Late Rental Payments

I’m not sure why anyone would let tenants get behind in their payments, but we regularly get calls from students asking what they should do because it’s the twenty first of the month and they still haven’t received the payment that was due on the first. “Why haven’t you done anything sooner?” I ask. “Well, they said they were going to pay.”

What other creditor does that line work with? The mortgage company? The gas company? Cable? Where do people learn this tactic? Apparently, with landlords who let them slide rather than responding as soon as the payment is late.

We have a set policy and we stick to it. Payments are due on the first and late fees start after the fifth. Your tenant is IN BREACH OF CONTRACT after the first. To be clear, payments are late after the first but our state government allows tenants five additional days before late fees apply, so we wait until the sixth to respond to non-pays.

Because of this, some tenants don’t believe that their rent is due until the fifth and wonder why we’re upset when they want to pay after that. “I’m not even late, yet,” is their rationale. However, according to the agreement the tenant signed, rent payment was due on the first, so it is very late on the fifth.

On the sixth, we can and do file for possession in our clerk of court office. Why? Because we don’t want to get to the twentieth when they still haven’t paid before starting action. By that time, they may decide to hang out and see how long it will take us to evict. Eventually, they could figure it’s cheaper to move than to pay the, by then, two month’s rent that is due. I don’t want to give tenants that much time to build up debt or to plan alternatives.

It doesn’t help the tenant at all to let them get further in debt. In fact, it’s just enabling poor habits which won’t help them anywhere in life. And, it definitely doesn’t help you or get the mortgage paid which is, after all, the bottom line. If you can’t pay the mortgage, you lose the house and they lose their place to live.

So, begin every tenant relationship the same way, letting them know the rules of conduct that are expected – beginning with, and especially, on-time payments. Let them know the consequences if payments are not on time – court proceedings and added fees on top of their regular payment. These are not fees you’re adding, these are fees they’re creating for themselves by not abiding by the terms of the contract. Your end of the bargain is to provide the housing they live in, which you’ve done. Their end of the bargain is to pay the agreed to amount on the first of the month. There is no confusion in that arrangement.

Beyond the court actions, we report to online rental screening services the non-payments and late payments, which will haunt the tenant for years to come.

No need to send repeated late notices. They know they’re late. We send a “pay or quit” and let them know we have filed at the courthouse on the sixth of the month. They must now come in and pay their rent, late fees, and court filing fees, in order to stop the eviction process. If they don’t want to move, doing this once or twice usually ends the bad habit. If they don’t intend to pay, we have nipped it quickly and don’t lose more than one month’s rent.

Be sure to know the eviction laws in your state. In some states, the process is more difficult and time consuming. Typically, late is three, five, seven or ten days before you can start the legal eviction process. Whatever it is, you don’t want to delay the process by taking your time getting the ball rolling. Make sure your tenants to know, without a doubt, what your actions will be if rent is not paid as agreed.

The most critical time to begin the habit of swift enforcement is the first few months of tenancy. Once they recognize you are not a slack landlord, you should have a smooth relationship and on-time payments.

If you have not dealt with tenants before, your first instinct will tell you to be understanding and work out a catch-up plan for them because, after all, there was a sickness/illness/death/flat tire/paycheck mishap, etc., and you understand how this can happen. Stop yourself. Take it from someone who’s heard all the stories and has tried everything to be the “good guy” – it’s a business.

Payment is due from the tenant just like mortgage payments are due from the landlord. I’m sorry about their life issues getting in the way of their paycheck, but you can’t let their life issues get in the way of yours.

Be reasonable, be responsible. Naturally, if the resident has a good record but a problem arises, you should work with them. A good tenant is one you want to keep.

What’s your experience with late payments?