Late fees on late fees? Consistently late rent

Late fees on late fees? Consistently late rent

Investor · Atlanta, GA · Member since 2016 · 37 posts · 17 votes

Hello! I have an investment property in Athens, Georgia, where the tenant consistently pays rent late. In the lease there was a 5-day "grace period." Even with a generous grace period, although the tenant is current on rent, there are late fees from 3 months' rent on her balance. 

I am tired of her taking advantage of the grace period, so I am changing her lease to longer have this provision. Late fees will be charged the day after rent is due. For any new tenant I allow one grace period of five days per year. I've structured the late fee to be $25 on the first day, and $10 each additional day to encourage her to pay rent as soon as possible when it is late. 

I'm wondering if I could have a late fee on the late fees, such as $5 fee per day until ALL late fees have been paid in full. I want to discourage the tenant from not paying the fees. I haven't found any examples of late fees for late fees in other leases, but it does seem like in Georgia as long as it's in the lease, it's enforceable.

Does anyone have any thoughts or experiences they can share? Perhaps other strategies to get tenants to settle their late fees?

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Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
10y
My lease says that any money collected first goes towards paying fees, then rent. If they owe late fees and only pay the base rent them that is a partial payment and subject to additional fees.
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  • Investor · Coeur d'Alene, ID · Member since 2016 · 551 posts · 218 votes
    10y

    First you need to check what your state will allow as far as grace periods go, some states you have to allow them. Also see how much you can charge per your state landlord tenant laws, this will tell you if you can do a daily fee. 

    I charge a $35 late fee and then an additional $5 per day until the rent along with late fees is recieved.

    After this lease is up you should one raise your late fees, and 2 decide if you are going to keep this tenant around. I know some landlords love the late fees, they see additional income. I'm not one of them. If I get a tenant that is late more then I think they should be they will not get renewed leases.

  • Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    10y

    @Elizabeth V.

    You state you are "changing" the lease. If it is a lease, you cannot arbitrarily change it. You would have to wait until it expires to do so. My solution to a problem tenant like that is to not renew their lease. Also, make sure your late fees are not in conflict with your state statutes.

  • Investor · Coeur d'Alene, ID · Member since 2016 · 551 posts · 218 votes
    10y

    I'm sure you know this but unless they are one month to month you can't go change their grace period in the lease. That is unless the terms are agreed upon by both parties. I doubt that the tenant will agree to this.

  • Investor · Buffalo, NY · Member since 2016 · 668 posts · 209 votes
    10y

    Is this the only issue so far or do you see the relationship going downhill? This is often how it starts when the tenant shows a lack of respect for the rules, then the property, and finally ... you. Good luck.

  • Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    10y
    My lease says that any money collected first goes towards paying fees, then rent. If they owe late fees and only pay the base rent them that is a partial payment and subject to additional fees.
  • Ormond Beach , FL · Member since 2015 · 345 posts · 223 votes
    10y

    We had a similar problem. Lease was coming due so we notified them that we would not be renewing. They begged to stay, so I raised rent $100 per month, with written notice on a month to month arrangement that if paid by the 1st, they could take $50 discount. Furthermore, if not paid by the 5th, I would cancel our agreement, and they were out first time they were late. So far, so good.....carrot and stick.

  • Contractor · Atlanta, GA · Member since 2012 · 176 posts · 103 votes
    10y

    I've had to go to court with two tenants and in Fulton County and Cobb County you can only charge a max 10% late fee.  My lease has a 5% fee after the 5th, additional 10% after the 10th plus $5 per day.  The judge only awarded me the 10%.  

    That's if it goes to court.  I have one current tenant who has been late and pays the 5% and 10% if she goes past the 10th.  I guess if I ever have to take her to court I'd have to credit back the 5%.

  • Investor · Atlanta, GA · Member since 2016 · 37 posts · 17 votes
    10y
  • Ormond Beach , FL · Member since 2015 · 345 posts · 223 votes
    10y

    I am out of town working on a flip house, but will try to get you something over the weekend. 

  • Realtor · Douglasville, GA · Member since 2016 · 44 posts · 17 votes
    10y

    I had a tenant that did this.  When the lease was up for renewal, I just raised their rent by 10% from $1000 to $1100 and told them that I would refund $100 if they paid by the 5th.  The funny part was they never did pay on time even after this but would pay the full $1100 later in the month!  At least I got an extra 10% every month.  I finally got tired of the hassle and evicted them.

  • Investor · Latham, NY · Member since 2014 · 217 posts · 65 votes
    10y
    I would be sending them a 3 day pay or quit immediately after the grace period ends and as mentioned make sure your lease states the order to which rent is applied which forces them to the late fees first.
  • Member since 2016 · 13k+ posts · 12k+ votes
    10y

    Tenants need to earn the right to have a term lease otherwise only have M2M leases.

    When a tenant pays late you advise them that if they do it again they will be terminated. If they do it again you terminate their lease and find a good tenant. This is the only way to properly operate the business and the best way to train tenants.

    Tenants only pay late when the landlord allows them to do so. If you have a tenant regularly paying late it is because that is how you have chosen to operate your business.

  • Investor · Grantville, GA · Member since 2016 · 9 posts · 4 votes
    10y
    You can solve this problem by putting in the lease "late rent will not be excepted unless late fees are included". Your tenant has trained you to accept the normal rent late without the late fee. The amount allowed in Georgia is determined by the magistrate judge in that county. Most won't allow more than 10% in late fees. I have a tenant that always pays late and always includes the late fee and frequently the court cost also as I have filed. For my aggravation I get an extra $1400 a year.
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