Tenant paying late every month, accept late payment or evict?

32 Replies

Hi all.  First year as a landlord here and I  need advice on this. 

 I have a bad tenant who has been paying super late (30 days, 45 days, 20 days late) every month for the last 7 months (except March).  The first couple times I waived late fee.  Then I started charging late fee and she paid late fee for those other times.  I am getting really tired of sitting and waiting and stressing out whether she is going to pay me or not, or how, or when.  It really drained me out.  I don't want her late fee, I just want to get my payment on time.  I have a full time job which stressed me out enough already.

So, in May she did it again, not paying.  On  6/3 I delivered notice to vacate.  Then on 6/7 went to court to file for eviction.  Court date is set for next Monday 6/24 because she was still not paying for May, nor June yet.   On 6/14 she paid for May rent, along with all late fee.  I told her I will not except late payment for June and will still go to court for eviction because she has been doing this every month.  Today she texted me asking if I accept late payment for June or not.  What should I do?  Accept her late payment for June, along with all late fee, and court fee (for filing eviction), and withdraw eviction, and suffer again with her being late again and again?  Or tell her I don't accept late payment anymore (and is it even legal to do so?) and go to court on Monday?  I just don't want to deal with her again, at the same time I am afraid if I don't accept late payment and this time she has money to pay and willing to pay late fee the judge might decide to let her stay and I just waste my time going to court.  What should I do with this tenant? I am in Texas and the property is in Texas.

Thanks.

You need to ask an RE attorney or the court clerk what your options are. If you can’t evict them maybe a weekly auto draft payment would help her budget better. 

I had a dude that paid late for years, always added the $100 late fee. Which was basically a 25% rent increase. He finally flew the coup stiffing me for 2 months rent. So we made an extra 2400 in late fees but lost 2 months rent.  I guess it depends on how you like aggravation. We have several that we put up with because we like late fees and the people. Better to never get in this position. That is why its best not to manage your own property. 

Tell her no and do not renew her lease.  With the late fee, it has to be enough that it discourages them from paying late.  Arlan's $100 would do it and if your tenant does the same as Arlan's, you still come out ahead with late fees.  Perhaps you can add the late fee applies for 1-7 days late, after that you will start the eviction process.

Personally I would take it this time, but tell her that your grace is worn out and in the future you will not accept late rent and you ill evict, no more chances.

I guess it would depend on conversations I had already had. In Ohio, you might get screwed in court because you had a history of accepting late payments. Here you need to send written notice saying regardless  of any past acceptance of late fees you will no longer accept late rent. 

An eviction is a serious stain on a tenant's record. I would probably take the rent money and fees and give her the no more late rent notice. The other thing you can do to protect yourself when she leaves is to collect the last month's rent in advance.  I might allow a payment plan to pay it off. Also, don't let anyone get a whole month behind before you post a notice to leave (or whatever your state requires). What state are you in?

@Jill F. Thanks Jill.  I am in Texas. 

 Is it legal to collect last month in advance now?  I heard someone said they do that but it's in their lease.  I didn't know we can do that so of course it's not in the lease.  My agent last night proposed something similar to what you said, to make arrangement with her that we want to collect 1 more month of deposit (refundable)  , breaking it down to multiple payments starting July.  She has 6 months left on the term, so extra $300/month for the next 5 months + $200 last month, on top of the monthly rent (monthly rent is $1700).  But I like your idea better now so will propose it as last month rent instead of extra deposit as my agent said. If she agree then I will ask my agent to add an amendment so we can sign.  I think that should cover it?  I will also send her notice of not accepting late payment anymore.  Is there a formal form for this or I can just write it?

I do not live in Texas but if the tenant shows up at the hearing with cash in hand to pay the rent due in full, it would take a stone hard judge to issue a warrant of eviction.  You will be wasting your time if she has the money is my best guess.  

@Courtney Duong

Here is the challenge you created for yourself

You signed a contract, this is a bi-lateral agreement. Where they have to perform and if they don't.. you have to perform. Meaning if the lease states they pay by the 4th.. if they don't then you MUST abide by the contract. Meaning charging late fees, if you don't then possibly you are considered to have voided the lease agreement first. And if you do that multiple times you could have set a precedent moving forward.

If you put it in the contract you better stick to it. Don't put it in there and change the rules. You don't have the option just as they don't.

