What to Do (and What Not to) When a Tenant's Rent Is Late

You followed our tips to discourage tenants from paying rent late, but alas, they still missed a payment. What should you do now?

Whether you’re faced with a past-due payment for the first time or you have a tenant with a long history of paying late, it costs you time and money to rectify the situation. Below, you will find a simple five-step process outlining the actions you can take when a tenant pays late.

1. Check Your Lease Documents and Payment Records

As silly as it may sound, double-check your records to make sure the tenant is truly late with their rent. Sometimes landlords keep better records on paper than they do in their heads and can be mistaken as to when something was (or was not) paid.

While most states don’t legally require grace periods to pay rent, the majority of leases contain a clause giving tenants a three or five-day period to pay rent after the normal due date. If you’ve double-checked and found that yes, the tenant is indeed late, then you’re bound to the provisions agreed upon in the lease and by state and local statutes as to what sort of extra fees you can charge.

Usually the lease will specify a late fee, but if it doesn’t, then you can’t retroactively change your mind and decide to charge one. And remember, no matter how you personally feel about any late-rent situation, a late payment is still a violation of the lease that was signed by all parties, and this effectively makes it a breach of contract.

Online platforms like Avail allow landlords to check if a rent payment was made, see the payment schedule date, the withdrawal date from the tenant account, and the deposit date to the landlord.

2. Send a Late Rent Notice

The next step would be to serve the tenant a late rent notice. This is a piece of paper reminding the tenant that the rent is past-due. It should include a list of all fees that are owed (including late fees) and a warning about further legal action you’ll have to take if the rent isn’t paid in full very soon. It can be served to the tenant in person, emailed, or taped to the door of the unit after the rent was due.

This notice will also help you later in court if you need to prove that there was a pattern of delinquent payments (so keep a copy for yourself!) This step is not required by law and is only recommended as an interim action. Hopefully, it will jog an honest-but-forgetful tenant’s memory, but the threat of legal action will make other tenants take it seriously.

3. Make a Phone Call

what to do when handling late payments

A phone call to the tenant to find out what’s going on can be done before or after the late rent notice is served. However, this only needs to be done once to avoid accusations of harassment (which is very illegal). The phone call serves the same purpose as a Late Rent Notice, but the added benefit is that you’ll be speaking to the tenant in person. For this reason, try not to substitute an email for a phone call.

4. Send a Pay or Quit Notice

This is a more official document than the late rent notice and is technically the first step in the eviction process. It shows the tenant you’re serious about pursuing action and can be delivered in-person to the tenant as soon as rent is overdue.

This notice needs to clearly convey your intent to evict, the amount of money you are owed (including all late fees), and the deadline to pay in full. If you have an eviction attorney, this is something they can draft.

Many states and cities have specific requirements about how, when, and where you must post an eviction notice. If the issue proceeds to court, landlords may have to prove that they made a good faith effort to make sure the tenant received the notice, so be sure to check local landlord-tenant laws and follow the guidelines.

Generally, you can post an eviction notice on the door of the unit or deliver it to the tenant in person. You may also want to mail one to them as a back-up measure. After this, you will have to wait a certain period of time until you can file eviction papers — depending on the state, it’s usually around three to five days, so check your local statutes.

5. Take Legal Action

If all else fails and the tenant still doesn’t pay, get an eviction lawyer. At the earliest possible opportunity (aka when the Pay or Quit waiting period ends), file a tenant-landlord complaint in court. In many places, it is illegal to evict a tenant until all court proceedings are over. This process can take months.

You’ll need to pay a fee and thoroughly complete all paperwork before you get a date for a hearing. When the day comes for you to head into court, prepare what you’re going to say ahead of time and have all your evidence documented.

When dealing with a tenant who pays late or partial rent, some landlords will recommend inspecting the unit as soon as possible to make sure that your property isn’t being damaged. You can usually only enter the unit with the renter’s permission.

After obtaining permission, it’s recommended that you document and take pictures of wear and tear and damages. Once you’ve identified these, repair any damages and ask that the tenants fix those which are their obligation. Schedule another inspection to make sure both parties have addressed the problems. Keep all documents in case you need them in court.

Remember, it is never acceptable or legal to lock someone out, move personal belongings, or shut off utilities before the eviction process is complete. Equally illegal are threats, humiliation, or physically attempting to remove the tenant. Not only can these be morally questionable, but an ex-tenant can easily turn around and sue you for unlawful eviction or harassment. As frustrating as it can be, let the court do its job.

Important Points to Remember on Late Rent Payments

  1. Act quickly and consistently. Enforcing the rules will let tenants know you’re serious and will help prevent late tenants from getting even further behind on their payments. You may have worked out a deal with them once or twice, but what if the payments spill over into next month? It’s better not to have to worry about continual bargaining for the money they promised to give you.
  2. Try not to accept partial rent payments and never accept even one cent if you think the case may go to court. In many places, accepting partial payment will void any legal actions you have previously taken, including Pay or Quit notices, and it will start the process of eviction over again (if you have already started it).
  3. Document everything in writing. If you and the tenant reach an agreement, have them sign a document specifying the compromise and give them a copy.
  4. If there were any co-signers on the lease (like parents of college students), they should be held responsible and named in all lawsuits and on all legal papers.
  5. Follow the exact rules of your state and city when going through the eviction process. Failure to do so could result in delays or even end the eviction process entirely while the tenant continues to not pay you.

How Do I Handle a Tenant’s Bounced Checks?

Your lease should also have a section specifying your response. Most landlords consider a bounced check to be late rent and charge late fees accordingly. Depending on the state, you may be able to charge an additional fee for the very fact that it bounced. Notify the tenant immediately if their check bounces, and if they don’t rectify the situation right away, then start the steps above.

Can a Landlord Sue for Unpaid Rent?

Unless there is a provision in the lease allowing them to break it (for example, if the tenant gives 30 days’ notice that he wants to move, then he can exit the lease), then they are still legally liable for any and all past-due payments and future rent payments until the landlord decides to rent to someone else.

In this case, you’ll definitely want to get an experienced lawyer on your side. You may also be able to sue for money to cover the costs of advertising for a new tenant and for cleaning and repairing the unit.

Does Landlord Insurance Cover Unpaid Rent in Situations of Eviction?

Landlord insurance usually doesn’t cover unpaid rent. Rent guarantee insurance, however, covers unpaid rent for up to six months per year. Rent guarantee insurance allows you to start the eviction process — which can be long and costly — without having to swallow the cost of unpaid rent.

How to Avoid Late Rent Payments

To help make collecting rent an easy and convenient task for all parties, it is highly recommended to use an online rent collection tool like Avail. Besides letting tenants pay rent from their phone or laptop — or even setting up automatic rent payments — Avail helps immensely with communicating and documenting everything and making the rent payment process simple.

Create an account or to get started today by setting up your rental properties and inviting your tenants to Avail.