Tenant paid rent but not Late Fee
Rental Property Investor · Davenport, FL · Member since 2013 · 285 posts · 220 votes
Tenant paid rent but not Late Fee
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Boca Raton, FL · Member since 2015 · 135 posts · 132 votes
9ynot a good way to run a business in my opinion. A great tenant, 3 years, doesn't trash the place? Was late by 1 or 2 days due to extenuating circumstances and you are giving him a hard time? He paid you in full! Don't be so nasty. I have several businesses, you don't treat your good customers like that.
Risking pissing off and losing great tenant and stable rent for 70 bucks? Use common sense
74 Replies
- Boca Raton, FL · Member since 2015 · 135 posts · 132 votes9y
not a good way to run a business in my opinion. A great tenant, 3 years, doesn't trash the place? Was late by 1 or 2 days due to extenuating circumstances and you are giving him a hard time? He paid you in full! Don't be so nasty. I have several businesses, you don't treat your good customers like that.
Risking pissing off and losing great tenant and stable rent for 70 bucks? Use common sense
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes9y
What does your state law say about late fees? Where I am, there is a 5 business-day grace period before you can charge a late fee, and there's a cap on what you can charge, though you can start with eviction immediately when not paid.
This is one of the problems with policies that are either boilerplate or not well thought out - they leave you in the difficult position of either appearing soft or appearing unreasonable. Never include anything in your lease you are not prepared to enforce. If you are hell-bent on having a late fee after one or two days, you need to enforce it.
If it were me I would probably keep it on the books and see how the rest of the tenancy goes. If the rest of the tenancy goes without a hitch, I would probably waive it when they left. If they destroyed the place, left without notice, started becoming late, etc, I would enforce it as an unpaid charge. In either case, I wouldn't bother mentioning it to the tenant and I would deal with it at the end of the residency.
Skyline Properties - Rental Property Investor · Davenport, FL · Member since 2013 · 285 posts · 220 votes9y
@Kyle Scholnick, is sending a reminder letter 2 months later for a late fee owed giving the tenant a hard time and being "nasty"? Let me clarify, I have not harassed the tenant over a late fee. I haven't said anything to this point, other than sending out a reminder letter. The question is, what would you do in this situation?
@JD Martin, this is late past the 5 day grace period (ex: paying on the 7th is 2 days late). Thanks for answering my question. I agree a lot with what you said. I have been leaning toward ignoring it if it remains unpaid, but I don't want this to remain a habit either.
@Account Closed, Washington state does not limit late fee amounts like many other states... not sure about the "complaining" remark. This is a business and like any other business they will send you a bill or reminder of amounts owed if you don't pay them.
- 9yRyan MurdockPro MemberRental Property Investor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
I would do exactly as @JD Martin described. Keep it on the books and see how it plays out. I would not toss a tenant over a late fee unless there were other pressing circumstances.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes9y
@David Stone OK, that is a different matter entirely. He was 7 days late, not 2 (the 2 days only for the purpose of the fee). If I had a tenant that was that late, I would begin eviction proceedings after it happened once. Two things you can never be lenient on IMO is destruction of the property and habitual late rent. It will ultimately only have the tenant pushing the boundaries. I would let this fee ride until the end, but next time around I would file the eviction on first available day.
Skyline Properties - 9yKim Meredith HamptonBusiness MemberReal Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
I would really try and work with the guy, seems like he's at least trying; paying the rent and keeping the place in good condition. Would you rather have it vacant and turn costs?
When does the lease end? If he doesn't find a job by that time, give him a proper termination if you still feel he can't live up to the lease obligations
- Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes9y
Some states have a % rate of rent that your not able to exceed for late fees. And some landlord don't know this because they don't know their state landlord laws.. Your $70.00 rate seems very High.. and a late per day fee, that some charge is another contention that state laws may not permit...So know what your laws are before you charge a fee like this..
A court for eviction action in MN will usually dismiss any late fees.
