Prop management company full rent collection

6 Replies

Hi, 

I have a property managent company for a property I recently purchased in MA. 1 month in, one tenant is $100 short on rent. My initial thought was to ask the property manager to charge the late fee as well as take the tenant to court. The property manager said to not take the tenant to court since filing the paperwork will be expensive and to not charge a late fee because they are never able to enforce it in court. Has anyone heard of this happening in MA or am I being given bad advice?

Thanks, 

Rick

So is the PM suggesting that you just let it slide? Guess what they will be short another $100 next month or worst if you let this happen. I live in KY but can’t see this being right anywhere. I would take immediate action with the tenant and fire the PM as well.

Hello @Richard H.   In my experience, companies have different policies as to when they file eviction.  It would be insane to file eviction if tenant is .50 short.  A large PM company here has a threshold of $200 before filing.  The tenants are informed of this, so if they are short the second month another $100, eviction will begin immediately.  However, it is your property, and you  should be able to request they file upon request.  It really depends on how strict you want to be.  Maybe a percentage would be a better policy.  If tenant is short on $500 rent, that would be 20% of the rent.  However, it is only 5% if rent is $2000.  Our policy is to file if a tenant gets behind at least 10% of the rent.  This is rent only, and does not include late fees, repair invoices, etc.  Of course, if an owner wants us to file on less, then we certainly will.  

@kevin - I hear you and I know this is the BP mindframe and exactly how I initially thought. Then I called an attorney to discuss my plans. He told me that MA is one of the most tenant friendly states and that evictions can run into the 5 figures if a tenant wants to fight it. Perhaps that is where the property managent company is coming from, as they are a well know company in the area. The property manager recommended only going ahead with an eviction if the tenant becomes a full month's $ behind in rent.... Crazy I know. 

It depends on what the monthly rent rate is. I usually send tenants a written notice if they have an outstanding balance but I won't start eviction over a small amount. I still charge late fees on anything over $50.

You should read your PM agreement and the lease agreement to see how the PM operates. Ask them if they have written procedures for dealing with late tenants, evictions, etc. That may help you better understand what they're doing. 

Of course, the most likely scenario is that they don't have a written procedure and instead they play it by ear and tend to take the easy way out.

@Richard H. seems to me your PM company is making the right call. However, the tenant does need to be informed of the balance and all parties should work to correct it. Your relationship with this tenant is not off to a good start. I would go with what @Rita Ciaccio suggested and figure out where your cut off will be. I suggest a percentage as well because a $100 shortage for you in MA is likely a lot different than the same $100 shortage here in KY. You are running a business and it needs to be worth your time to evict (don't forget about turn over costs as well). @Kevin Allen is probably right in that you want to keep an eye on this tenant though. They may be short again next month and that is a behavior you would want to try to correct. 

If your PM has not issued a pay or quit notice the day after rent is due when payment is not made in full he is not doing his job and is placing you in financial jeopardy. The notice is not a eviction it simply starts the clock ticking in the event that do not pay. I would not keep a PM that does not issue the pay or quit notice on the 2nd of the month in ever case.

You are the one at risk in regards to wasting time and potentially rental income when the notice is not issued. Find a new PM that is willing to do his job to protect you as a landlord.

As for late fees if it is in your lease you charge it otherwise that clause becomes null and void should your tenant challenge it in th efuture. Lease articles not inforced consistently can not be inforced. Remove any article  from your lease if you do not intend to inforce otherwise your entire lease may be in question.