Late fees - approaches to tackle slow pays with built up fees

4 Replies

Looking for ideas on how to handle the chronic slow payer.  I'm thinking someone out there has some good ideas?  Yes the lease covers late fees.  No they don't pay the late fees,  but do pay the rent.  I'm thinking a diect discussion with the tenant is the starting place.  Not sure a letter is going to do it.

Say that both a discussion and letter do not work...how have you remedied this yourself?  Do you use late fees as an eviction basis or just leave them out there to be settled at lease completion.  Do payment plans work on fee collection in your experience? Looking for the best practices on BP....Thank you!

I have a clause in my lease that states I can apply money received to fees or other charges first, then to rent.  So, "they don't pay the late fees, but do pay the rent" would mean the late fees were paid but the rent was not.  If the rent wasn't paid, I'd start an eviction. Usually the pay or quit notice gets their attention.  I also only do month to month leases, so if the tenant becomes a problem, the lease can just be terminated.

I also offer a small discount if the rent is paid on the first.  I've found that's much more motivating than the late fee.

I have no across the board policy on late fees. If it is someone who can actually afford to pay the late fees then I go after him/her. About half of the properties under my management are in location where the tenant can't afford to pay late fees...so must of the time we don't bother. 

In Wisconsin, you only can add fees and other charges only after you have won the eviction for non-payment of rent only and then with the judgment amount you add the fees and charges. 

When I have a chronically late tenant, I mail them a tenant ledger with the break down of what is owed. I tell them if they pay on time I will take a percentage of the fees off each month they pay on time. This works about half of the time...

Originally posted by @Jon Holdman :

I have a clause in my lease that states I can apply money received to fees or other charges first, then to rent.  So, "they don't pay the late fees, but do pay the rent" would mean the late fees were paid but the rent was not.  If the rent wasn't paid, I'd start an eviction. Usually the pay or quit notice gets their attention.  I also only do month to month leases, so if the tenant becomes a problem, the lease can just be terminated.

I also offer a small discount if the rent is paid on the first.  I've found that's much more motivating than the late fee.

 This - though you need to make sure you are very familiar with your local laws, I always recommend an attorney to review your process and procedures. I know there are different policies people have about late fees. Some are a set fee at different intervals, like $25 after 5 days, $25 more dollars or a percentage of rent, or a daily amount until rent is paid. The issue that you have is that you did not set a precedence at the beginning, since you kept accepting rent without late fees. My opinion (as long as it complies with your local laws) is you should send them a letter, certified, keep a copy stating the late fee policy as well as the penalties and advise that next month this will be strictly enforced. Locally if late fees got to be around 10% of the rent amount for that month my attorney recommended stopping there, as a judge might not look favorably on that (excessive late fees). In addition, here in Kentucky if you accept money you are restarting the time frame for the eviction process. Which is why we did not allow tenants to deposit the money directly to the bank. As a side note, we also had a no cash policy (for those with no bank account for check or ach - there are money orders), that way we had records of payments. 

I always recommend an attorney to review your process and procedures.

Absolutely agree.  I spent about $200 doing this early on.  Money well spent.  And you now have a client/attorney relationship which can be useful in the future.  It has been for me.

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