A late fee is a type of tool, a tool to use, but not as a hammer to get a guy that trying to keep above water while in a flux over employment.. His rental history says he is not a jerk and you'd do right by working with him during this time.
The cost of a turn, far offsets any $$ you'll gain from collecting and pressuring for a late fee payment.
Common sense tell me what to do in a situation like this, and should for you also.
- Rental Property Investor · Davenport, FL · Member since 2013 · 285 posts · 220 votes9y
Thanks JD and Kim!
@Deanna McCormick, if I don't pay my mortgage on time I get hit with an even larger late fee so I'm not sure how $70 for being 7 days late (2 days after Grace period) is too high. We did try working with him and he ensured us he could afford it.
I appreciate everyone's thoughts! Although I don't agree 100% with everones thought on my late fee amout etc. I am getting the understanding to let it go and keep working with the guy as long as he stays current. I am going to keep it on the books but won't pressure him. Definitely not planning on eviction over a late fee.
- Rental Property Investor · Davenport, FL · Member since 2013 · 285 posts · 220 votes9y
Also @Deanna McCormick, I like the point you brought up about the late fee. It seems like a late fee only makes the situation worse when a tenant is obviously struggling to afford rent. It needs to be high enough to encourage on time payments but low enough to be practical when the tenant is struggling financially... We usually waive the fee but decided to enforce it since it had 2 months in a row... but thanks for bringing up that point, definately something to consider
Originally posted by @David Stone:
Hey, just had a question for landlords out there to see what everyone else would do in this situation... We have a tenant who has been on time or early coming up on 3 years now and keep the place in excellent condition.
Recently, he was laid off and is collecting unemployment and seeking employment. The first month, rent came in late by 1 day, so we waived the late fee and explained if he was having trouble affording rent we could let him out of the lease. The next month, rent was late by 2 days, so we charged the $70 late fee. He said he couldn't afford the late fee and paid the full rent. The third month, he paid on time and did not pay the late fee that month either.
I sent a letter of "Balance Owed" for $70 yesterday. My question is, what would you do? Let the tenant slide on the late fee for now until they can afford it and take it from the security deposit if they never pay it or get aggressive with recovery, making an example of the seriousness of his obligation to pay us the full due amount?
( NOT LEGAL ADVICE )
Late fee = rent. If rent is paid late, only accept ALL rent that means rent + late fee.
Otherwise, do not accept it! If you do, you're setting a precedent and a court of law can determine that through your actions you're waiving the late fee.
At this point, YOU REALLY HAVE TWO OPTIONS:
1. Tell the guy that this isn't working for you and agree on a move-out date. He's now in breach of your lease agreement. Tell him that if he doesn't agree to move-out on his own accord, you will evict him and this will negatively affect his credit, rental references, etc. and make it very difficult for him to get approved for a new rental.
2. If you must, Evict him...quickly!
Personally, I would pursue option 2 to keep things amicable. Option 1 may have legal consequences because by drafting it, you are changing the terms of the lease agreement that both parties have already signed.
You've already given the guy several chances to catch up. This is a business. Paying late has consequences and they should be enforced. It's either him or you and you're not operating a non-profit. It's likely to continue getting worse, so cut your losses now and get the guy out asap!
- Rental Property Investor · Davenport, FL · Member since 2013 · 285 posts · 220 votes9y
@Jon Q., Interesting... makes complete sense. I mean, try paying your property taxes late, they will not accept anything less than the full amount plus penalty/fees. I wasn't ready to move forward with an eviction over a late fee, that is why I let it go and sent a reminder recently to see if I could collect (giving him enough time to get some things together on his end). But, if this becomes a bigger issue, I will definitely be taking your advice. Thanks for the input, I love learning new things from every situation. It's nice to see opinions from both sides of the issue :)
Originally posted by @David Stone:
@Jon Q., Interesting... makes complete sense. I mean, try paying your property taxes late, they will not accept anything less than the full amount plus penalty/fees. I wasn't ready to move forward with an eviction over a late fee, that is why I let it go and sent a reminder recently to see if I could collect (giving him enough time to get some things together on his end). But, if this becomes a bigger issue, I will definitely be taking your advice. Thanks for the input, I love learning new things from every situation. It's nice to see opinions from both sides of the issue :)
When a tenant pays late once, I enforce and collect all late fees and...I take notice.
