How do you deal with a Tenant Who Pays Rent Late?

33 Replies

What do you do if you were me? Please advice?

Even though I trained them that due date is due date, My tenant moved in May 2109,it’s a year lease contract with 1st day of the month due, in June 4th, I got the first email from my tenant with explanation of  “unexpected expense occurrence during/after the move in” 

In their email they informed me that they  will be paying late with the late fee for the month of June and they paid after June 15 with the late fee, for July rent they paid a few days later of the gross period with late fee, August on time for June I was tried to respect their early communication and reluctant to file eviction on their next month of their move in.

Now I am getting another email stating as follow “

My vehicle has been totaled (I am fine) and I of course am in need of another one.

….I am completely aware that it is my responsibility to remain current in bills, however I would like to take a portion of Octobers rent to replace my vehicle ….I will be about 2 weeks late and I am also aware that this will result in a late fee “

I am careful what to respond; I want to have a good relation with my tenant and respect their early communication but don’t like the bad trend either.

I start the eviction process the day after the grace period.My lease says rent is due 1st they the 3rd by 5 pm. When the 4th arrives I start eviction. It states this is an automatic reaction to rent being paid late

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Seems like they are more trouble than they are worth.  I get life happens but they clearly are living beyond their means.  with that said it really depends on your area is it easy to find a new tenant so that the day they are out you have someone else coming in? or will it take time to find a new tenant.  

Personally at this point i would start the eviction process, the late fee is not some convenient way for her to be able to afford her other bills.  With my tenants i am pretty lax but i never get rent late more than 3-4 days

It is up to you if the late fee they are paying is worth it/sufficient.

If you are not depending on timely payments (for example, if their rent is not paying your mortgage on the property), I say take the additional late fee income (I hope your late fee is substantial).

When their lease comes up for renewal you might decide not to renew, you might leave rents the same or increase to whatever the market commands, but if you do renew I'd probably increase the late fee or restate your late rent policy to whatever you are more comfortable with.

Keep in mind that charging a late fee does not prevent you from filing eviction. If you charge a late fee on the 5th and they tell you "I'll pay on the 20th" - even if they've always kept their word - you can still post a cure notice and follow the rest of the steps to eviction in your jurisdiction. I'd have this conversation with them and explain that since they moved in in May, they have had various situations come up that clearly show they aren't able to adhere to the stipulated terms of the lease. The late fee is not a "pay your rent whenever" option, unless you just care that you get all rent paid within the month, in which case you treat it as such.

I'll admit to being a little more lax with timeliness of rent payments than most people on BP.  But my rentals are mostly C-class, plus I'm in a soft market.  However, what I definitely do for some protection is post the appropriate Pay or Quit notice so if they do not pay on the day promised, I can immediately file for an eviction the next day.

With that said, I've also non-renewed leases when every/most months I was having to post notices.

I also got creative and worked out an agreement with a couple tenants where they pay a partial rent every time they get paid or every two weeks.  It's not my first choice and it has to be the right tenant that I think it will work for.  I also ALWAYS increase the rent, if the tenant wants to go for that option because it is more risk and hassle.  Plus there is still a late fee if they miss any of the due dates.  But I was surprised at how much better and more consistent the rent paying got.

I have a time line that triggers actions explicitly stated in my leases.

Rent due on the 1st.

Rent not credited to my account or check not received by 5pm EST on the 4th will trigger a late fee.  I don't care if the mail man lost the mail or it's the weekend or holiday or the bank didn't process the deposit on time or whatever, by the 4th day 5pm a late fee is charged.

By 5pm of the 9th day is rent is not paid in full, and paid in full means settlement of all previously invoiced charges, fines, late fees, damages PLUS the full rent, I file eviction.

They would ask for a grace period for the late fee.  I do have a grace period, that's why rent is due on the 1st but late fee doesn't kick in till COB of the 4th, the fact that they decided to think of rent being due on the 4th with no grace period, is not my problem.

They would also ask for a grace period for eviction.  I have that too.  That's why there is ten days of time between due day and eviction filing.

