Chapter 5

How to Handle Late Rent Payments

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The Complete Guide to Rent Collection

Late Rent Payment

 

In the last chapter, we went over how to encourage on-time rent payments. We discussed the importance of enforcing late fees, sticking to your rules, and making it convenient to pay. If all goes well, you’re all set to receive rent on time each month.

But as you may already know, it’s common for tenants to pay rent late. In fact, late rent is the most common dispute between landlords and tenants.

In this chapter, you’ll find an actionable guide for handling late rent payments. And, further below, we’ll answer common landlord payment questions.

What to Do When Your Tenant Pays Rent Late?

If you have a tenant who pays rent late, remember to always be professional. It’s illegal to lock your tenant out or turn off utilities. Instead, you should follow helpful, legal steps to get the situation resolved.

Here is our step-by-step guide for handling late rent payments:

  1. Check payment records to verify the payment is actually late. This is easy to check if you collect rent online.
  2. If the tenant’s payment is truly late, send the tenant a reminder email. You can make the subject line, “Late Rent Notice,” so your tenant understands you are officially taking note of his or her late rent.
  3. Depending on if you have a legal grace period, or if a grace period is written in your lease, you should assess the late fee as soon as it applies. You need to be strict about following your late fee rules so your tenant doesn’t take advantage of leniency by continuously paying rent late.
  4. Depending on the situation, you could refer your tenant to rent assistance programs. Learn more in this article on dealing with late rent payments.
  5. If your tenant still has not paid (another 5 days have gone by), send a formal Pay or Quit Notice that says if he or she doesn’t pay by a certain date you’ll pursue an eviction. You can give the tenant 5 days to pay.
  6. If the tenant doesn’t pay by the date written on the Pay or Quit notice, you can choose to move forward with an eviction.
  7. Pursue an eviction. The steps for pursuing an eviction will vary greatly depending on your location and local laws. In general, here are the steps you’ll need to take:
    • Go to your local court and file for an eviction.
    • You and your tenant will receive a Notice of Hearing in the mail telling you where and when your court date is.
    • Attend the court hearing.
    • If the court rules that you’ve won, the court will send a sheriff to provide the tenant a Writ of Possession (sometimes called a Writ of Restitution), which tells your tenant he or she needs to leave the property by a particular date. It typically provides the tenant eight days to leave.

For more on what to do in the case of an eviction, check out this chapter from our Guide to Rental Leases:

Breaking a Rental Lease and Grounds for Eviction

Common Questions on Late Rent Payments

Landlords frequently ask us questions about handling late rent payments. Below, you’ll find answers to the most common questions:

When should you consider evicting a tenant due to lack of payment?

You can technically evict a tenant anytime he or she misses a rent payment. Not paying rent is considered breach of contract. When your tenant signed the lease, he or she legally promised to pay. Although you can evict a tenant as soon as the grace period passes, we recommend talking to him or her first and trying to find a solution. Oftentimes, tenants simply need to be reminded to pay.

Keep in mind that in some states, the eviction process will require providing a Notice to Pay Rent or Quit. This gives the tenant the opportunity to pay you before he or she can be evicted. Other states let you file for eviction in court as soon as the payment is missed.

What’s the difference between pay or quit notices and late rent notices?

Late Rent Notices are written notices that remind the tenant that rent is late. It will outline how much money is owed (including late fees) and the date by which it needs to be paid. It’s one way you can reinforce the importance of timely payments.

Pay Or Quit Notices are a form of an eviction notice. The tenant either needs to pay rent by a certain date or leave the property.

What if your tenant paid but didn’t have enough money in his or her account? 

If the payment doesn’t go through because of Non-Sufficient Funds (NSF), this means that the tenant didn’t have enough money in his or her account in order to successfully make the payment. In this case, we recommend talking to your tenant.

Typically, the tenant just needs to transfer funds from one account to another. Sometimes, the tenant may be waiting for a paycheck before he or she can afford rent.

Here are some options for how to handle NSF payments:

  • Discuss it with your tenant.
  • Ask if your tenant can transfer funds from a different account.
  • If your tenant has a co-signer, he or she can step in and pay rent.
  • If necessary, create a payment schedule with your tenant (get it in writing).

If a tenant’s payment doesn’t go through due to insufficient funds, then you can charge a late fee, assuming it’s after the grace period. If a co-signer steps in to make a payment on behalf of the tenant, you can technically still charge a late fee, since the payment is late. However, you can handle this on a case-by-case basis.

What if your tenant skips town and hasn’t paid rent? 

First, we recommend trying to reach out to your tenant. If you can’t get a hold of him or her, here are next steps to take:

  1. Go to court and get a money judgment. A money judgment is a piece of paper that says the tenant owes you money. Unfortunately, if the court can’t find the tenant either, then this is not the same thing as getting your money. After obtaining a judgment, you’ll need to work at trying to find your tenant to collect on that judgment. There are a few ways to find your tenant:
    • Find out if he or she forwarded mail to a new address.
    • “Serve” them a court date at his or her previous address.
    • Publish a public notice of the court date.
  2. Report the tenant’s debt to the three credit bureaus. You can complete this step even if you do not have a judgment. This will alert any future landlords (that are wise enough to require a tenant credit report) that the tenant owes money to a prior landlord. Sometimes getting this on your tenant’s credit report is enough to motivate him or her to pay you what is owed.

Final Thoughts on Late Rent Payments

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With our step-by-step guidance in this chapter, you’re now ready to handle late payments in a professional and helpful way. Avoid evictions if you can by trying to find a solution. It’s a good idea to talk to your tenant about the situation before moving forward.

As we mentioned earlier, always be professional when a tenant misses a payment. If it comes down to taking the matter to court, it’s better to have been professional throughout the situation and to have communication in writing.

Sometimes tenants will offer to make a partial payment. In that case, is rent still considered late? Find out everything you need to know about partial rent payments in the next chapter.

Read More About Handling Late Rent

Problems landlords have collecting rent and what to do about it

How to handle tenants with late rental payments

What to do (and what not to do) when a tenant’s rent is late

Everything you need to know about dealing with late rent payments


Also published on Medium.

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