When a tenant pays late twice, it's a trend. I push back hard. If they pay after the 5th, they get a 3 day notice to pay or quite on their door, then are evicted.
If a tenant establishes a negative trend, you should assume that it will not improve. It will get worse.
Fortunately, because I do a significant amount of work screening tenants, I've only evicted 1 tenant in my 13 years of investment experience.
Though some may not like the way I say this, tenants are like children...if they sense that they can get away with something, they will. If you set and enforce the rules strictly, they will abide by them. They will learn that taking advantage of you is not an option. You must do this both for yourself and for them, because enforcing the rules is in the interest of both parties.
If rules weren't enforced you could not provide housing and they would have nowhere to live.
- Buffalo, NY · Member since 2015 · 252 posts · 109 votes9y
I am going to have to disagree here with the "tenants are like children and try to get away with things." That has not been the case with this particular tenant. That may be the case for some tenants, but this guy is struggling financially. He's not taking advantage. He did pay the rent but couldn't afford the late fee. He needed a grace period. He doesn't seem to be abusing the situation. He's not avoiding your calls or dodging you. He let you know up front he lost his job. Have some compassion.
Its a business for sure. But its also about PEOPLE. You're providing a service/place to live for a human being... A human being that has previously been a good tenant, paid for 3 years, and respected your property. You don't have to hit him with an iron fist while he's already down. I would work with this guy on a weekly payment plan or allow him to pay smaller increments of his balance... Or take the late fees out of his security deposit at the end of his tenancy. If he becomes a jerk or starts dodging you, change your tactic. But jeez, 3 years of good tenancy is a long time to then throw the book at the guy. Karma might not grant you such a good tenant next time...
- Investor · Tacoma, WA · Member since 2014 · 83 posts · 40 votes9y
My rental contracts are written so that funds collected are posted to fees before they are posted to rent. In this case the tenant would still be in arrears on rent but the fees would be paid up. It is always tougher to collect on fees than rent so fees should have funds applied to them first.
- Investor · Mitchell, SD · Member since 2016 · 86 posts · 21 votes9y
I'll about I'm a rookie and don't have experience in this matter(yet) but I don't think the $70 on day seven is to high of a rate. It's ten dollars a day wiping the record clean if it is there by the 5th. Other wise he did make his payment on time in the previous month. When is his lease up? If it is soon I would say work with him up until the end of the lease if he manages to pay in a reasonable time period every month. That way you keep a good tenant who may turn his situation around.
Originally posted by @Shannon K.:
I am going to have to disagree here with the "tenants are like children and try to get away with things." That has not been the case with this particular tenant. That may be the case for some tenants, but this guy is struggling financially. He's not taking advantage. He did pay the rent but couldn't afford the late fee. He needed a grace period. He doesn't seem to be abusing the situation. He's not avoiding your calls or dodging you. He let you know up front he lost his job. Have some compassion.
Its a business for sure. But its also about PEOPLE. You're providing a service/place to live for a human being... A human being that has previously been a good tenant, paid for 3 years, and respected your property. You don't have to hit him with an iron fist while he's already down. I would work with this guy on a weekly payment plan or allow him to pay smaller increments of his balance... Or take the late fees out of his security deposit at the end of his tenancy. If he becomes a jerk or starts dodging you, change your tactic. But jeez, 3 years of good tenancy is a long time to then throw the book at the guy. Karma might not grant you such a good tenant next time...
Yes, we disagree.
