I recently purchase a Texas MF with tenants in place. The lease that the tenants signed with the Seller states that rent is due on the 1st of the month. On the 2nd, a $50 late fee is charged, plus a $20 per day late penalty.
The previous owner never enforced the late fees, although one of the tenants was chronically late (undisclosed at time of sale),
I sent all the tenants a change of ownership letter restating the terms of their lease, including the late rent penalties. This tenant chose to ignore the letter, and assumed I would not be enforcing the late fees. The first month after purchase, she was 29 days late with rent. She gave me various excuses such as "I am not paying you until you come change my lightbulbs", and a lot of other BS. I told her if she wanted to avoid an eviction, she had to pay me rent plus the late fees specified in her lease. This meant that she owed almost $600 in late fees by the time she sent me any money. (She said she had the money, but was withholding it because her lightbulbs burnt out and she wasn't sure if she wanted to stay in the apartment).
My question is: Is this even enforceable? This is my first long term rental property, and I am unfamiliar with normal late fees. $600 in late fees seems excessive.
(Least you think I am completely heartless and cruel, you should also know that this tenant snuck in a cat. Her lease states that pets are not allowed, and there is a $500 fine for having a pet, plus a $20/day pet rent. I am turning a blind eye to the cat for now. )
She is moving out in January anyway, and I have no interest in keeping her as a tenant any longer than I have to. She has been a complete and utter pain from day 1.
I just want to know if I can legally enforce the late fees specified in her lease.
Hi Nikki -
You should double check your local rules but I believe Texas allows for both a one time late fee and a daily late fee so long as they are "reasonable." Of course, they don't define reasonable but depending on the overall rent, the $50.00 and $20 daily don't seem excessive.
Call the local rental owner's association in the area where your property is and pose the question. I have always found them to be a great resource. These associations usually have condensed versions of the local rules with helpful explanations available for members, as well as approved and updated local forms. Looking at an approved lease outlining late fees charged might give you comfort if the numbers are similar to those contained in your lease. The membership fee for these associations is usually very reasonable and is worth it in my opinion.
What leads you to believe she is leaving in a January? Is her lease up or did she give notice. You may want to check your local rules again because you may have notice requirements if you don't plan to renew her lease. If you really don't want her to stay on, and she hasn't given you written notice of her departure, you may need to get it in writing or provide notice yourself that you don't intend to renew.
Texas is very landlord friendly. Review your lease with her. Or if you don't have a lease, she is treated as a tenant at will. My leases state rent is due on the 1st and late on the 5th. I have served 3 day eviction notices to difficult tenants on the 6th if their rent isn't paid in full. If she is a tenant at will, give her a 30 day notice and get her out of there. The rental market is hot in DFW, where I'm at and finding quality tenants isn't hard.
Agreed, get her out sooner rather than later. You might be able to get a judgement for late fees but do you know how hard it is to remove the smell of cat urine? Yuk.
The amount of late fees sounds excessive and unreasonable. I have seen courts toss those out. As soon as you can sign new leases, I would definitely consider getting rid of that clause. I don't charge late fees. I make my rents due by the 5th (posted by then or earlier) and offer a $100 discount for the early payment. So the least may state $1500 rent but they can pay $1400 if postmarked by the 5th. This has worked very well and most of my tenants take advantage of it. Also, at least in our jurisdictions, some courts regularly disallow late fees but DO allow additional charges provided they are noted in the lease as "additional rent".
Start the eviction process today, get her out. If she goes to court and says she wouldn't pay because of a burnt out light bulb she'll get laughed at. JP court isn't going to give you late fees due, you'd need to go to small claims court for that.
I personally would be THAT insistent on the late fees at this point even if its under the lease. You may bring it up later after the move out date and deduct it out of the deposit. But fighting it now may backfire on you by her deciding not to pay you any rent at all. I recommend giving her a 30 days notice depending on where you live to move out and deduct the deposit as needed. Then move on with your life and find new tenants.
This post has been removed.
If you ever end up in front of a judge I don't see a scenario where they allow you to charge $600 in late fees.
Texas Property Code is pretty vague about what you can charge for late fees, etc. But one word that is thrown around a lot is "reasonable." I can't imagine any scenario where a $20/day late fee would be considered reasonable.
Nikki - I wanted to add that you would be hard pressed to find a landlord on this site that would think you were "heartless and cruel" for enforcing a late fee on a renter that is chronically late in paying rent. On the contrary, I would strongly encourage you to deal with late payments immediately by posting the appropriate notice as soon as permissible under the law and following up with the next steps to evict if rent is not forthcoming. My guess is you will have an opportunity to put this into practice with this tenant for Nov. rent.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.