Tenant Late on Rent - Is this the right course of action?

20 Replies

Hello,

I have a tenant who is consistently late on rent payments, but usually pays before the 5 day grace period expires (after one or more reminders from me). This month, she has yet to pay the rent. After multiple reminders, she finally responded to me yesterday to say she would be paying the rent when she got to work. However, the rent is STILL not paid. We use Chase QuickPay, so it's not a question of the check being in the mail. To add some color - tenant is financially in good shape (or at least they were when I rented them the property) and I don't believe cash flow is an issue for them generally speaking. However, they are currently month-to-month and planning to buy a house at the end of the year. Pure speculation on my part, but I suspect they may be trying to garner enough funds to complete the purchase of their new home. I have no facts to back this up, but the longer she takes to make payment, the more I think this is it. She's historically been quite communicative regarding rent, so this time feels a bit different since she has not been as responsive.

I've written a pay or quit notice and was planning to give a little more grace (until the weekend) before dropping it off in person at the property. Am I putting myself at a disadvantage by waiting the few more days, or does it really not matter at this point? Property is in Philadelphia. The notice states they have 10 days to pay or quit, which I think is the right duration for this jurisdiction. Should I reach out to her again to try and get her to pay or just deliver the notice and if she pays great otherwise move forward with eviction process? And finally, if anyone has general advice regarding where to find the latest and most accurate information on evictions in my area, I'd be grateful for the help (and I'll take advice about these types of situations in general). Thanks!

PS - In case it makes a difference - the lease expired in August and tenant is now month-to-month. I visited the development a few days ago for unrelated reasons and I know that they are still in the property.

I just posted a similar situation, the advice I received was basically if they are living in your home and not paying, they are stealing from you-and I totally agree. 

The longer you wait, the more you lose. Why are you giving more grace time? Clearly the tenant isn't bothered at all by paying when they feel like it and ignoring you. Serve the Pay or Quit. 

I don't know PA laws, but can you give them 30 days notice to terminate if they're on a month to month? If you suspect they're going to buy a house, there may come a month, or more than one, in the very near future when they don't pay at all, to make sure they have enough funds for their closing. And if that happens, they know you won't likely try to evict. And you'll be in the holiday season when trying to re-rent. Act now.

You should not wait to post the notice, and you should inform the tenants that you will be filing an eviction at the end of this week (i.e. 12 days after rent is late).  Posting the notice is essentially just a reminder to the tenant that they have to pay or face consequences - you don't need to wait until the end of the notice period to file an eviction, since it will take 3-4 weeks after you file before the court date anyway.  There is no reason not to post the notice now, and there is no reason to delay in filing the eviction (since the tenant ultimately pays these costs anyway).

For easy evictions in Philadelphia, and to get a second opinion on any advice you get here, try evictionsunlimited.com

deliver the pay or quit notice and start the eviction process. 

Yeah, file the paperwork today if you haven't already.
There's no reason for her to not pay rent--regardless if she's possibly buying a new house or not. And if she is--file asap--and you'll have better chance of getting your money back.

You don't even need to contact her anymore. Just let the legal papers do the talking.

You may have seen your last payment. If they are buying a house they could move out in 45 days before they get evicted. Start the process now. It's just good business.

From this point onward, hold tenants accountable for all of the terms of your rental agreement. Serve the Pay Rent or Quit now and also post a Notice to Enter to inspect the property. When a tenant is breaking one term of the rental agreement they are usually breaking more. Look for any and all lease/rental agreement violations. Also, check that they are paying their utility bills. You don't want to be stuck with a hefty utility bill that may become a lien on your property. 

If they are wanting to purchase their own home, they will need to have good credit... that may be incentive enough to keep their finances in order and not rock the boat. I suspect they will pay the rent after you serve the notice. Then talk with them about your expectations... 

I like to use this question.... "Rent is due on the first day of the month, every month.  What would it take for you to pay rent on time?" Then listen.  Let them know the course of action you will take... "I am prepared to proceed with legal process to remove you from the property if you pay rent late again."  "What I really need is for you to pay rent on time, take good care of the property and follow the terms of the rental agreement. Can you do this?" If the answer is yes... "Great! Then let's see how you do this month and next month. I really appreciate your turning this around!"

I now have the rent due on the first with no grace period. The late fee is due on the second and I serve the (7 day) notice on the second including the late fee.

