Unfortunately, your bills won’t wait for a tenant who’s slow to pay.
Strategies for Avoiding Late Payments
Make sure your lease provides a specific due date. If your standard lease allows some wiggle room — a “grace” period, you may actually be encouraging late payments. Also, if you have a policy of adding on late charges, the tenant may choose to be late and plan to pay the fee.
The reason this happens is that late fees are so heavily regulated, it’s nearly impossible to charge enough of a penalty to serve as a deterrent.
Gone are the days when tenants place the rent as the first priority. They are more likely to pay the cell phone bill on time then their rent. Why? Because they know the phone company will cut them off. Invoice the tenant regularly to reinforce the schedule. Tenants who have a bill in front of them near payday are more likely to pay on time.
Use electronic payment methods and take the date of payment out of the tenants’ hands.
Deposit rent checks as soon as they are received. Tenants who watch their accounts take note of any delays, and that encourages them to pay late. Also, being slow to deposit the checks can hurt when enforcing late fees in the courts — it’s hard to prove you needed the money by the 3rd or 5th of the month if you didn”t deposit the checks until the 30th.
Get on the tenant for late payments immediately. If they don’t feel the pain, they may try to do it again.
Know Your Options Once Rent is Late
You must act quickly and decisively once the rent is late. Undoubtedly you have the right to evict for nonpayment. Hopefully, your lease doesn’t make it hard to determine at what point the rent is late.
Review ahead of time what the procedure is for eviction in your area. Be prepared to serve notice on the late-paying tenant.
Many landlords and property managers take the approach that the eviction papework should be served immediately, before any negotiations take place over payment of the rent. This keeps the landlord in the driver’s seat, and gives tenants the incentive to work it out.
Some landlords opt for a strategy of getting the late-paying tenant out of the property voluntarily as quickly as possible, before they disappear entirely, or cause property damage.
Usually, lack of money is the reason behind the late payment, although sometimes the tenant is away on vacation or forgets. If the tenant needs help coming up with the rent, they must do it on their own. If need be, they can borrow the money from some other source and pay the rent in full. Accepting partial payments usually ends in disaster for the landlord.
With AAOA, landlords have resources at their fingertips. Check out our Landlord Forms page.
American Apartment Owners Association offers discounts on products and services for landlords related to your rental housing investment, including rental forms, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.