Notice to increase late fees??

Question

Hey everyone! I want to increase my late fees from $25 on the 6th to 8% of rent (MN maximum) on the 3rd. Do I have to give them 30 days notice for that or can I give it now (on the 7th) for next month? Too many people taking advantage of it and it's irritating. I realize it's extra money, but then I have to send them a pay or quit notice, and I also worry that I'll have to spend money on an eviction because there may be a bigger reason behind it this time.
While I'm asking, what are your timelines for rent, late fees, and pay or quit notices? Mine is due on 1st, late on 6th with $25 fee, and then pay or quit on 10th. What is your terminology in your lease?

Thanks much!

Steven Warner · Answer

Jennifer:

I doubt you can increase in late fees during the term of a typical lease; barring some statutory provision in Minnesota allowing you to do so.  For a lease to be modified both the tenant and yourself must sign some sort of addendum to the lease allowing for such an increase.

Now if the tenant is on a month-to-month tenancy then the you need all you need to do is given them the statutory notice required for your state.

OK, now for the fun part- here is what I do- rent is due on the first, period.  I give no grace period.  Why you ask?  Simple, first everyone one knows when the first is so it has to be in my possession on the first or a late fee is automatic and will be followed up with a Notice to Pay/Quit at a time of my choosing.  Second, and more important as to why the first, because judges have become more and more lenient in giving tenants time so the quicker I am in court to get them out the better (Thanks California Rent Control!).  I also make sure everything is in writing to the tenant - certified, first class, and email -  It is tough to say I never got it when I sent it Certified Return Receipt because even if they never pick it up I get it back unopened.  Then, all I have to do is hand it to the judge and ask them to open it at the UD hearing funny how I have a copy in the file matching the unpended envelope and  it is the same as in the first class mailing; let them deny the email all they want.  Notice is real tough to deny- even if it is for a late fee ($50)

I am not sure if I helped you.

Good luck!

Steve

John Woodrich · Answer

@Jennifer Rysdam in MN you have to give them one rental period notice so if you give it to them now it will be effective beginning 9/1.

Joseph Hammel · Answer

The purple books says:

Raising the Rent

Under a periodic tenancy, a landlord cannot raise the rent unless the landlord gives proper written notice. Proper notice is one rental period plus one day. (Click here for an explanation of proper notice.) During a definite term lease, rent cannot be raised during the term unless the lease allows for an increase.

https://www.ag.state.mn.us/consumer/handbooks/lt/CH2.asp

I don't see specifics about raising the fee but my guess is its the same as raising the rent.

Joseph Hammel · Answer

@Jennifer Rysdam

Most of my leases are due on the first. Late fee charges on the 5th. My property software (buildium) Has them set to 8% of the rent. I've also been considering changing my new leases to eliminate the grace period. As Steven stated they should know when the first is. I also need to change the lease wording to 8% of the balance due (per MN law). Example if a tenant paid half of their rent early then the late fee should only be 8% of the balance due. This is how I read the landlord and tenant rights and responsibilities but a lawyer is the best to ask.

With the harshest rules possible it puts gives you the upper hand. Then if you have a tenant that has an otherwise good record of paying on time you can decide if you want to give them a break on the fee.

Using buildium epay gives my tenants the option to pay with a credit card also they pay 2.75% fee to use a cc. So I will remind them that 2.75% is better than 8%. Of course they could get in a hole if they racked up cc debt but it might get them out of trouble. I'm sure there are lots of other options to use cc to pay that are cheap or free compared to buildium.

Some have suggested dumping your tenants. I see your from Luverne MN. I don't know this but I'm guessing you don't have a massive demand for rentals. I have some properties in high demand areas and some in lower demand the quality of the tenant will be typically lower in the lower demand areas. Its also not that easy to just dump them for many reasons. First what if they don't want to go? Then you have to file eviction and thats more money tied up and time. Second properties might need some repairs that have been deferred. Wear and tear ect. Things that you might not know because the tenants don't tell you. You may still have tenants that you want to get rid of anyway.

Here are some of the lessons learned and tips I can share.

I have a couple that I rent to that fell about 2 months behind. I had almost always communicated with the guy. It got to the point where I decided to file eviction. She as it turned out was in the dark about the situation and had all the money available in her account to pay the 2500 or so including the eviction cost.

Lesson: Bug them both.

Another tip. Get emergency contact # on the application. This is valuable for younger tenants. I filed on one guy and his Dad came in and bailed him out. The parents may help that way or help them budget ect.

Another tip. Take payments every 2 weeks when they get paid. They need to understand that the objective is to pay the 2 payments AHEAD of the first not after. Its a little work but I've had success with this as well.

Another tip. If a prospective tenant is flaky in the initial process Example not returning calls promptly, not showing up for showings, Its a red flag that they will be a problem. Find someone else.

If I think of more I will post.

Tim Swierczek · Answer

@Jennifer Rysdam  I agree with @John Woodrich.  The one variable is if you have a longer notice period, such as 60 days you may need to work with that period.

Hubert Kim · Answer

Changes to a month-to-month lease may depend on your city/state. In California, any changes generally require at least 30 days notice.

I would also look up grace periods for your geographic location. In California, there is no required grace period unless it is stated in the lease. However, some states do require a grace period.

Theresa Harris · Answer

As Steve said, if you are mid lease, you can't change it until lease renewal time.  If they are month to month, give them notice of the change in policy.

Bryan Devitt · Answer

@Jennifer Rysdam your questions are MN specific. There is probably a MN forum to ask in or find a local lawyer, the hour of their pay is worth the definite answers and they might give you more info in that hour that will be invaluable in the future. As for what you should do, the absolute minimum required by law. If its 2 days and 10 days then that is what you do but not a day more

Anthony Wick · Answer

@Jennifer Rysdam

Ok, they’re on MTM leases, and you’re sick and tired of them paying rent late? It’s called Terminating their leases and finding tenants that will pay on time.

Sam Shueh · Answer

To pay or quit does not apply to late fees. You need to verbally contact them and to enforce it.  Others already answered the lease issue.  I suggest you not renew their lease. Try someone more dependable.

Notice to increase late fees??

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