Should we work out a payment plan with our tenant?

5 Replies

We had a misunderstanding with a tenant (involving a transfer of a lease) and they failed to pay August's rent. (No one and everyone was at fault as it was legitimately a confusing situation.) He has paid all the other month's rent (sometimes a few days late but never more than this.) We all realized the error October 15th and let the tenant know that instead of insisting on the unpaid rent immediately or charging a late fee, we would give them until the end of the month (October 31st) to pay the back rent plus the rent for November. On November 2, we received 1 months rent (so I guess we put that towards Aug outstanding rent and technically he is now just 4 days late paying November 's rent and everything else has been paid) His lease states after the 5th of the month there will be a late fee and after 10 days he will receive a 3 day notice to pay rent. The tenant just sent us this message "as far as the back rent for August I'm not sure how long its gonna take for my case manager to help me but I can also start making an effort to pay it back as well before we have to go to court or anything..... I don't want this to be a long on going problem I just want the issue over with so we can all move forward thank you."  I am not sure what he is talking about re: case manager but would you set up a payment plan for this tenant and just increase the rent for the next X number of months or head toward eviction. The other thing I was thinking of was agreeing to set up a payment plan but requiring him to sign a new/different lease (he came with a lease that is far more lax than the one we usually use.)

Thanks for any insight!

He probably has applied for emergency assistance which hes entitled to apply for. Sounds like you bought this property with this tenant.. 

Basically any rent he had paid to prior owner should have been pro rated and given to you at closing. 

Otherwise Work with the guy, I'm not one for late fee's if someone is on board and trying to catch up.. like you said... It's both of your issues..

Not sure you had complete story,,, about how this all happened but if it's a property you bought and transfer of ownership and funds on rent / deposit weren't clear,, then your basically more to blame then the tenant..

I would not do the lease again or push for a drawn out payment plan.  Try to get it resolved in weeks rather than months.  Ask him for updates on what he is doing and when he plans to have all or part of the funds to pay.  You can contact the third party to get a better read on the situation and timeline.  Agree that there is no sense slapping on high late fees, but charging some may help motivate him to resolve it sooner. If he stays in communication that is good, just set a date in your mind after which you will force the issue and stick to that.

The challenge you may have is that if you have a lease agreement that has due dates, late fees etc and you do not enforce those per the signed agreement between landlord and the tenant. First you are setting a possible legal precedent that you will allow the voiding of the signed contract by you or the other party (not an attorney but I have been advised this, check you area and consult). Also if you have other tenants and they want the same treatment and you do not allow it can be deemed discrimination and could be a fair housing violation.

My thoughts are, as tough as it seems stuck to the agreement and your policies. The more you deviate the more problems you create for yourself down the road (yes I have done these and have paid the price)

I kind of agree with @Steve Rozenberg that this could create additional problems but you can mitigate that by creating a written agreement with the tenant that spells out the payment plan and that this is a one-time waiver.

Here's my problem. No matter how "confusing" things are, the rent is certainly the largest payment the tenant makes every month. Do you honestly believe they failed to pay rent and didn't notice the extra money in their account? That's a sign that they are either financially irresponsible or they are deliberately trying to get away with something. Both are indications of a bad tenant that I would not want to keep.

I would notify them - in writing - that the last payment was applied towards the August rent. i would waive the late fees and give them the remainder of November to catch up. Starting December 1st, I would start enforcing the lease again.

I am in agreement with @Nathan G. August rent was due and he did not pay it meaning he still had the money. Give him till the end of Nov. to catch up and inforce the December payment on time. 

Also if he has a habit of paying late start the pay or quite process next time and either train him to diligently pay on time or get rid of him.

Rent is due in full on the 1st. If he is not paying on time he is not a good tenant worth keeping.

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