On occasion, I have made exceptions for longer term good tenants, who communicated that they can't make rent BEFORE they are late, AND it's no question they have experienced a sudden unforseen event beyond their control.  That's rare though.  It sounds like your tenant is habitually late, always having an excuse, and when something hit them unexpectedly, they have already lost their credibility.

Sam is spot on. You set those expectations early on as far as where you draw the line when it comes to late rent payments. Communication is always key and if you're not communicating early and often about foreseeable problems with paying the rent on time then there's really no excuse. And let's face it; there are many things that are made clear from day 1 - ie. when the rent is due, what those late fees are, when they kick in, etc. A lot of systems out there help to automate the late fee creation process to make things easier on the landlord and the tenant. I hope this helps!  

I have tenants that paid rent late every month. I charged them a late fee. they were on a month to month lease, so I decided to raise the rent and made them pay every 2 weeks. It is a lot easier on them. And they end up paying $1600 more a year. I work with them within reason, i did years ago have to take them to court, however we worked it out for them to stay and I got my money. It’s a lot cheaper to keep them, work it out financially then to evict, fix up, find new tenants, etc. obviously, all within reason.

@Alex Get I view this as an opportunity. Seems like they can afford the rent plus the late fee. I’d given them the choice. Pay rent on time with a escalation late fee. Each time it goes up. Or pay a higher rent and have it due anytime before day the 20th of the month. Obviously this rent would be much higher. We’ve done this before and it worked great. I charged him $100 extra for the flexible pay schedule.

@Alex Get

You need to get rid of that tenant as fast as you can. Evict them immediately. The key to getting tenants to pay on time is that tell them it has to be paid on the 1st day of every month. Did you do a background check on this tenant? Always calls the last landlord and if possible, see where they are living and how they are living before you accept them as your tenants. I’m sorry that you’re in this mess but right now you need to get rid of them now!

@Lorie Thomas, The  late fee charge is 5%,which is about $92,but I want to go with the lease agreement and no one like  the hassle neither.

@Agelo Mart, yes I did the screening.but some times you go with the best out of the beast.

@Brenda R Sullivan , soon or later, The road is towards to your suggestion.

Thank you all,your suggestions mean to me a lot

@Angelo Mart ,and all others who shared me your suggestions, I want to give you another tip,based on my screening I required them to pay 2 months security deposit and they did pay. which is if i need to file eviction I can do it at any time and  i am safe interns of money.

Prior to the due date they're letting you know by email which to me is less annoying than a call or text. Could be a lot worse. 

They are paying the late fee.  Mine have an additional per day cost beginning on the  8th or 10th. $5 or $8 per day depending on the rent level. 

Hopefully they submit rent in a way you don't have to go over there or something. That would raise the hassle factor significantly and change my answer.

I would keep them since I don't have much debt. Whether it's in by the 5th or not doesn't determine if the mortgage gets paid. This changes if other drama or complaints are involved.  Turnover sucks. YMMV. 

And if your security deposit is the same amount or multiple as rent (x2 in your case) it will be seen by them as all or part of their last month's rent.  Don't be shocked when you get nada their last month.  Always make deposits a different amount than rent.

@Alex Get  Working with tenants who struggle has value for a landlord for two reasons:

1. Tenants who live paycheck to paycheck will stay for a long time at your property, because they don't have money to move. Long term tenants reduce vacancy which is one of a landlords largest expenses.

2. Late fees are an extra revenue stream. My late fee is $30 on the 5th and then $5 per day after that. It is important to have the per day charge instead of just a flat late fee. That way if they pay on the 15th, it costs them more than paying on the 6th. It is costing them money every day, which is motivation to pay you.

I generally don't let tenants pay rent after the 15th of the month. The reason is you don't want the tenant to get too far behind. It becomes hard to catch up and you lose opportunity to rerent to a paying tenant.  

If you are going to work with a tenant, you need to hold them accountable to their commitments. You also need to understand the source of the money problem to know it is temporary and recoverable. You can do this as a small landlord, but if you scale, then the hard policies become necessary.

When you screened this tenant, what was their credit score? Did they have good payment history on their credit report? This makes a difference in how much you can trust them.

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