Adding late fees to existing tenants - what is legal?

8 Replies

I would love for someone to direct me to a resource (or answer my question directly here) to find out if I am within my legal parameters to add late fees if tenants do not pay rent on time. 

Quick background: My mom and I inherited several single family homes this year when my dad died quickly from brain cancer. He was a terrible landlord in terms of not having correct paperwork, procedures, etc. We have one house where the tenants act surprised when I ask them to pay rent - like wow - didn't know I needed do that this month.

I know going forward when we place new tenants, we will have all the paperwork sorted out (I am meticulous and organized) and have them pay everything online (complete with late fees, evictions, etc.), yet I didn't know if I could legally have these inherited tenants start paying their rent online, require rent be paid on the first, and include late fees, etc. since we did not inherent them through a purchase. If my dad had a lease for them, it's just a few scribbles on a piece of paper with little to no official documentation. We had to physically go to the house several months back to get their phone numbers.

The property is located in central Oklahoma in a super small town (about 1k). They have lived in the property for about two years. 

Thanks in advance! 
  

@Kelsey P. It sounds like you don't have an existing lease for these new tenants?  If they have been living there for a couple years that initial "few scribbles on a piece of paper" lease is probably over and they are on a month to month tenancy with you.  By law you must follow what is on their lease whether that is a lease term or they are month to month.  If the lease states nothing about late fees then you probably wont be able to charge them late fees, it wont hold up in court. Typically the judges here in Oklahoma will go by what is on the lease. 

Now my suggestion to you is get them to sign a new lease with you, if they are on a month to month, with all the correct documentation. This will probably go one of two ways, they will either accept the new terms and you will have to "train" them towards your style of management, i.e. paying rent on time, submitting maintenance request, paying late fees if they are late, etc... The other way it will go, and in my opinion it sounds like this will be the route they go, they will not accept the way you manage because they were so used to getting away with not paying rent and I'm sure countless of other things and you will have to give them 30 days notice or start the eviction process is they wont leave. 

You are required to honor any existing agreements, however, if the existing agreements are all oral then you have oral month to month leases. Month to month lease can be modified with 30 (or sometimes 60) days notice. This will depend on your local laws.

My advice would be to get written leases from a reputable soure and give the tenants notice that they must sign the new lease or vacate (with proper notice). Do not give them year leases, only month to month. This is because you did not screen these tenants, so you have no idea if you want them to stay the whole year.

Get everyone into the habit of paying on the first, paying electronically, and stress the fact that late fees will be enforced going forward.

If, by chance, someone has a long term lease, you cannot change those terms.

Lastly, your local landlord/tenant laws will dictate much of what you can/cannot do. Look for a copy of them on your local states website and study the hell out of them. They are your first line of defense.

@Kelsey P. , According to https://oklaw.org/resource/landlord-tenant-rights-and-duties, you are required to give 30 days notice. The notice you give must include an entire rental period, in this case one month so it would turn into more of a 45 day notice if you do it today, as you must include the entire December rental period.

Before you ask them to sign a new lease, get a good lease. BiggerPockets has a landlord package available for $99 per state, but these forms are also a perk of the Annual Pro Membership. (Use code Mindy20 to get a 20% discount on the Pro membership if you're considering upgrading.) 

This landlord package was written by attorneys licensed in your state, so they are up to date on all current state landlord tenant laws.

Provide the notice along with the new lease to be signed. Give them a specific day/time to return it and provide your phone number and email address for them to ask any questions about the new lease. Remind them that if they do not choose to sign this new lease, their tenancy ends on 12/31/19 and they will need to coordinate with you for key return and final walkthrough.

@Kelsey P.

You're allowed to enforce whatever rules you have in your lease. If it doesnt say it in your lease then you'll have a difficult time winning a court case if its brought that far. If they arent on leases now, then get them on one. If they are on leases, then you have to abide by that lease until it expires.

@Kelsey P.

Join a landlord’s association. The one I belong to has all the forms necessary for the rental business. They are constantly updated to reflect all the changes in the law.

The association is also the best resource to learn and keep on top of your business.