Late Fees for Partial Rent Payment

[Jarrod B.]

Hey there guys, I have a question for you all in regards to late fees.  I made the mistake by giving my tenants my bank account information and just had them deposit their rents into the account, well that opened up a can of worms that allowed for partial rent payments.  I have since closed down my bank account and have instructed my tenants to either pay me by way of check (and then I'll use the postmark date to assess late fees), or I have set up an account with erentpayment.com that will not allow for partial payments.

That being said, I have one tenant that's a constant pain in my ash.  He's consistently late and pays partial payments all the time.  His rent is $1,500 and this past month he paid me $1,450.  In the event that your tenant is even just $50 under their rent payment, do you all assess the late fee (the late fee for this unit is $50) if your lease allows for it?  In addition, when the following month comes rolling around, if they don't pay you for the underpayment and the late fee and just pay you the full amount of rent ($1,500) do you again assess a late fee because there is still uncollected rent ($100)?  And so the late fees keep incurring until they're paid in full...is that correct?

I'm a new investor and have a couple of rentals, but I'm still trying to get my processes down.  Thank you for your wisdom BP community :-)

[Thomas S.]

Tenants pay late because that is how their landlord has trained them. Late payments are always the fault of poor landlord management of tenants.

Payment is made when received, post mark is irrelevant. If it is due on the first it must be received on or before the first.

How you operate is based both on your lease agreement and your state regulations. They go hand in hand when deterring what is owed and when.

On the second of the month you give notice to pay or quit if full rent payment is not received. Again you must learn your state regulations but generally you should never accept partial payments. Doing so can effect your ability to evict.

All other issues aside you should have proceeded with the eviction when he did not fully pay the last month rent. 

Assuming your state regulations do not penalise you for accepting partial rent begin the eviction process immediately. That should get you your money.

In the future make it your policy to refuse partial payments and immediately begin the process to evict beginning on the 2nd of the month when full payment is not on time.  

If you do not have the stomach for the eviction process your tenant will be in control of your business going forward. At this point in time you have dropped the ball.