Tenant paid rent but not Late Fee
Rental Property Investor · Davenport, FL · Member since 2013 · 285 posts · 220 votes
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 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
Also had this situation once. I charged half the late $100 late fee. The reasons I didn't waive it was because I he almost always paid on the last day of the grace period, and this time he went past it; and I always had to remind him to pay on time. He said he kept forgetting. He got upset over the late fee, and paid both the rent and late fee 15 days afterwards. The situation never got any better (kept having to remind him to pay on time), and I'm now not renewing his lease.
Your guy sounds better, so I'd let it go, but it's your call.
A bigger question might be this: If you consider evicting the guy over $70 (and you likely can't since you've now accepted this months rent) would you be able to find a replacement tenant willing to pay rent on time or early for three years and "keep the place in excellent condition"?
Gail
Regrettably in this case the tenant has disrespected their landlord. By not complying with the lease regarding late fees the tenant is basically telling the landlord where they can shove their lease. He can afford to pay $70 but clearly is sending a message to his landlord. As the landlord your only option is to insure your tenant gets the message that you are in the position of power not him. Demanding the payment and not receiving it gives you only one path and that is eviction.
As a landlord you can never give a tenant the position of power.Yes he may be otherwise a good tenant but this is a very clear message to a landlord that can not be ignored. There is zero tolerance for emotions in dealing with tenant behaviour. The cause behind a tenants behaviour and their past record is irrelevant.
I personally have zero tolerance for tenants violating any article of my lease and wield the eviction hammer when ever it is necessary to train and move tenants back in line. Serving a eviction notice is not the same as eviction. The notice of eviction is only that ....a notice, a message to get in line. If they choose the path to eviction then that is their option not the landlords.
With a tenants first late I send a strongly worded letter making it clear a second late will absolutely result in a eviction notice. If they informed me in advance I will wave the late but if I was not contacted and given a heads up then the late fee is owed without exception. It is a given that a penalty is imposed for my inconvieance and my additional costs of processing a late.
If you do not inforce the late payment fee you have relinquished power to your tenant to follow your lease as he sees fit. That is a very bad business decision and a path you will regret taking.
Do not be the dumb a** landlord that includes articles in a lease that they have no intention of enforcing. If that is your policy don't have a lease.
@David Stone Wow is all I can say...I am SOOOOOO glad some of these guys posting here aren't managing property for me.
Real estate is a business. Do you get charged a late fee when you're late on your car payment? Your mortgage payment? Your electric bill? Yes, yes, and yes.
You don't accept anything other than the full amount of rent plus any fees owed period. All this BS about being a good guy or a bad guy is ridiculous. We're ALL only as good as our last performance. Paying on time is the expectation and what is required in the legal contract.
Most of these comments also show they are rookies when it comes to management because if you were in the business and you waived a late fee for one person and not for everyone now you've created a fair housing violation.
What I do is a little different. If I have a property that I want $1400/month in, I have in the contract that the rent is $1450/month with a $50 discount if paid on or before the 1st of the month. On day 6, there is a $50 late fee. I will put up the notice at 12 days. I can then choose to waive or not and keep the extra fees in my books as unpaid late fees at the end of the lease term. But if you condition them to early to pay the fees, they will. I will generally waive the first one and not mention it. The idea of a discount is there just as a carrot to get them to pay. And some tenants just pay the extra amount "voluntarily" because they know what the contract says. If at the end of the lease they have a few late fees but the property was paid up, notice was given, and it's returned in good shape, I might be inclined to let them off. If they appear to be a problem child, then I won't accept the rent unless the entire amount is paid up including the late fees. If I have to put up a second eviction notice, that's it. It's going to happen. Fortunately, Ohio is very landlord friendly.
BTW, I think I've read somewhere that in some areas, that not collecting a late fee in a timely manner becomes uncollectable. The court will side with the tenant with the thinking that your continuation of the lease by not exercising your option to evict over unpaid fees constitutes you having waived them. So, i'd check before you just charge the fees to the security deposit. I'd hate to be charged triple damages on $500 worth of late fees by the court.
Brian
@Robert Gilstrap
All this BS about being a good guy or a bad guy is ridiculous.
The reality is that enforcing a lease is a landlords responsibility. It is a legal contract that must be followed. Expecting a tenant to follow the language of a lease is a requirement. The definition of a good tenant is one that adheres to the language of their lease therefor it follows that the definition of a good landlord is one that enforces their lease.
Hobby landlords take note ...you are operating a business with a legal contract.
