I have a consistent situation and would like I some best advices. My tenant pays late (7 days -10 days late) but also pays the late fees. The issue is in few instances, the tenant rent plus late fees but keeps a small amount of $100-150 pending every time and pays off in next month cycle.
My late fee clause in lease states
- first day $75
- every other day $25/day
So if the tenant has $100-150, pending, do I still keep charging $25/day late fees as technically it’s still late as full payment is not received? If I go this route, tenant will have late fees way over the actual amount owned. So for tenants pending amount. If $150, the person may end up with $300-400 in late charge?
How to deal with this? I want to trend carefully as not to loose the tenant as except this, so far the person has been good tenant. I have a renewal in few months so do not want to anger the tenant.
Any suggestions on how to best deal with partial payments?
@Mak K. I am sorry for grammatical errors on my post. Hate the spellchecks and auto correct on the phones.
I have a few people who are late. One lady is late every month by like two or three weeks. I only charge a $50 late fee. There might be a limit on how much your late fees can add up each month. Check with your state. I guess I’m too lenient, but my tenants always end up paying me. I just don’t count on rent being on time with a couple of them. Lol. But those $50 late fees start to add up. Maybe an extra $1,000/year or so for me? Not much, but I hope to keep all my tenants forever so I just deal with it and it don’t let it bother me.
What is so special about this tenant that you want to renew them even with this headache?
If I were you, I would bite the turnover and get new tenants then train the new tenants to pay on time. During screening, I tell all my potential tenants that rent is due on the first, late on the second, and the eviction process starts on the third. The ones that have a problem with this never call back. With this method, I've never had a late payment, so I can't speak from experience on dealing with late payments.
I've heard that some landlords don't accept the payment if it's not in full and continue to accrue daily charges. i.e. if the tenant pays rent and only half of last month's late fees, return it and make them resubmit payment in full, with each day adding a late charge to next month's bill.
@Mak K. I would charge your tenant the late fees exactly as you laid it out - $75 on the first day and $25 every other day. States have limits on how much you can charge for a late fee every month, so I would double check this before charging them the above fees.
If you have other tenants with the same late fee structure, but only modify this tenant's late fees just to keep them, it is definitely unfair to the others.
Late fees continue to accrue until ALL amounts owed are paid in full.
Some Landlords see late fees as extra income, but that's usually a mistake that will catch up to them in the end. If the tenant is consistently late, get rid of them as soon as possible.