Late Rent Payment: How would you approach the situation?

Question

Hi BP Folks,

I have a rental which I've had for 3 years. Recently my old tenants moved out and spoiled me with on time payment every month. Our new tenants were late 5 days with their 1st month and so I sent them a friendly reminder that I will not tolerate in the future. They apologized and I reminded them the transfer from their bank to mine should be deposited by end of month. Its now their 2nd month and they are 3 days late. There is a payment fee of 10% after 7 days per the contract. Should I be concern? Should I address them again now or give it a few more days? How would you approach this situation?

Thanks in advance for your thoughts!

Mike

Randy E. · Answer

I have a 5-day grace period.  Since joining BP, I've considered the idea of removing the late fee altogether and assessing the late fee on the second of the month.

Last month, a new tenant who has paid after the first (but before the sixth) four out of five months, finally paid after the fifth in April.  I wasn't upset, because he paid on the seventh, and included the late fee.  I asked why he waited so long to pay every month.  He said, "The rent isn't late until the sixth.  Why should I ever pay my money before I have to?"

I told him he just helped me make up my mind to make all rent late as of the second of the month.  I haven't asked him and his roommate to sign a new lease yet, but they paid their May rent yesterday ... on the first of the month.

Randy E. · Answer

If you have a de facto grace period of 7 days, the rent is not late until after that time has passed.  You may want the rent on the first of the month, but your lease says it is not late until the 8th.  Many tenants will use the grace period end date as the true due date of the rent.

Your lease and expectations are at fault here, not the tenant.  There is nothing for you to address with them.  Repeating that you "will not tolerate" them paying the rent as they are allowed to do so under the lease you gave them and signed could be viewed as tantamount to harassment.   You wrote (or chose to use) that lease, not the tenant.  You have to live with what the lease stipulates.  Expect them to pay after the first (but before the eighth) more often than not from now on.  Knowing what to expect will release any stress you feel about the situation.

In the future, if you want your rent on the first of the month, you  should change your lease to say that rent is late as of the second of  the month and the late fee will apply as of then. (If your state allows that, of course.)

Ursula B. · Answer

Agree with @Randy E., it's not late until the grace period is over. The day after the grace period, begin whatever steps you must take to evict in your state.  For example, our grace period is through the 5th. On the 6th, like clockwork, we assess the late fee and issue a pay or quit notice. The day after the notice period ends, the file is forwarded to the attorney to process the eviction paperwork. We explain this to tenants upfront.

Had a tenant yesterday say they couldn't pay the rent until the 8th and asked the amount of the late fee. I told her the amount of the late fee but reminded her that the notice would be issued to start the eviction on the 6th as standard procedure.  Her reply - Oh I looked at the calendar wrong. It will be paid by the 5th.

Set an expectation, then stick to it.  Good luck to you.

Nancy Curran · Answer

In my lease, rent is due on the first and considered late on the 6th. If anybody is late at all, new or not, they MUST pay the late fee. Tenants talk to each other so you can't give anybody a break. So if someone is late, I send a text that says that "Rent is due on the first and it is the 6th so you are late. Please include the $50 late payment (or whatever it is) with your rent check.". I have always heard back from tenants with their excuses or apologies. If I didn't hear back within a day, I would deliver a 5 day notice.

Jeremiah Perry · Answer

@Michael Hable have the tenants given the reason why they are late?  I have a tenant in one of my houses who receives SS benefits and depending on what day of the week the first is she may not get a check on time.  On the other hand another house that I was having a property manager run consistently let the tenants be late....the lateness led to partial payments, payment shortages, and finally no payments.  I would think though if they are still paying inside of five days whats the problem? Some people do like to pay their bills at the last possible moment out of habit even if they do have the money.  Hope it all works out!

Ursula B. · Answer

@Randy E. After ~10 years in the business I could write a book ...you just can't make this stuff up.

Randy E. · Answer

LOL

Steve Vaughan · Answer

So by 3 days late, do you mean the rent was paid on the 3rd?  What is late to you @Michael Hable?  Mine are due on 1st, late after the 5th. Late fee applies on the 6th (unless a weekend).  Of course, most pay on the 4th or 5th, but that's ok with me.  Either way, you are smart to give them a friendly reminder by phone or text at first, especially if they are new.  Mail them a letter next time.  Still be fairly friendly. There's just a little more seriousness with a hard letter in the mail, ya know?  Groom them to remember.  They have been warned, so go ahead and apply the late fee if it gets there.  Memories improve when stupid tax is paid!

Late Rent Payment: How would you approach the situation?

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