I would consult with an attorney and start running your business more off policies and procedures and less on gut feeling and emotions or you will end up on we form of lawsuit or litigation

Just my opinion, but I have seen so many people get in trouble over not following the lease they signed

Originally posted by @Jill F. :

...The other thing you can do to protect yourself when she leaves is to collect the last month's rent in advance.  I might allow a payment plan to pay it off. ...

 Can I ask what you mean by collecting the last month's rent in advance?  All rent is paid on the 1st of the month, so May's rent is paid May 1.

Originally posted by @Courtney Duong :

@Jill F. Thanks Jill.  I am in Texas. 

 Is it legal to collect last month in advance now?  I heard someone said they do that but it's in their lease.  I didn't know we can do that so of course it's not in the lease.  My agent last night proposed something similar to what you said, to make arrangement with her that we want to collect 1 more month of deposit (refundable)  , breaking it down to multiple payments starting July.  She has 6 months left on the term, so extra $300/month for the next 5 months + $200 last month, on top of the monthly rent (monthly rent is $1700).  But I like your idea better now so will propose it as last month rent instead of extra deposit as my agent said. If she agree then I will ask my agent to add an amendment so we can sign.  I think that should cover it?  I will also send her notice of not accepting late payment anymore.  Is there a formal form for this or I can just write it?

Really, extra deposit is better since it can be used towards last month's rent or other damage. We don't because in Ohio we have to pay interest on deposits that exceed one month. Since your tenant is in breach of her current lease you should be able to require her to sign a new lease as a condition of accepting payment. I would do only month to month with this tenant. In Ohio, there is not a particular no more late rent form but I don't know the rules in Texas or if such action is required there. The rules from state to state can vary pretty dramatically.

@Theresa Harris when a tenant moves in we get first month and security. When we agree to a riskier tenant sometimes we also require that tenant to pay rent up front for the last month he will live in the apartment so that when he gives notice you know he's not going to do the old, "hey, just use my security deposit as last months rent." This is really valuable for tenants that don't have a credit score to protect.

@Courtney Duong

Well, her staying is clearly not an option. Have you attempted to come to an agreement to terminate her lease and she moves out without penalty/eviction? How is she always late, yet comes up with full rent and late fees later? If you cannot come to a written agreement where she moves out by June 30, then continue with eviction.

Originally posted by @Arlan Potter :

I had a dude that paid late for years, always added the $100 late fee. Which was basically a 25% rent increase. He finally flew the coup stiffing me for 2 months rent. So we made an extra 2400 in late fees but lost 2 months rent.  I guess it depends on how you like aggravation. We have several that we put up with because we like late fees and the people. Better to never get in this position. That is why its best not to manage your own property. 

 wow that late fee Is NOT legal in most states..  awesome though.. most people out there cannot do simple math.. LOL

Originally posted by @Anthony Wick :

@Courtney Duong

Well, her staying is clearly not an option. Have you attempted to come to an agreement to terminate her lease and she moves out without penalty/eviction? How is she always late, yet comes up with full rent and late fees later? If you cannot come to a written agreement where she moves out by June 30, then continue with eviction.

 in our jurisdiction by accepting partial rent like that would mean we would start all over with the eviction.

Originally posted by @Anthony Wick :

@Courtney Duong

Well, her staying is clearly not an option. Have you attempted to come to an agreement to terminate her lease and she moves out without penalty/eviction? How is she always late, yet comes up with full rent and late fees later? If you cannot come to a written agreement where she moves out by June 30, then continue with eviction.

Ah, the beauty of using only M2M lease agreements.  You can deal with this stuff immediately, and the important thing is, your tenants know it.

Best, Terrell

@Anthony Wick

I thought of what you said but then don't think she will move out early.  She has been telling me that she likes the area and the schools for her kids and she would like to stay.

She works 2 jobs, both with good pay.  Believe it or not, her salary is twice as mine and I am a programmer.  So her income is 3.5 x rent.  Credit score around 620.  No eviction before.  So I don't understand how/why she is always late either.  Unless all information she submitted during application was fake.  She has 5 kids though, and single mom which is why at the beginning I had sympathy for her and waived the late fees the first 2 months.  But then it became every month late.

This morning we talked and she said she will pay for June tomorrow.  I said If she pays tomorrow, along with all late fee, and cost of filing for eviction then I will withdraw the eviction on Monday morning.  But if I don't see anything tomorrow then I will go to court on Monday as planned.  Court time is set for 1:00 pm Monday.  