You're mixing emotion with business. I do not do that. People who do that will not last long in this business and/or will achieve lackluster returns for themselves and others. Treat your business as a business. You're providing a product and a service to a customer (your tenant). If they cannot pay, they are no longer my customer.
It pays to treat tenants with respect and develop and maintain a positive relationship. It DOES NOT pay to bend the rules that both parties agreed on in writing.
I'm happy for you to take the tenants that will complain about paying the rent or pay rent late. I'll avoid those and only accept responsible tenants who take seriously and hold up their responsibilities per the lease agreement.
- Real Estate Investor · San Diego, CA · Member since 2008 · 23 posts · 17 votes9y
I'm sure there are going to be a number of opinions on this. I have a tenant that pays late but pays the late fee. They are late quite often.
They keep the place spotless, and have been there for years. There is something to be said for that. Yes, you could evict a person based on hard timelines and you could screen people and be back at it a year later or every year after that since they only stay for a year or two and leave.
Or.. you know this person likes the place, and probably won't move. They will also remember that you worked with them when times were low (it wasn't charity, it literally is only a few days). The tenant will remember that and would most likely want to stay even longer. They get a job, pay regularly, and you get regular payments again and your property is still well taken care of.
I would talk to them about it to see when they think they will get a job. If prospects aren't looking up, then I would talk about parting ways as it looks like the place is too expensive for them.
- Buffalo, NY · Member since 2015 · 252 posts · 109 votes9y
I'm not mixing emotion with anything. I don't rent out properties. I only flip so I don't have to deal with tenant issues. People lose their jobs. People have financial troubles. It's reality. People have emotions. Only robots are immune. Good luck to you running your business like a prison. I catch more flies with honey :)
- Real Estate Agent · Austin, TX · Member since 2014 · 636 posts · 486 votes9y
Man, @David Stone, you are a hard-core dude. I usually waive a late fee for the first time someone is later than my state's required "grace period", provided they warn me about their issue and are honest. I would also never charge such a high one-day fee (of course, my rentals are more in the $1000-1400 a month range, if it's a $3000 a month place you might need to charge more to make it stick), but rather a progressive increase for each day late.
Like it or not, real estate is a customer service industry, and if you need to give your residents a small gesture in order to keep them around and to help you feel vacancies, it tends to pay off in the long term. I'm not saying what you're doing is necessarily wrong, but it seems like a lot of work and loss of goodwill for a pittance.
- Rental Property Investor · Davenport, FL · Member since 2013 · 285 posts · 220 votes9y
Hard core because of the late fee amount? I never really thought they were that high. When I bought my first rental property (a duplex from a guy who owned 30 some properties outright in my area) I utilized some figures from his lease. One of those was the late fee amount. I used property management briefly at one point who charged $5 a day late fee (mind you they got to keep all of the late fees per contract and it gave absolutely no incentive for the tenants to pay on time).
Also, when I rented an apartment many years ago, the agreement not only spelled out a late fee per day charge ($40 and $10 a day after) but it also said rent would be increased from $950/mo to $1200.
Besides this little issue the tenant is having, I have successfully managed 5 units (yes, not a ton but I've only been doing this a couple years now) and my tenants pay on time practically every month. We had one tenant pay late once (waived it) and the next time he got the late fee. He didn't pay late again. He made paying rent a priority.
Obviously my late fee amount has stirred up some emotions in the BP crowd, but it is something I disclose to potential applicants as they get a chance to review the contract before applying and it is something we go over line by line in the lease before signing. It is something they agree to. Usually when they see the late fee amount, they say "you won't have to worry about that, we always pay on time."
I guess here is a question... what is everyone else charging for a late fee? (First day charge and daily charge after)? Just to give me perspective, maybe. Always willing to learn why people do their business certain ways. It can only help me in the future. Thanks in advance!
- Realtor · Farmington, MI · Member since 2016 · 129 posts · 69 votes9y
@David Stone:
There is a lot of wisdom in response to your post.
