staggering late fee of rent charged by PM
We recently acquired a property with tenants who have been perpetually late paying rent. It didn't dawn on us that our PM has been charging hefty late fees until recently when they sent a statement with the late fee unsuppressed.
They've always been suppressing this late fee charges. They verbally mentioned it but I was never clear how the late fee impacted us.
How this late fee works is: If the tenant is late for Month 1, the late fee will be deducted from their month 2 rent and kept by the PM. Now since the rent is now partial - with the late fee deducted, when month 3 rolls around, their month 3 rent will be partial again with the late fee for month 2 deducted. This could go on infinitely...
They've been charging $350 per month for late fee per tenant. So let's say if the rent is $1000, we only get $650 - management fee - repair.
Now they said that they cannot go back and reverse the late charges if payment has been sent out to us, due to some accounting issue.
I wanted to work a solution out with them before considering switching, as I always feel like switching PM is an inconvenience for my tenants.
I would like to hear suggestions and advice.
P.S. The contract does say the PM keeps the late fee. But it doesn't specify how. In my opinion, late fee can be kept by PM only if full rent is collected for the month.
Anyone knows solid PMs please recommend as well.
Thanks!