Letting Tenants Slide on the Rent!
How Long Will You Let a tenant Slide on the Rent if They Have Had a Personal Emergency?
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Property Manager
- Steve Rozenberg Consulting
- http://www.SteveRozenberg.com
I suppose it depends on the "personal emergency" (e.g. sudden, unexpected death of a spouse, etc) but as a general rule: you have to be business-like and the rent has to be paid on time.
Having said that, for me part of the pleasure of being self-employed and somewhat successful financially is the ability to help people who are truly in need by being a bit flexible as circumstances warrant.
I would consider their rent payment track record. If they're long time good renters, I would not start eviction but advise them that there will be a late fee. If they're relatively new, or flaky, I would proceed with protocol quoting the lease parameters. I think tenant history goes a long way.
The way it was explained to me by a judge is that a lease is a Bi-Lateral agreement between landlord and tenant.
If the tenant does not perform per the lease agreement say 'Rent is due on the first and if not in by the grace period of 11:59 of the 3rd, then on the 4th it is late and fees apply' (per the lease agreement that both parties signed.)
When the tenant does not pay and if you do not charge late fees that were in the agreement and start the eviction proceedings that are in the contract, then the owner is actually the first one in breach of contract not the tenant, and you are potentially setting a precedent for not only this tenant but for all your properties due to potential Fair Housing and Discrimination Laws.
So the point that the Judge was getting across was that if you put it in the contract you better be willing to enforce and back it up. Don't try to pick and choose what you will enforce and when you will enforce it. They are bound to the agreement just as much as you are.
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Property Manager
- Steve Rozenberg Consulting
- http://www.SteveRozenberg.com
I let my clients slide for the same amount of time my mortgage company lets me slide....
That would be 16 days for me since mortgage is due on 1st but late on 16th luckily.
Don't.
Ask yourself what are you doing exactly? Are you just postponing a problem and then your renter will have to pay two months rent next month. Are you creating a situation where they are going to get behind? Are you delaying the inevitable?
If it is a matter of a few weeks because your renter was hit by a semi was in the hospital for a month and is lucky to be alive, that's one thing. In that case, extend a little grace or later refund the late fee depending on the language of the lease. Otherwise, don't.
Make sure you're not digging a hole for you and your tenant. For a lot of people rent is a huge chunk of their take home and it is hard to make up after getting behind. You're doing them and yourself a disservice.
Don't let it slide, talk to your tenant and figure out how this realistically ends.
This is a bigger problem if you own units together or an apartment building. The tenants all talk and no good deed goes unpunished.
The utility companies generally work with tenants sometimes with such income or hardships with repayment agreements to get back on track. Have the tenant seek relief elsewhere but not from paying you the rent in full.
You can't let rent snowball and be late every time. The process is the same. If they don't pay they don't stay.
When they know the process is out of your control then they will either find a way to pay or not. I would say before the eviction is ongoing but can be stopped if you pay everything in full.
A time you might not want to evict is if you own property in a rough area where it will be stripped if vacant or it is a hard weather or holiday time of year when nobody is moving. You might lose more in evicting with damage to the unit and lost rent then doing a workout with the tenant.
When evaluating a tenant it is just like an asset manager would review a home owner on a loan. Is this a temporary setback they can recover from or something permanent where waiting is going to make the losses and situation much worse?? Sometimes it works out and sometimes it doesn't.
No legal advice given.
One factor is how long they have been tenants and what their payment record has been to date. Another is whether this is an emergency from which they can recover, as in a death when the insurance has not yet been paid to them, or a situation where they may need to take a short time off work but are still employed and will soon be getting a regular paycheck again. On the flip side, losing a job means that they are going to need help now, and then 30 days from now, and so on... If their unemployment does not cover the rent and living expenses, you have no recourse but to ask them to move.
Most emergencies cost money, or they cost time off work, which is also money (usually). If they can't pay because they reduced their money, it's hard to double down the next month. Unless they are the most amazing tenant ever, I'd tell them to skip the payment on their cell phone, Internet, and car payment but that the property where all that stuff lives is the first priority.
I have always felt that if you listen to someone's problems you often end up shouldering them yourself. Emotions are extremely contagious. As a landlord you cannot do this. Tell yourself and your Tennant this is only "business" and that by law you will need to go through the steps outlined in the contract and file with the courts. It's amazing how resourceful people can be once they are in a pinch.