The vicious cycle will be set in motion as soon eviction process is initiated. The current Renter making an earnest effort to pay so he doesn't get evicted that would damage his credit and with damaged credit he can't get a job. He probably has some savings.
My suggestion is to have a conversation to put the renter on notice for the late fee. But, the deal is if he delays the Rent once again in the next 12 months then you would start the eviction process and withhold the Late Fee from the security deposit.
The cost of eviction is probably more than how? much the renter owes you in late fee.
Everyone needs a break, play smart, be firm and be nice.
Good Luck
- Rental Property Investor · Greer, SC · Member since 2016 · 39 posts · 30 votes9yThis isn't really to the OP but more to some of the responses. I guess I have a very different take on this. All of this evicting after the first late fee is crazy to me. I LOVE late payers. Now understand, my rental properties are in the $1400-$2000 range and so they are usually educated and/or have decent jobs but they (well some) just aren't great w money. Between my 7 rentals this year I have collected thousands in late fees and they LOVE me. Why? Because I don't hassle them and they are able to pay some other things before me if they so choose. I realize not everyone can float the money but I would never threaten eviction after a few days. I've had to threaten eviction one time in 7 years and the behavior was corrected quickly. This method has also led to me never having any vacancy yet on my rentals (once again in 7 years). I agree w Shannon (I think that was her name) above about relationships. The dude that says she's mixing emotions with business just doesn't get it. Better relationships equals more credibility, more trust (knowing they will eventually pay) and most importantly more income. Now would I do this with $400-$750 month properties? Nope. But I screen the heck out of my tenants and develop relationships with them and it's worked out for me so far. That's just my two cents.
- Rental Property Investor · Greer, SC · Member since 2016 · 39 posts · 30 votes9y@ Jon you said "It pays to treat tenants with respect and develop and maintain a positive relationship. It DOES NOT pay to bend the rules that both parties agreed on in writing" Isn't the late fee part of the rules and what's agreed in writing? That's not bending anything. If you're late you pay the late fee. The landlord can decide to evict a perfectly good tenant that he already said has been a great tenant and takes great care of the property. Why risk losing him and possibly putting in someone that ends up being worse?
- 9yLevi T.Pro MemberRental Property Investor · Tucson AZ / Nice FR / Washington DC · Member since 2016 · 1k+ posts · 1k+ votes
Originally posted by @David Stone:
Hey, just had a question for landlords out there to see what everyone else would do in this situation... We have a tenant who has been on time or early coming up on 3 years now and keep the place in excellent condition.
Recently, he was laid off and is collecting unemployment and seeking employment. The first month, rent came in late by 1 day, so we waived the late fee and explained if he was having trouble affording rent we could let him out of the lease. The next month, rent was late by 2 days, so we charged the $70 late fee. He said he couldn't afford the late fee and paid the full rent. The third month, he paid on time and did not pay the late fee that month either.
I sent a letter of "Balance Owed" for $70 yesterday. My question is, what would you do? Let the tenant slide on the late fee for now until they can afford it and take it from the security deposit if they never pay it or get aggressive with recovery, making an example of the seriousness of his obligation to pay us the full due amount?
Firstly that sucks, but lastly your running a business, so you need to follow operations rules, or you fail to run your business all together. This is what separated good landlords from bad ones, you stick with your rules vs playing to the heart. Apply his payment to the late fee, then the rents, so he is really late of rents and not fees. This keeps people from stacking fees and never paying them.
If it was me, I would let it stack up to $400 before we did something about it, but would send pay or quick notice each month no matter what via email, and at $400 we would send one certified and start court processing. - Investor · Broomfield, CO · Member since 2016 · 45 posts · 13 votes9yBeen a landlord for a while, 3 year perfect tenants are not easy to come by, just me but I wouldn't press anything on the late fee if future rent payments are on time.
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