Proper response to tenant requests about payment. Exact words?

19 Replies

How do you guys respond when a tenant tells you they can't pay until the 15th or 20th? Or they want to change the payment date to the 5th or 10th? What are your exact words and responses to these situations?

Our policies are well documented and they would have been explained to the tenant, and an acknowledgement signed, when the lease was executed.

1) Rent is due on, or before, the first of the month;

2) If any balance remains outstanding as of 17:00 local time on the 4th of the month, a late fee of $50.00 is assessed (for a first offence).  For repeat offences, a late may be assessed as early as the 2nd of the month.

3) If any balance remains outstanding as of 17:00 local time on the 7th of the month, we post a Notice to Vacate which, under the NB Residential Tenanacies Act, provides the tenant 7-days to pay all outstanding amounts or 15-days to vacate the premises.  If they settle their account, they are allowed to remain in tenancy.

4) On subsequent offences, a Final Notice to Vacate is posted 2-days following the assessment of late fees.  This notice provides the tenant 7-days to pay all outstanding amounts owed, but they are still required to vacate the premises.

Business is business, and having the process documented up-front saves lots of hassle.  That said, we are not totally inhuman; if a tenant comes to us prior to rent being due and alerts us they have a situation and rent will/could be late, we will work with them without assessing a penalty.  However there is no way we would allow rent to go un-paid - at least the majority of it - beyond the first week of the month.

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126

So if a brand NEW tenant said they couldn't pay till the 15th what would you tell them?

Have they moved in yet?

If they have not moved in, I would try to get them to agree to cancel the lease.  I just don't see a tenant in that situation being a good risk.

I would simply respond for them to refer to the lease for applicable late fees and policies.  If the payment is late, enforce the late fee.  I also would be timely with any follow up steps(i.e. starting the eviction process) if they are required.  I also would make sure my response was in an email vs. verbally or via text.  The only case is where I would suspend a late fee would be if it was a long-term tenant.

I am more than fair with my tenants.  If it's a first time occurrence with requesting to pay the rent on the 15th, I will agree but I send out my pay or quit/documentation to reflect the requested date . So just in case they don't pay I can move forward with starting the court paperwork to start the eviction process.

But the bottom line is they agreed to your terms of the lease with how/when rent is due & when it is late.

I think it depends on whether the tenant has taken possession yet.  If you are still in negotiations and they would prefer their payment date be the 15th rather than the 1st then it's up to you whether you want to do that.  I would be OK with it but we don't have a ton of properties.  I would imagine with a lot of properties, having different due dates for rent could get confusing.  

If they already have taken possession, then they are testing you and you need to stand firm on the policies you established when they moved in or they will walk ALL OVER YOU for the remainder of their lease.  If their rent was due on the 1st and they're late, you assess proper late fees, pay or quit notices and eviction filings if it gets to that point.

The wording is simple.  "When you signed the lease you agreed to pay your rent on or before the first or be penalized.   You currently owe X dollars which includes X late fees and you will continue to incur X late fees until you pay or are evicted from the premises, per your lease agreement"

@Jesse T. Is right. If they are brand new and haven't made their first payment and are already in violation of the lease, it's not going to be a good situation for you. On the other hand, I have a tenant who has been in my home for 3 years and pays late every month, every month I collect an extra $100 - $200. She always pays and every month tells me she's going to pay late, but all late fees will be included. Go figure, people are tenants for a reason I guess.

@Sean Kuhn  Chances are they are fishing to push you around.  Stay firm to the date rent is due in the lease.  If they are paying late for whatever reason and tell you a specific date they will be paying.... have them repeat it back to you.  Tell them if they don't pay on say the 15th, the following day you will  be serving a 3 day notice.  Have that notice typed and ready to go.


Frank

If they are a new tenant, then start the lease on the 15th. Just prorate like you would normally to the 15th..

If they are a current tenant, then I would again prorate until the 15th, and then start on the 15th..  So if they pay $500 a month and said on the 1st, I want to change my payment to the 15th, I would say okay, pay $250 now, and start making your $500 payment on the 15th. It might not be exactly $250 since most months have 31 days, but you get the drift.

You might also find out why they need to switch it up.. It may be a great opportunity to turn this into a bi weekly lease. When you switch to biweekly or weekly leases, you get 13 months in the year instead of 12...

Medium spousesbuyinghouses cmyk 01Lee Smith, Spouses Buying Houses, INC | [email protected] | 317‑450‑3491 | http://SpousesBuyingHouses.com | IN Agent # RB14037978

When a tenant moves in we tell them our late fees in laymans terms.. Rent is due on 1st, late on the 5th, and we start charging $25 a day late fee.. If we don't have the rent and all late fees by the 15th then we start eviction, and there's no going back from that. We have a special sheet of paper that explains just late fees. It's in the lease as well, but we make them look this paper over, and sign this paper, to make sure they know we are not nice on late fees.