I agree with the others. File NOW.

Now that we have cleared that up, a couple of other thoughts. "5 day Grace period". What's with that? I don't think PA law requires that so, no grace, period. They already have had 30 days (time from last payment until the current one is due) so no need to add more time. While this tenant may end up paying it's bad policy going forward.

Get them on an ACH service since they have money. They are just choosing not to pay you. That is so wrong. Use an ACH service like ClearNow to TAKE the money from their account (they authorize this when they signup). They don't need to log on to Chase or anything. It requires zero tenant action each month. It costs some money but it's well worth it. The more you have the cheaper it is too.

Finally, why would you let them buy a house at Christmas time and leave you with a winter vacancy? There is no reason or law that says you have to go MTM after a year lease. Make your lease renew for another 12 months each and every year with built in rent increases. If that doesn't work for them negotiate something that works for both of you. Take charge, they pay extra for a month to month agreement or a lease that ends in the winter. For me the extra amounts to enough that they pay enough between now and Nov 1 to cover two weeks vacancy (I'm in a hot market so you might need to do more). Once you show them that it costs (and costs a lot) to be flexible, you will find that they can figure out ways to buy a house that doesn't leave you holding the bag.

Thanks for all the advice. I will contact the tenant one last time to advise that I am issuing the pay or quit notice and will be starting eviction proceedings at the end of this week if they do not resolve the issue (and I will be following through on that). I will also post the notice to enter, and arrange to visit the property for an inspection in short order. And thank you for the tip to check on their utility payments. I will work on that as well. I like the very specific verbiage used to discuss the tenant's ability to pay rent as and when due, and I will be using that. Thanks also for the link to the evictionsunlimited.com site.

Regarding the grace period - I do realize it's working against me (I might as well just make the rent due on the 5th), so I'm no longer going to include that in future leases. I gave flexible options for payments including ACH, but I didn't anticipate a need for it with these tenants given their financial situation. My mistake, and I will not make that mistake again.

Regarding the month to month lease in the winter - I initially had no intention of re-renting the property when the tenant's lease was up due to certain circumstances that arose. Given that, I was comfortable extending to a month-to-month lease and the ensuing vacancy. However, things have changed and I have decided to continue renting and so no, it was not the best choice to make. I am not under pressure to re-rent the property though, and I am well positioned for a time of vacancy if it should arise. All that being said, I wouldn't make the same decision if faced with this choice again.

do you not have late fees?

I do have late fees. I give a grace period after which the late fees kick in. She has generally paid before the grace period expires, so I have not had reason to charge it.

I thought that in this situation she went past the grace period?

I do a 2 day grace period with stiff penalties. I usually work with people if they are late, but if they become habitual, I remind them of the stiff penalties. It usually makes them shape up.

Yes, in this situation she is past the grace period and not seeming that committed to making things right (regardless of added fees, which I reminded her of before she actually became delinquent). That is why I think I need to take some more decisive action.

if you plan on doing an eviction, remind tenant that this does show up on their credit report so if they plan on renting again, or buying a house *wink, it will cause major problems for them.

Thank you. Perhaps that will increase their "motivation". :)

Just for clarity. Evictions are civil court actions. They are not credit events and are not reported to credit bureaus. They only show up on the tenant's credit report if the landlord goes to small claims court and gets a judgment. Some court systems (like Colorado) do allow for judgments as part of the eviction process but you have to pursue it. The standard eviction most eviction attorneys do does not involve judgments, it's just for possession. So while @Brett B.  is technically correct if the landlord does everything, don't think that just because you see a tenant's credit report you will know if they have had an eviction.

Thanks for all the great information. The tenant paid the rent following my last contact, provided an explanation and says that it will never happen again. I have learned a lot about how to handle it if it does happen again, and also about how to structure future leases to be better protected in the future.

I recommend that anybody who is a landlord of property in Philadelphia should join HAPCO; HAPCO is a landlord organization that happens to offer the services of an eviction attorney at reasonable prices.

And regarding utilities - in Philadelphia PGW (natural gas) and Water Revenue Bureau can bot place a lien on a property if those utilities go unpaid, even if the lease requires that the tenant make those payments.  There are some special arrangements that landlords can make, but the risk still is there.

@Steve Babiak is right HAPCO is great. I wish the serviced South Jersey as well. Great luck.