? self managing

Reno, NV · Member since 2016 · 328 posts · 97 votes

I have a PM, but will start self-managing in July. The lease by the PM gives tenants a 3-day grace period. I want to change this to no grace period -- rent is due on the first. Can I legally make that change?

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Michele FischerPro Member

Rental Property Investor · Seattle, WA · Member since 2013 · 2k+ posts · 1k+ votes

10y

It doesn't seem like a good way to foster good tenant relationships. If you can get a late fee on the 4th and beyond, that seems adequate. Consistently collecting late fees is better than squeezing every turnip.

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Kathy Johnson
Real Estate Professional · Hayfork, CA · Member since 2015 · 231 posts · 212 votes
10y
If the lease is month to month, you can change this with the proper notice to the tenant. If a term lease exists, you will have to wait and make changes when renewing or extending the lease.
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Jeff Gates
Investor · Cathedral City, CA · Member since 2014 · 481 posts · 170 votes
10y
Not likely. Not reality. Even the best of tenants will not be perfect payers. I am not saying they are late payers. I just mean to say they cannot pay perfectly on one day each month.
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Michele FischerPro Member
Rental Property Investor · Seattle, WA · Member since 2013 · 2k+ posts · 1k+ votes
10y
It doesn't seem like a good way to foster good tenant relationships. If you can get a late fee on the 4th and beyond, that seems adequate. Consistently collecting late fees is better than squeezing every turnip.
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Account Closed
San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
10y
Originally posted by @Yvette M.:
I have a PM, but will start self-managing in July. The lease by the PM gives tenants a 3-day grace period. I want to change this to no grace period -- rent is due on the first. Can I legally make that change?
If the tenants have a lease, you can't make any changes until the lease ends.
This is a great book. Has all the CA laws and all the contracts and forms you'll ever need, and it's easy to read and understand, and so are the contracts - easy to understand by tenants, too. It was my bible. I liked their contracts much better than the Apartment Assoc contracts.
http://www.nolo.com/products/the-california-landlo...
Keep in mind that most people get paid on the 1st, but some may get paid later. Is your reason because you want the money on the 1st, or that you just don't want to give grace periods? You could just change the due date, then, to say rent is due on the 3rd, etc.
If you just want the money on the first, I'd suggest you make that as easy as possible for your tenants to comply with. Give them an option to pay online or by ACH, for instance. If you require a check to be in your hands on the 1st, that could be difficult for them to accomplish if they are working. They'd have to normally go to work, possibly have to work late, get stuck in traffic, pick up kids, etc., and remember to get a check to you wherever that would have to happen.
Just don't set them up to fail, is my advice. You'll just give yourself a lot more work if you're giving them 3 day notices every month, that could have been avoided with a short grace period.
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Jesse Sasomsup
Property Manager · Los Angeles, CA · Member since 2013 · 58 posts · 9 votes
10y
It is not a good practice when you give them no grace period. However, you should find a way to deduct rent from their bank account automatically to avoid them being late.
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Yvette M.
OP
Reno, NV · Member since 2016 · 328 posts · 97 votes
10y
@Jesse Sasomsup
I'm in the process of setting up ACH. I using RentPost and I was notified yesterday that my paperwork is being submitted to the third-party partner.
When I notified tenants that I was assuming management, I told them the payment options: ACH when it becomes available, deposit only ATM card or mail payment. I will adjust the lease language for new tenants.
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Marcia Maynard
Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
10y
Some jurisdictions will not allow the charging of a late fee unless you allow a grace period before charging such, the reason being that weekends and holidays can delay the receiving of and processing of rent payments. Some income checks, such as social security, pension, and benefit checks even if scheduled for the first, may not hit the tenant's bank account until the third. You can make rent due on the first and late on the second, and still leave some grace time before late fees kick in. Glad to hear you're giving tenants options for how to pay their rent, as it allows them to tailor the method of payment to coincide with their lifestyle. Flexibility is a good trait to have as a landlord, as it's a changing landscape out there. Set up your rental agreement in a way that helps your tenants succeed.
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Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
10y
Accidental late payments is not the same a regularly paying late.
Rather than dealing with late fees just terminate the lease of any tenant that regularly pays late. It is not the responsibility of a landlord or any other business to act as a social worker to manage a customers money. Most tenants are excellent in regards to paying on time so if you have one that does not keep them on a M2M lease until you have had enough of their games and then find a better tenant.
No landlord is obligated to tolerate late payments or adjust their lifestyle to accommodate the lifestyle of bad tenants.
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Jon S.Pro Member
Investor · Tampa, FL · Member since 2015 · 530 posts · 92 votes
10y
I had the opportunity recently of being on the other side of the coin, as a parent and guarantor of a college student seeking a rental. The experience and results are interesting in that they relate directly to your question. We narrowed our search down to about 6 apartments that we personally viewed. One apartment had everything needed, was unusually well maintained, a great location, very generous square footage, nice bathrooms, and plenty of natural light. It was dreamy! And it was priced right! But upon reading the terms of the lease, I was taken aback by the lease. Even though the rent was equal to the others we viewed, we did not choose this apartment, even though it was clearly the nicest. While the apartment was indeed the nicest, we were also measuring up the landlord. She was very nice, very friendly, but the terms of her lease seemed unsually draconian, including no grace period - a $100 penalty on the 2nd, plus $50/day thereafter, as well as a requirement that a credit card be kept on file to collect late fees. That part of the lease was a deal killer for me. We have no trouble paying bills on time, we could have paid them a week to 10 days early, no problem, but the draconian nature of the lease terms, combined with a few other draconian rules in the lease, painted painted a picture of a potentially difficult inflexible landlord. We could have easily solved the no grace period by making payment via EFT a week early, which is how we pay all our bills anyways, but we felt the sum of these terms were indicative of a potentially difficult landlord relationship, and we just didn't want to chance it. Perhaps she would have been the greatest landlord in the world. She actually seemed extremely nice in person. But we will never have the chance to know her as a landlord because there are other apartments without such language in the lease. We are not doing business in a vaccuum, we have competition, there are other apartments to choose from. We chose an apartment with a little less polish but also in a great location, with much more reasonable terms in the lease. The landlord with the more reasonable lease terms will now get a tenant for potentially 2 to 3 years, which means low turn over rate, with all payments on time, and few if any tenant issues. The management company of the apartment we chose, and the lease terms, did seriously weigh into the decision. Even though we don't need it, we were pleased that they offered a grace period. Otherwise, it looks like they are intentionally going out of their way to be inflexible or they are intentionally trying to collect late fees, neither of which looks good from the prospective tenants' point of view. Hope that helps in some way.
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Yvette M.
OP
Reno, NV · Member since 2016 · 328 posts · 97 votes
10y
@Marcia Maynard, thanks for your post. I like the idea of "due on first, late on second". I have eight months until lease renewals, so I have time to work out the kinks.
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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
10y
What does your local/state law say about it? In my state, you cannot charge a late fee until 5 business days have elapsed.
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