When is a tenant in rent default?

Your Alabama lease says the rent is due on the 1st.  If paid after the 5th, there is a late charge of $50. If paid after the 15th, there is an additional late charge of $25.

If the rent is unpaid, when is your tenant in default?  In other words, when can you send your Seven Day Notice of Default and Opportunity to Cure Letter?

• The 2nd?
• The 6th?
• The 16?
• The 1st of the next month?

Tenants argue that your late charge clause gives them permission to pay the rent late, as long as they are also willing to pay the late fee. In other words, they are not in default, they simply owe a late fee plus the rent.  In fact, some tenants have been able to successfully argue that they are not  in default until the next months' rent is due, and the prior month's rent has not been paid. In other words, not until they are one month late on their rent.

Avoid this problem.  Do not let a tenant's lawyer and a judge decide when your tenant is in default.

Spell things out in the your lease.  Say something like, "If rent is not paid by the 5th day of the month, the tenant will be in default. If default is cured, tenant will also owe late fees as follows...."

That works for new tenants. For current leases,  send a notice to all of your tenants. Say something like, "There have been some questions about our lease. Just to be clear, your rent is due on the 1st of each month. If unpaid by the 6th, your lease will be in default.  You will be given an opportunity to cure your default, but you will also owe late fees as follows..."

This way, a tenant who defaults after the notice cannot claim he or she misunderstood your lease.