Hey @David Stone I get the approach and how you need to operate the property as a business, however you hove to variables in play that need to be taken into consideration. 1. long term (on time payments), loss of income(Chances are the unemployment is fixed). With that said, I'll put a note in a card for the tenant that says "Merry Christmas, your past late fees are forgive." Choose your battles my friend. Also what are you considering late? Is the rent late after the 1st or 5th of the month?
I would leave it , 70 bucks extra now yes but on the long term this is not a good idea. Bare in mind the guy was early most of the time and paying constantly for 3 years. Would piss me right off if I got the late fee. It's also a people business not just numbers.
@ 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?
Yes, late fees are included in the lease agreement for a reason.
Why risk losing him? Because if he's not paying late fees, it's a message and it'll likely continue. Not paying the rent will likely be next. So, why risk losing him? Because you can find someone BETTER. ALL my tenants are better. All pay rent on time, with few exceptions. During those exceptions they paid the late fees, which I enforce strictly.
The question is...
What type of business do you want to run? And for who?
I had the same situation in the past. What I've done in the past was I gave him a list of charities to contact that provide assistance to families that are experiencing hard times. Your tenant will appreciate that more than demanding late payment from them. You will leave a bad taste in their mouth should you demand $$$.
My advise is don't nickle and dime them especially if they're taking good care of your property, not to mention paying on time. If this becomes to be a pattern, however, you have no choice but to ask them to move since you're running a business and not a charity.
Just my two cents.... good luck.
Being a jerk comes easy to some but there are plenty of millionaires who didn't have to be.
If being a jerk is your definition of being professional I will take that as a compliment. The enforcing of a lease as out lined by your state landlord tenant regulations in relation to operating a business has little to nothing to do with being a particular type of landlord aside from professional.
If a tenant borrowing your money without your permission does not prompt you to take the legal action you are entitled to then, as a hobby landlord, be happy with your own personal management decisions.
I became a "millionaire" by being very professional.
Create a definitive procedure. I definitely agree with waiving the late fee the first time around.
Relationship, trust, and flexibility is applicable in any business. It's not an 'emotional' or weak decision to be forgiving.
Committing to enforcing the late fee if he pays late again is important though. Don't keep waiving it.
@David Stone, Hello David. The even respectful tone of your responses is very enjoyable. Well done.
I'm under the belief that Washington law does not require any grace period for late fees. Do you have reason to believe otherwise? I charge a $10/day late fee starting the first day late. Therefore, rent due on the first but not paid till the second, requires a $10 late fee. I'm renting rooms in Olympia, not the whole house, so in my case I'd be collecting a $70 late fee on the 8th of the month for a $400/mo room. But I would not let a tenant go that long. All late payers must put together an articulable and believable plan to pay within 3 days of the due date or I file notice to pay or leave. I would follow up with eviction if needed. I'm not in a position to lend to my tenants.
That said, I typically waive the late fee for each tenant the first time if they can come up with the rent the next day and so far they always have. I also make it clear to my tenants that I'm not trying to profit from their lateness and prefer to avoid the hassle of having to follow up on the rent. So I tell them that it is my policy to refund all late fees upon request if they subsequently pay their rent on time for just the next six months.
Finally, I would not evict, nor threaten to evict a tenant over a late fee nor over a few late fees. Instead, just as you did, I would inform my tenant that the late fee is due, but would remind the tenant that it will be forgiven after six months of on time rent payments, otherwise it will eventually be deducted from their deposit. With that reminder, I always include some statement of appreciation for his tenancy and for his or her care of my property and, in your case, I would include a statement that I want to work with him to the extent reasonable during his hardship.
I would let him slide, its good will, good tenant, keeps the property up, down on his luck, better off letting it go. I would send him a note and tell him given the fact you know he's out of work you would like to let it slide but please make sure the rent is on time in the future.
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.
Rates vary by market. Each market has a standard.
It doesn't matter what you think is high. Both parties sign and agree to abide by the lease agreement.
Like I said be happy with your own personal management decisions. There is no reason for you to take my opinions personally. It's not worth your time or aggravation.
I have a policy based on the fact that I have a large number of tenants
and, although I may forgive the first late, I can not and do not treat each tenant on a individual bases. There are not be enough hours in the day.
Some day if you are lucky you may learn this but in the mean time you should absolutely manage your tenants and your time as you see fit.
In my state we are limited to a late fee of 4% of the rent and only when it's 15 days late. Mortgage companies also only charge after it's 15 days late. Most states have similar laws. Be careful not to charge too much too soon or you will find yourself with a stupid law like in my state. You know what they say, "pigs get fed, hogs get slaughtered".
Now that you've charged the fee twice and he's refused to pay, you're in a situation where you have to follow through. I would have waived it, but it's too late for you unless you want to make it his Christmas "gift". That might be a good out for you. Good tenants are like gold, value them.