Renting my SFH per BR & utilities are split. When/What fee can I charge if unpaid?

Question

Hi BP community! I am renting out my single family home I currently reside in per bedroom. I currently have 2 tenants who are college grads at the local colleges. Their parents are cosigners and pay their rent+utilities. They typically always pay on time but recently the parent didn't pay their portion of the utilities until the following month. This normally wouldn't be a big deal but it was an oil delivery & it was frustrating worrying about whether it would be paid. In the lease it states that utilities are split equally among tenants & myself.

My question is how long are tenants allowed to have before I'm able (if I'm able) to charge a late fee? How much of a late fee am I allowed to charge?

Thank you everyone for your input :)

My question is how long are tenants allowed to have before I'm able (if I'm able) to charge a late fee? How much of a late fee am I allowed to charge?

Thank you everyone for your input :)

Samuel Eddinger · Answer

@Jill Jay - it depends on what your lease says.  My lease says that oldest bill is paid first.  In that case, the oil bill would be paid with the money from tenants and a late fee would be charged if rent wasn't fully paid.

If your lease makes that statement, inform the tenants and their parents and charge it going forward.  If not, consider updating your lease to include that language.

The late fee can be charged after the 10th and the amount is what you find to be appropriate and defendable.  Some people charge a % and others charge a flat fee.

Matt Devincenzo · Answer

Your lease should spell out how long after bills are received and split up a payment is due. But if this was me I'd address this completely differently by including a monthly utility estimate every month and then truing it up quarterly or semiannually. That way you 1) spread big ticket items out so you have the funds on the day needed 2) are less likely to get stiffed on a big bill that goes unpaid. It will take some time to get an idea of what the normal rate should be, but you can adjust periodically as you get a better sense of costs.

I'd estimate ~5% over what you think costs will really be, not enough that I end up with lots of extra cash to refund but not so low that I end up needing additional money every few months to cover the cost. So if oil is $1000/yr, electric is $100/mo and water is $60 bi monthly. That's ~$850 per person per year, or $71/mo...I'd charge $75-$80/mo above the room rent rate.