. In a polite way I told her she can live in a nice a apartment or she could live in her car.

Is she paid in full today and paying the late fees each month? If so, I wouldn't even worry about it. It may be a bit annoying, but that's what the late fee is for. I wouldn't worry about getting late payments, I would only worry if the tenant is not current on rent or starts missing payments and doesn't pay late fees.

Jon, great question. She was on Section 8, which was paying $300 of the $985. She was taken off the program because she makes too much money. She makes $22/hour. I think the extra $300 is more of a planning problem than an affordability problem, although she does drive a nicer vehicle than me. She's also been a good tenant, no complaints, keeps the place clean and the grass cut. Her adult son is now finished with school and has a job and will be helping towards the rent, so she says.

Roughly 20% late fee for a month seems onerous and predatory to me.

My late charge is 10% of rent...several pay late monthly but I don't waive lc... I'm trying to motivate timely payments....I know for one tenant it's a lifestyle problem, but she's been there 4 yrs and lc($70)...taking care of property.... No stress!!!

Originally posted by @Steve Babiak :
Roughly 20% late fee for a month seems onerous and predatory to me.

I haven't seen the lease. But all MY leases have per diem late fees. So if they get into the 3rd week of the month, it can easily be more than 20%.

I would never have a flat rate late fee. Tenant needs to understand that paying late causes hard costs for the landlord. And that the later they pay, the more the hard costs are.

Originally posted by @Mark Whittlesey :
But all MY leases have per diem late fees. So if they get into the 3rd week of the month, it can easily be more than 20%.

I wouldn't let someone get into the 3rd week of the month without paying rent without taking action against them first.

I'm with @Dawn Anastasi that I don't let people get three weeks late.

Assuming she's working full time, $22 an hour is enough to qualify for your units.

If she gets paid on a date that doesn't work well for rent being due on the first, then you could adjust the dates for the "month". What I would do is to have a short month, then move the due date. So, say paying the month's rent on the 10th works better. On the first of the month where you're making the switch, collect one third of a month. Then, on the 10th, collect a full month. Now the rent is dues on the 10th instead of the 1st.

Originally posted by @Dawn Anastasi :
Originally posted by @Mark Whittlesey:
But all MY leases have per diem late fees. So if they get into the 3rd week of the month, it can easily be more than 20%.

I wouldn't let someone get into the 3rd week of the month without paying rent without taking action against them first.

Yea, I get that.

But if rent is due on the 1st and late on the 5th then likely the only action I can take is a 5 day.

Even if it is due on the 1st and late on the 2nd and I 5 day them immediately then the best I could do would be to file.

And with all that... it's more complicated. A lot of it depends on the tenant and what the relationship is.

In North Carolina, you can only charge $15 or 5% late fee. whichever is greater. Per diem late fees would be illegal to charge. Our courts are punitive to landlords when they exceed this.

@Mark Graffagnino tenants that fall 1 month or more behind rarely catch up. You are very close to that. The question is, would you rather have a few months late fee and an eviction or a broke tenant paying on time.

Get them on a payday payment plan. Get them signed up for an ACH debiting service (ClearNow or erentpayments) that TAKES rent from their account the day they are paid. Biweekly payments or even weekly payments would be good so it matches her pay check.

Your dollar signs from the late fees are clouding your judgment. She obviously can't manage money. You want to always be paid first vs taking a chance of being one of the ones she decides to pay. Look at it this way since she can't manage money, she won't ever save enough for a deposit to move. She'll only move if you evict her. If you can keep her on time and not get so far behind she can't catch up, you will have a tenant for life. I would much rather have a 10 year tenant than 4 tenants over 10 years that I collect late fees from for a few months and then evict because I let them get too far behind.

If it's me, I will maybe try to remind her at the 1st that her rent is due. Set up an auto alert via email or something similar. Also, suggest her to setup bank auto payment.

If she doesn't follow my suggestion, then, If the tenant can afford it, let her pay the late fee. $200 fee over rent of $985 is a lot.

I have the late fee due on the 3rd ($50) and $5 a day after that, although we will post the 3 Day Pay or Quit on the 5th. A good tenant that has only been late twice isn't worth losing, unless this goes on continually. Keep the late fees and as long as you're getting the rent and fees in full at least partway through the month, you're better off than trying to remove a tenant and finding another.

Great comeback to the tenant, @Mike Haro . I had a tenant once who told me her rent would be late because she had to pay her car insurance. I told her that the car insurance company could afford to wait for their payment, and I could not, and a Pay or Quit would be posted. She paid the rent and late fee.

I always wonder what other bill the tenant is paying that makes it worth paying close to $100 in late fees to their landlord - and more than once.

Originally posted by @Brett Byerly :
In North Carolina, you can only charge $15 or 5% late fee. whichever is greater. Per diem late fees would be illegal to charge. Our courts are punitive to landlords when they exceed this.

Oh my, you're limited to $15 or 5%? I would have thought NC would be a pretty landlord-friendly state, is that not the case? Or is NC an otherwise landlord-friendly state, and that is just some funky law they happen to have?

@Mark Graffagnino I personally would not set up anything special for the tenant. I'm not their mother, and it's not my job to turn them into a responsible, productive member of society. But that's just me. There's nothing wrong with you setting up something for the tenant to encourage timely payment.

Sooner or later they will not pay at all. Do not get greedy with the late fees. They are telling you they can't afford it. Unless you get them on automatic ACH based after each paycheck it's time to go. Help them find a place they can afford. I would feel I am taking advantage of them by collecting all those late fees. Who needs to stay up at night wondering when/if they will pay.

I appreciate all the replies. I'm actually in the process of setting up an ACH account, but this tenant pays by money order so that wouldn't work.

Will look at some kind of plan to get her back on track or set up due date around her work paydays. She's a good tenant and was in her last house for 7 years, so I like her domestic stability....just need some financial stability.

As far as "not letting her get 3 weeks late" we file a dispossessory if she goes past the 10th. One benefit for me personally, of setting up a plan and getting her back on track is not having to go to the magistrate court once to file the warrant and a second time to cancel it after she pays.

Funny side story- the first time I filed a dispo warrant I mistakenly put my info in the "defendant" section....the sheriffs deputy called me from in front of my own house to ask if this was the correct address...."because if this house rents for $985 I'd like to get on your waiting list".

Enough has been said by others, but let me offer two quick thoughts.

1. On one hand it might not serve her or you best to "mother" her (i.e. by setting up the arrangement, especially since your partner is the one that came up with it).

2. On another hand, for me personally, it's not acceptable to take advantage deliberately of someone's "weakness" (in this case poor financial management).

I offer these thoughts with no point, no connection, no judgment. Just two loose thoughts that came up that might be of use to you in your decision making process.

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