Also, I want to get the last month rent in advance but spread it out in the next 3 months, starting July.  She agreed to that and asked to break it down to 2 days, 5th and 20th.  I agreed to that.  So let's see if she will pay tomorrow or not.  If she pay then I will ask my agent to create an amendment so we have everything in writing.  Oh, I also said I won't accept late payment anymore starting in July.  So if she won't pay on the 5th, or 20th then eviction again.  I should have thought more of the offering her to move out by 6/30  in exchange for withdrawal of eviction.  Just that I didn't think she will want to move out early or have enough time to do so.  You have no idea how this lady is in terms of keeping things moving and be on time.  Last night she said she would call me around 7:30, well she never did until this morning.  This happens so many times by now.  She has no respect for other people's time whatsoever.  

Originally posted by @Jill F. :

@Theresa Harris when a tenant moves in we get first month and security. When we agree to a riskier tenant sometimes we also require that tenant to pay rent up front for the last month he will live in the apartment so that when he gives notice you know he's not going to do the old, "hey, just use my security deposit as last months rent." This is really valuable for tenants that don't have a credit score to protect.

 Thanks

@Terrell Garren

Well sure, that’s one example where a MTM lease is great. But so many people on BP ignore regions and how bad MTM is when it’s January, zero degrees, snow, and you can’t rent a place for two months.

@Courtney Duong

Hi Courtney! I know a lot of people already weighed in but when I read your initial post it made me think you already have your answer. If she causes you stress like this, it’s not worth having her as a tenant. Try to get her out of your place as soon as you can. Whether that’s Monday or the following month when she avoids paying rent. Refuse to renew her lease when it comes time and fingers crossed for the next tenant to be better. I try to cut out anything that gives me additional stress or anxiety. I’d rather pay a month without a tenant than stay up late thinking about a jerk that isn’t paying for something. Just my opinion though :)

Best of luck! I hope whatever way you choose makes things better!

@Tanya Rooney my thinking is exactly the same as you said.  I told her I want June payment tomorrow including late fee, if not I will go to court on Monday.  Only if she pays tomorrow then I will withdraw the eviction on Monday morning (because I am afraid if she has money to pay now and shows up in court with cash on Monday then the judge won't make her leave and I will waste my time going to court).  Then on top of that I want the last month rent in advance breaking/spreading/adding into rents of July, August, September.  She can pay 2 times each month (because the payment is now stacked and higher than normal) on the 3th and 20th, but has to be on time because I don't accept late payment anymore.  So if I don't get payment on the 3rd or 20th then eviction will come again. My agent will only draft the amendment tomorrow after I get the June payment.  if she won't pay on time from now on then eviction will come.  If she pays on time then I will wait until end of contract which is 4 more months and will NOT renew.  I don't mind the house sitting vacant for a few months, I rather get less money in the end and not having to deal with the stress of having someone like her. I also try to avoid any additional stress or anxiety.  Just not worth it at all. I'll be very patient and screen way more next time.

On a good note, I have a second rental where I have the perfect tenant everyone is looking for.  She has been paying not even on time, but always early, like 3-4 days early each month!  She takes really good care of the house and there is only her and her daughter so way less normal wear and tear.  Sometimes I think because God is so good and gives me a perfect tenant like her then I should not complain about the bad tenant who always pays late : )

Thanks for weighing in though, really appreciate it.  Have a good night.

I'll be honest: I didn't even read past your third sentence. You need to hire an attorney to evict this tenant at the earliest legal opportunity. At the same time, you need to find a professional property manager that can save you from yourself or find a good REALTOR that can sell the property so you can invest in mutual funds.

I'm not insulting you; I'm just speaking honestly. You don't know what you're doing. It's causing you stress. You're losing money and you run the risk of losing much, much more if you keep it up. Real estate investing isn't for everyone.

@Terrell Garren @Anthony Wick

I self manage in upstate NY, and the risk of someone leaving in January pales in comparison to all the benefits a M2M lease affords me.

Look, if a tenant wants to leave in January, they are going to leave whether they have a term lease, M2M, or a note from the pope.

To the OP:

If you have to keep trying to evict for non-payment, the tenant can constantly jerk you around by showing up at court and paying at the last minute, then repeating that insanity with you the next month with the another non-payment of rent.  With M2M leases, I NEVER evict for non-payment.  I just terminate the lease, and then evict for holdover (if they don't leave).  Getting holdover evictions are much easier where I am, and there is no "last minute" cure drama they can put me through after all of my sunk costs and time.  I also collect first, last, and security UP FRONT, so that minimizes my loss if I evict for holdover.  It goes without saying that your lease should allow for all of your collection/eviction costs are the responsibility of the tenant.