A Written Late Rent Policy

[Jill F.]

Does anyone have a written late policy that they use? How has it worked?

I don't always want to "quit or pay" on the fourth day of the month.  I do want a policy that will:

provide me with a consistent action plan

encourage tenants to communicate problems before rent is due, 

encourage tenants to pay enough to stay "current,"

define and discourage  habitual late payments. 

[Travis Hughes]

What does your lease say?  (What it should say in my opinion, local laws permitting, is that rent is due on the 1st and late on the 2nd.)

My opinion is that you need to be strict and immediate with enforcing your lease.  That doesn't mean you are necessarily going to kick them out, but they need to know that if rent is late, you're calling to ask about it, sending them a demand letter, and promptly filing an eviction.  The filing can be dismissed once they pay.  (Your lease should also say that they have to reimburse you for the legal fees of any evictions that you have to file against them.)

You can treat everyone with respect, dignity, and equality in your rent collections processes, but don't give an inch of leeway.  No one wants to not pay their rent - all of your tenants want to pay you - but if they can't pay, they can't stay.  If you don't send demand letters out immediately upon delinquency (ie on the 2nd) and you don't start calling and emailing to ask for the delinquent rent (ie on the 2nd), then they are going to assume that it's not a problem for you and they can just pay whenever they want.

For example, there is a decent segment of people that will always pay the day before late fees kick in.  Notice I didn't say "the day before the rent is late."  For example, many folks have leases that read "rent due on the first, late on the 2nd, late fees start after the 5th."  These tenants will always pay you on the 5th because they are going to take every inch you give them without actually being penalized.

Eviction takes several weeks to a few months in most markets anyways.  For the folks that legitimately cannot pay the rent, you don't want to be delaying your collections actions.  For the folks that can pay the rent, but want to take every inch of leeway that you will give them, you are just letting them pay you later and later with no benefit on your end.