Your real boundaries are what you allow someone to get away with
Hope this helps
Garrett
Originally posted by @Bryan O.:
Most emergencies cost money, or they cost time off work, which is also money (usually). If they can't pay because they reduced their money, it's hard to double down the next month. Unless they are the most amazing tenant ever, I'd tell them to skip the payment on their cell phone, Internet, and car payment but that the property where all that stuff lives is the first priority.
This made me chuckle. I've often said my tenants have two things I don't have: a bigger TV and a newer car. That was in the days before cellphones. Nowadays I often wonder how much those tenants who have a hard time paying the rent are spending on their phones and all the other fancy gadgets.
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If they have several months/years of paying on time, I might give them an extra 3 days. After that, file! I can't even count how many times I've been promised to be paid X amount of money on X day, and then see nothing. But I've already filed for eviction, so they usually make it happen before then. But that filed eviction paperwork is your best insurance on them actually following through.
Just this morning, I drove to one of my units for an eviction after the girl told me last week she'd paid Thursday or Friday. Then last night she's texting me saying she's on the way to 7-eleven to pay. Then has the audacity to ask me if I received the email notice yet of receiving payment (paynearme), as if I'd fall for that. THEN, she text me a picture of the money saying she has the money and that's not the problem, but the cashier doesn't know how to do the PayNearMe system. If that's not enough, she said she'd get up early this morning and make the payment by 0700 because maybe the new shift would know how to do the paynearme. This girl made me lose a few hours of my regular day job to show up and she hand me the cash. She is my one trouble tenant, but she's never waited to so last minute to pay up....I suppose she was testing me to see if I was serious about the eviction.
Basically, they lie and lie and lie to try and squeeze some more time out of you. So file those eviction papers! You can always cancel the eviction once you receive all of your money.
Depends on what you mean by letting them slide. For a tenant's first time having to pay the rent late, we may let them pay a few days late without paying the late fee (but they still have to pay within the Notice to Pay or Quit time period), though it depends on how long they've lived there, if they've been a good tenant otherwise (not causing problems with neighbors, not breaking stuff, etc.), etc. As our AZ PM calls it, they get one "mulligan." I think that's a golf term, I don't remember, I hate golf. We don't let them pay after the Notice to Pay or Quit time period, we don't accept partial payments, and we never excuse any portion of the rent from being due. Ever.
After their mulligan, though, they have to pay the late fee if they pay rent late again. No exception.
Originally posted by @Steve Rozenberg:
The way it was explained to me by a judge is that a lease is a Bi-Lateral agreement between landlord and tenant.
If the tenant does not perform per the lease agreement say 'Rent is due on the first and if not in by the grace period of 11:59 of the 3rd, then on the 4th it is late and fees apply' (per the lease agreement that both parties signed.)
When the tenant does not pay and if you do not charge late fees that were in the agreement and start the eviction proceedings that are in the contract, then the owner is actually the first one in breach of contract not the tenant, and you are potentially setting a precedent for not only this tenant but for all your properties due to potential Fair Housing and Discrimination Laws.
So the point that the Judge was getting across was that if you put it in the contract you better be willing to enforce and back it up. Don't try to pick and choose what you will enforce and when you will enforce it. They are bound to the agreement just as much as you are.
Love this comment!
Enforce the lease. When you don't you are showing the tenant that the lease has no value.
if you decide to waive any fee at anytime always send them an invoice or something indicating the one time waiver so they know there was one and you won't let it go next time. A waiver might be for a good payment history tenant. If someone had a death or emergency hospitalization or something like that I think I would not feel right to charge a late fee. A financial "emergency" well housing should come first.
it's easy to make this issue personal but business is business. My experience has been that if you let it slid once it will happen again. I was very upfront about late payments being penalized with a new tenant and she's been late a couple times for vamoose reasons, it's never even a discussion, she just lets me know it will be late and adds the $35 late fee
We have a policy where the tenant pays a late fee if they are a day late up to one week late, and a second late fee if they are late during the second week. During that time we have prepared and served them the eviction papers and thereby started the 2 week clock that the local court requires.
One of our tenants pays their rent late three or four times per year. They've never not paid within 2 weeks, and over the years we have earned many hundreds of dollars in late fees from them. It's therefore a very profitable unit, and the tenant otherwise is a good tenant, so I'm not in a hurry to evict them.
