It's not technically you cancelling; it's you giving them an opportunity to cure their breach.

What a long post...I am in Macae, Rio de Janeiro, Brazil for the first time in 9 years after the 2008 Collapse of the US Economy, Hep C and the new cure, almost dying from the tumor on my liver that showed up four years later and was not discovered by all my Primary Physicians, my Oncologist sitting on my bed when they were pulling the tubes out of my throat to see if I was waking up as a vegetable...the only thing she said was, "you need to get your affairs in order...you have three years to live."

Document everything, give them notice in writing of their default with a deadline to cure and seek legal counsel. 

We had a situation this year where we sold a guy a turnkey SFH in Chicago 3rd qtr 2014 and in January he found out he was terminally ill with a disease that has no cure except for an experimental treatment that insurance wouldn't cover.  

When you can't get the borrower to cure the default either by no contact or their lack of income, the result is foreclosure.

Or am I better laying down the law sooner or later with a cure or quit with a rent increase to see if they shape up and fly right? 

Lease violations get a cure notice.Don't skip your walk-throughs, as it may be your only chance to remedy a small problem before it gets bigger.

The whole, an ounce of prevention is worth a pound of cure argument.

After 3 days if they have cured (fixed the problem) you don't go any further.  

After a difficult to cure heat outage this winter with 6 calls to the repair guy and electrician we installed a monitor for the boiler temperature to warn us of temp drops in advance of tenants calls.