This step-by-step guide can help you resolve a late rent situation with your tenant.
This step-by-step guide can help you resolve a late rent situation with your tenant.
Property managers and landlords want responsible tenants that pay rent on time. Rent helps landlords pay their other expenses, such as utilities, mortgages and building maintenance costs. When a renter is late with a payment or stops paying altogether, the situation can quickly become stressful and aggravating. Here’s what to do if your tenant is late on rent.
1. Set up a phone call or a meeting
Most lease agreements include a three to five-day grace period to pay the monthly rent. When that date has come and gone and you’re still missing a payment from a renter, check your records to make sure your tenant has not paid. And a bounced check is also considered unpaid rent.
Reach out by phone to see if they’ve simply forgotten, or if something else is preventing them from paying. Direct communication can help resolve the situation calmly. If your tenant lost their job or is dealing with family issues or illness, this may affect their ability to pay the rent. Find out what’s going on before deciding what to do next.
2. Negotiate a payment plan
If your renter wants to pay you but can’t afford the full monthly fee, set up a new agreement for the short-term where you’ll accept reduced rent. Showing good faith can help develop a positive landlord-tenant relationship.
Should you decide to draw up a new or temporary lease, outline the grace period, any late charges and your plan if the rent remains unpaid.
3. Document everything
Keep track of all communications between the two parties. Document phone conversations and emails so you have a record of how you handled the situation in case you need to seek legal action in the future.
Notify and name renters on all documentation who required co-signers or guarantors on the lease, as they’re also responsible for paying the rent in full.
4. Send a formal late rent notice
This written document politely reminds the renter of payment obligations according to the lease. The letter should state amounts still owed, including late fees. It also explains the steps you’ll take next should the rent not be paid. You can hand the document to your tenant in person, send it by registered mail, email it or tape it to their door. Always follow up to ensure they received it.
Sending an official late notice confirms you have not received a rent payment on time. Although it’s not legally required, receiving this notice in writing often motivates tenants to pay up.
5. Give your renter a payment or quit notice
Paying rent late or not at all violates the lease agreement signed between landlords and tenants. When renters don’t pay, they have breached the contract.
If your tenant still does not pay the rent after you’ve tried to reach an agreement, you have the legal right to begin the eviction process. The first step is serving them with a payment or quit notice stating that the renter has violated the lease agreement.
This document details the total amount of rent past due, including late fees, the due date of payment and your intent to evict the renter if rent is not paid immediately. Check with your state or city for specific requirements regarding posting an eviction notice.
Depending on where you live, landlords or property managers can hand the notice to tenants directly or send it by registered mail so there’s a formal record of it being served. Technically, the eviction process begins as soon as you serve the document. Often, this action will prompt the tenant to pay.
Starting the eviction process does not give property managers or landlords the right to harass the tenant, however. You’re not allowed to make threats, remove their belongings, cut off utilities or change the locks.
6. Take them to court
You might need to take legal action against tenants for unpaid rent if all other options have failed. If their security deposit amount does not cover how much they owe, you can sue tenants to recover lost rent.
An eviction lawyer can help you file the paperwork, including all documentation since you first communicated with your tenant about late rent payments. Once you’ve decided to seek legal action, do not accept partial payments from your tenant. This might overrule the legal proceedings, and you’d have to start the eviction process all over again.
While filing a lawsuit will cost you time and money without guaranteeing you’ll be paid, it’s sometimes the only way to recoup money owed to you.
Be proactive about late-paying tenants
Chasing after late rent payments or going to court takes money, time and energy. Property managers and landlords should put several processes into place before a tenant stops paying.
1. Get rent default insurance
Suing your renter can take month, costing you thousands in lost rental income. Rent default insurance for landlords can cover this loss, usually for up to six months, while you wait for a judgment.
2. Make it easy for tenants to pay online
Using an online rent payment tool can encourage your renter to pay on time. Plus, it’s an efficient way for landlords to keep track of rent payment records, send payment reminders and collect money without having to deposit checks at the bank. You can also send out reminders a few days before the rent is due.
3. Develop a positive landlord-tenant relationship
Foster good relationships with your tenants so you can work out potential conflicts in advance. If they advise you that they’ve lost their job, for example, you can collaborate to find a payment solution that works for both of you.
Avoid issues by screening your tenants carefully
Once prospective tenants respond to your rental listing, you should conduct a thorough background and credit check before signing a lease with a new renter. Make sure a tenant’s income-to-rent ratio is within the accepted range.
Discuss the terms of the lease with prospective tenants, including your policies about paying rent on time. Let them know you intend to enforce the rules, so you can avoid late payment problems before they happen.
Source: rent.com