SO, If they are going to be late, they already know the consequences. We just thank them for letting us know, and tell them to make sure they have rent and any late payments before the 15th.

Medium spousesbuyinghouses cmyk 01Lee Smith, Spouses Buying Houses, INC | [email protected] | 317‑450‑3491 | http://SpousesBuyingHouses.com | IN Agent # RB14037978

Originally posted by @Sean Kuhn :

So if a brand NEW tenant said they couldn't pay till the 15th what would you tell them?

 If they have already moved in?  Tell them rent is due on the first and start with proper notice as soon as possible (pay or quit or local equivalent).  You have to train your tenants from the beginning and if you let them get over you from the start they will walk all over you.  Make them know that rent needs to be their number one priority.

If they tell you this before they move in then you can start the lease on the 15th and have it due on the 15th.  I generally try to avoid this  but have made an exception for a few people that get a large monthly check around the middle of the month (child support/alimony, annuity, etc) that don't feel like they can budget properly until the 1st.  Tenants are bad with money.  I will not accept any due dates other than the 1st or 15th because it would become far too hard for me to keep track of.  For my tenants that want to pay on the 15th there is no grace period, I charge a late fee on the 16th since I've already helped them out with a non-standard due date (for my standard lease I provide a grace period through the 5th before I charge a late fee, that way any of their excuses don't really hold up because they had time to figure it out).  

My lease also has a clause saying money can be applied to other fees and charges first, then the rent.  So, if I get rent but not late fees, the rent is still late.

NOBODY moves in without giving me one full months rent plus the full security deposit in cash or money order.  Period.  Lease signing and exchange of money and keys all happens at the same time. I prorate the second month.  Not the first.

Is this a move in situation or the first time rent is due?

For move ins, I will not hold the place very long, but we have a very hot market.  If someone applied now, was accepted, and said they couldn't move in until Feb 15, I would tell them I would continue to market the unit.  If I found someone who wanted to move in sooner (very likely) I would offer the first tenant the right of first refusal.  If they want to start their lease, pay and take possession on the earlier date, its theirs.  Otherwise the new applicant gets it.  If I do agree to a hold, I get a non-refundable holding deposit equal to the security deposit and I stop marketing the unit.  If they move in as scheduled, it becomes their security deposit.   If not, I keep it and resume marketing the unit.

If they've moved in and tell me the first rent check is going to be 15 days late, we would have a discussion.  I'd probably post a pay or quit notice on the day that would allow me to start an eviction on the 15th.  And I'd start an eviction on that day if not paid.  Fifteen days is a long time to be late, and starting with that BS at the beginning of the lease is a bad sign.

If someone wanted a lease that runs the 15th to the 14th of the next month, I'd have no issue doing that.  If they wanted to change and existing lease, I'd want half a month's rent on the 1st, then a full month's rent on each 15th going forward.  If someone just wanted to pay on the 15th with no penalty... see above.

Jon Holdman, Flying Phoenix LLC

Originally posted by @Lee Smith :

If they are a new tenant, then start the lease on the 15th. Just prorate like you would normally to the 15th..

If they are a current tenant, then I would again prorate until the 15th, and then start on the 15th..  So if they pay $500 a month and said on the 1st, I want to change my payment to the 15th, I would say okay, pay $250 now, and start making your $500 payment on the 15th. It might not be exactly $250 since most months have 31 days, but you get the drift.

You might also find out why they need to switch it up.. It may be a great opportunity to turn this into a bi weekly lease. When you switch to biweekly or weekly leases, you get 13 months in the year instead of 12...

Yep. Being flexible can work, especially when you have thought it out in advance and can give the tenant options. We let tenants know in the beginning that we prorate based on a 30-day month and we make our monthly rent divisible by $30, so each day has an even dollar value. Easy for us to calculate and easy for tenants to wrap their head around.

I agree it is important to find out why the tenant has this need. It may be the harbinger of things becoming worse, or it may simply make more sense for the tenant's financial situation. As long as it is something that will not inconvenience me, cost me more money, or cause more confusion, everything is negotiable. If it will make me more money even better!

Marcia Maynard, Fischer Properties | Podcast Guest on Show #83

Originally posted by @Sean Kuhn :

How do you guys respond when a tenant tells you they can't pay until the 15th or 20th? Or they want to change the payment date to the 5th or 10th? What are your exact words and responses to these situations?

