When a tenant habitually pays rent late, it can turn into a frustrating experience. Late rent disrupts your cash flow, can complicate your ability to pay your mortgage, and makes it hard to trust your tenant. With tight margins and limited time, perpetually late rent can turn a profitable rental into a liability, and it’s something you need to address to maintain your business.
If you’ve been dealing with late rent, here are the best methods to resolve the issue quickly and peacefully.
1. Hire a property manager
Chasing down late rent payments can become a full-time job depending on how many tenants you have, but even just one late payment is frustrating. Hiring a property manager can take this burden off your plate. In addition to collecting late rent and all applicable late fees, they’ll fill your vacancies with high-quality tenants who have a track record of on-time payments.
If you want to avoid late rent, you need quality tenants. Property managers are experts at screening tenants to reduce the chances of late payments. For instance, Green Residential, a Houston property management company, conducts thorough background and credit checks, verifies employment, and talks to former landlords to ensure prospective tenants can meet their obligations. You can get this same level of service through a local property management company in your area.
2. Review the lease and applicable laws
Before taking action against a late payer, it’s crucial to understand the terms of their lease and all laws governing their rights. Check the lease and verify rent due dates, grace periods, late fees, and consequences for late rent payments. If anything is ambiguous or contradictory, it might weaken your position if you end up in court. However, only a lawyer can tell you if your lease terms might be an issue.
When requesting payment, including through written notices, make sure your requests comply with the lease terms and laws. For example, if your lease says late fees will be assessed on the first day after a three-day grace period, make sure your calculations reflect that.
Its also important to understand federal, state, and local landlord-tenant laws. Get familiar with all laws applicable to late fees, notice requirements, and eviction procedures to ensure you stay compliant. Some states have a maximum for late fees, while other states – like Texas – do not.
3. Send a late rent notice
Your next step will be to serve your tenant a late rent notice. This is a simple reminder that rent is past due and includes the total amount owed, including late fees. A late rent notice should also warn the tenant about legal action you’ll take if all outstanding rent isn’t paid in full by a certain time.
4. Communicate early
Sometimes a simple conversation is all it takes to resolve late payment issues before they escalate. Communicating early will help you find a mutually agreeable solution. For example, your tenant might just need to change the date rent is due to match up with their paychecks. If they don’t know that’s an option, they won’t think to ask. However, when you approach them for a conversation, you can ask if changing the rent due date will help.
5. Consider eviction
Evictions can be costly and time-consuming, but it’s better to replace a tenant who consistently can’t pay on time. One or two late payments over the course of a year might not be a big deal if your tenant was only late by a day or two, willingly paid the late fees, and didn’t make up stories, but if you have a tenant who always seems to have an emergency or tragedy that makes them late with the rent by a week or two, and they scoff at late fees, don’t hesitate to evict them. They will only create more trouble for you.
Filing an eviction lawsuit is risky if you don’t do everything legally, so consult an eviction attorney before taking any kind of action. One wrong move could give your tenant the legal right to maintain possession of the property, and you could be on the hook for a serious judgment.
Be proactive to protect your investment
Constantly getting late rent is a threat to your financial stability, and it’s not something you need to tolerate. Sometimes eviction is your only option, but once that’s over with, you can find a reliable tenant as a replacement. And if the process of screening and selecting tenants is a challenge, don’t hesitate to hire a property manager.