Rent Grace Period and Late Rent Fee

9 Replies

Hi there. I just wanted to get some feedback before I email the tenant about the rent being late. It is the first time that my tenant is late for her rent. Rent is due on the first and I have a 5-day grace period so the 6th day is when rent should be paid and if rent is received after the 6th day, that is why I charge the late fee. She made a check deposit on July 5 and I just found out today that the check bounced.  Per our lease agreement, a late fee is charged for each additional day that the rent remains unpaid. So, I will start counting on July 7 for unpaid rent because that is after the grace period. Any feedback would be appreciated. Thanks.

@Ruel, don't let your tenant take advantage of you. You should get in contact with them and always follow the terms of your lease unless you think they are illegal. I am not familiar with CA tenant laws, but I understand they can be very tenant friendly. This means that unless you start the process immediately you will be losing money months from now and second guessing why you didn't follow the lease that you worked so hard to put in place. My heart sinks for you. This is the unfortunate part of the business, but you owe it to yourself, your hard work, your family, and other tenants that are looking for a good landlord like you to follow the terms of you lease. 

These folks may do this each month unless you enforce the lease now.

Also, always following the terms allows you to prove a track record to lenders as well as prove a track record in the event that a tenant sues claiming that you treated them differently than any other tenant. Leases are written to protect both the landlord and the tenants (as long as they pay their rents).

I think you're shooting yourself in the foot by being wishy-washy about the rent due date.

Rent is due on the 1st.

Grace period of five days.

Late fee charged on the 6th.

You say, "The 6th day is when rent should be paid."

No, rent should be paid "on or before the first day of each month" and the 6th day is the day the late fee is charged. Rent is due on the first. Always. If you tell your tenants anything different, you are training them to pay late.

You require rent on the first. You graciously excuse the late fee for five days. That grace period is for the late fee, not for rent.

Consider changing your policy so that you only accept checks if received on or before the 1st. Any payments after the first must be in cash, money order, or cashiers check so you know the funds are good. It can sometimes take a week to find out a check has bounced so that would put you in the middle of the month. It's best practice to require "certified" funds any time the payment is late, which is any day after the first.

I value communication and view being a landlord as a relationship based business. That doesn't mean I'm friends with my tenants, but it does mean I think its important to treat them like people.

So, the first thing I would do is talk to them and find out what is going on. Did they have any kind of negative life event? Maybe they lost their job. If so, I might direct them to charities that offer rental assistance.

If this was just a mistake and they get me my payment right away, I would likely only charge them a fee for the bounced check. I would of course tell them that I'm waiving the late fee so they know they are getting some consideration from me.

I generally only want to charge fees to "make me whole", to make up for whatever the tenant caused. A few days lateness isn't really costing me anything appreciable when it happens rarely. Generally, I would only charge late fees to habitual offenders, especially people who don't communicate or who give me endless changing excuses or to people who are going to be evicted.

If you treat people like people, they will be more likely to be communicative. I can't quantify the value of that on a spreadsheet, but it does have value.

I'd say the fact that they paid rent late, and the check bounced (so they didn't really pay at all, did they?), means they lost any grace period or understanding from me. Late fees, start eviction process. If they have personal problems, communicating that prior to the 1st would have been the only way for me to listen. 

Thank you all for the feedback. This community is indeed a good resource.  It turns out that it was a timing issue with the bank and the holiday last week was a factor. Tenant deposited the replacement check today and I just charged them the bounced check fee since this was the very first time rent was late. I told them that next time rent is late, late charges will apply. This tenant is great and I like maintaining a good rapport. Again, thanks all.

I’ve had a similar issue with one of my tenants paying on the 5th and I had to explain to them that rent is due on the 1st of every month. However, in the event of an emergency you have until the 5th before it’s late as a mere courtesy. On the 5th day at 5:00pm a $50 late fee is assessed and there’s a $50 late fee for all returned checks. Things have been pretty smooth sailing thus far.

Keep in mind, as others have pointed out, rent is due on the 1st and late on the 2nd. Regardless of when your late "fee" begins every tenant that has not paid on the 1st should be receiving a pay or quit notice on the 2nd. This is very important every time for you as a landlord to show consistency and to officially track tenant late payments. Calling the tenant and asking what is the problem, reminding them that rent is due, will hold no water in court. You must have a paper trail every time simply because you never know when a late payment is going to end in a eviction. 

Landlords are not social workers, we operate a business and must show proof of all our business dealings with tenants in every situation. Always send the pay or quit notice on the 2nd then follow it up with a phone call to explain to your tenant what they are to do.

Every eviction always starts out with a landlord not taking care of business.  

@Jacob Villalobos , @Michael Martin , @Thomas S. - I have been so lenient with my tenant then.  My tenant has been paying every 5th of the month even when rent is due on the 1st.  I will need to remind her that if rent is not received/posted to my bank account on the 2nd, late charges will apply and I will post on her door the pay or quit notice. Yes, landlords are not social workers. Thanks for all the feedback!