To answer your question, they first thing I ask is "Why can't you pay on the standard due date?" How I proceed from there depends if this request comes prior to the tenancy beginning, or after we have already signed a rental agreement. The answer also depends if it is a request for a one time need, or ongoing need.

Everything is negotiable, but if I am going to change my normal operating procedure to accommodate a tenant's need, then the rent will be higher to compensate me for this. Before we get to that however, I would have a discussion with them as to why they feel they need such a change. Often it is not something they need to do, but something they want to do. Usually they can pay rent on the first, it's just a matter of priorities. So I will talk with them about getting their priorities in order. I might ask them, "What would it take for you to pay rent on time?"

Now, if tenancy is already underway, there are two ways this could go, depending on my past history with the tenant.  

If the tenant has been a good tenant (following the terms of the rental agreement, paying rent on time, taking care of the place, not bothering the neighbors, etc.) and this is a one time need, then I will grant them the ability to pay late. I will thank them for letting me know in advance and inform them they will receive our standard late rent letter which will include the late fee that will be due at the time we accept rent late. Our standard late fee is $50. I will also inform them the next month's rent will still be due on the first as per our rental agreement. I also let them know if they don't pay on or before the date we agree upon, then we will need to serve a 3-day legal notice to Pay Rent or Quit at that time, and I will remind them that each time we serve a legal notice, we charge a $20 posting fee.

If the tenant has been a good tenant and the change in due date would be an ongoing need, I would do as @Jon Holdman does.

If the tenant has already been on notice for not abiding by the terms of the rental agreement, I will let them know I hear what they are saying, but rent is still due on the 1st and if we do not receive rent by it's due date, we will proceed with charging late fees and posting legal notices as per the rental agreement. I also might have the discussion with them that "This is not working out for us and it's time we talk about a move-out plan." 

Sometimes a tenant's circumstances change and they can no longer afford to live in the apartment/condo/house that they are renting. If they are up front and talk with us about it, it bodes well for them. If they don't, then it can get ugly. 

More often than not, when a tenant tells you they can't pay rent until a later date, it is the beginning of the end. More often than not, when a tenant wants to change the due date, they are living paycheck to paycheck and aren't managing their money well, and want to pay rent right after they receive their paycheck or benefit check.

Marcia Maynard, Fischer Properties | Podcast Guest on Show #83

I recently had one of my 3 year tenants request this.  He had just changed jobs with a substantial pay increase, but the new company paid two weeks in arrears.  I said no problem as long as I got full payment and he was on time with the next month's rent which he was. 

If it is someone just starting I would do as suggested and prorate the rent and set their normal date on the 15th.  Some people have money coming in the first week of the month or other bills due late in the month that makes managing cash flow more difficult for them.  It doesn't really affect me to get a check on the 15th verses the 18th verses the 1st just as long as they come in every month and I know when to expect them.  My wife drops them off at the bank when she takes our daughter to school so it isn't even a special trip.

Thank you everyone for all the input. This is not a current situation but it did come up once. I realized my lease states nothing beyond "due on the 1st, late on the 6th." I will be adding the following to my lease agreements. I like the idea of biweekly as @Lee Smith  stated so I added that. What do you guys think? I believe all the waiting period days conform to Illinois Law. And there are some personal preferences in there, like adding 5% for recurring payment dates later than the 1st, because it does slightly upset my business structure.

-Rent is due on the 1st, and if submitted on the 6th or after there will be a 10% late fee. If payment is not received by the 6th a “Pay or Quit” notice will be issued. If payment or vacation has not occurred by the 11th eviction will commence.

-Payment date can be set to a later recurring date but a 5% fee will be added to the rent and the recurring date cannot be later than the 15th.

-Biweekly payments options are available, with a fee of $3 per month.

Switch it to $3 per payment. 26 x 3 = 78 a year. I know several people who charge $10 per payment processing fee when it's weekly or biweekly...

I have several people who pay weekly, and it's direct deposit. Makes it nice!

Medium spousesbuyinghouses cmyk 01Lee Smith, Spouses Buying Houses, INC | [email protected] | 317‑450‑3491 | http://SpousesBuyingHouses.com | IN Agent # RB14037978

If you haven't done so check your local laws before you change the lease.  We cannot charge a late fee until it is 5 days late.  It is an issue for some tenants. They figure no late fee until  after the fifth , then it is due on the 5th and that is when I get it. I had trouble with one guy who just didn't get it.    I am looking at giving a discount now for auto deposits on the 1st but I am trying to see if that is a legal way to go. if someone said the 15th I think I would not do it unless it was the start of a lease or a long term good tenant.

Originally posted by @Sean Kuhn :

So if a brand NEW tenant said they couldn't pay till the 15th what would you tell them?

 To come back on the 15th and if the unit is still available, we'll talk then.

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126