11 July 2016

What to do when tenants don’t pay rent

It’s always better to have a prophylactic process in place, one that discourages tenants from delaying rent payments. Nonetheless, late rent payments do sometimes occur.

But how should prudent landlords deal with late rent payments?

There is both a soft and a hard approach – both of which are looked at in some detail below. The soft approach is firm but fair, and doesn’t necessitate the burdens that come with the harder, more expensive, and more time-consuming legal alternative.

Here, we set out the stall – offering some essential thoughts on what landlords, whether experienced or otherwise, should do when tenants don’t, or refuse, to pay their rent on time. With time, dealing with unscrupulous tenants becomes that much easier to manage.

Being firm, but fair

Sometimes it’s the landlords who are at fault. It’s not uncommon for landlords to falsely believe that the tenant didn’t pay his/her rent.

This may be the case with faulty records, or records that haven’t yet been updated, or it may be because the landlord has simply forgotten that the tenant had paid their rent. Yes, it’s embarrassing, but landlords should double-check whether they’re actually right!

And should landlords prove to be correct, they are then obliged to follow the letter of the law – both federal and state statues. However, landlords should not that a grace period of 3-5 days usually applies to give the tenant enough wiggle-room to actually pay the rent.

Penalty fees may also apply, and are often stipulated in the lease agreement. Landlords should revisit their lease agreement to determine the precise terms applied. Landlords may, however, retrospectively apply a late fee even if it isn’t specified in the contract.

Landlords should also note that the failure of tenants to pay their rent constitutes a breach of contract, and the situation should always be treated as such.

Taking the next steps

Should the tenant fail to comply in the post-grace period, the landlord should then issue said tenant with a late-rent notice.

This notice can be delivered via post, email, or attached to the door of the property. It should contain the precise details of the missed rental payment as well as any other associated late fees.

Some flexibility and leniency is never a bad thing. Tenants may, through sheer ineptitude, have forgotten to issue the rental payment – this could be for any number of reasons, including an unexpected tragedy in their family circumstances.

It’s always worth keeping an open mind until the facts become clear.

After the late notice has been served, and the tenant has signally failed to address its urgency, the landlord should then contact the tenant directly – preferably by phone (landlords should, of course, always urge on the side of caution, such that they don’t veer into harassment).

The final stages

At this stage, the precise reason – or lack thereof – should become clear to the landlord. Every effort has been made on behalf of the landlord to notify the tenant and to determine the cause of the late rental payment.

It’s also the stage where landlords demonstrate their seriousness in dealing with the situation.

The landlord should inform the tenant of their intent to evict. They should also state what fees are owed – both the rent and the late payment fees – and the date by which the tenant should vacate the property. The letter should be both clear and concise.

Landlords should wait up to 5 days before the eviction process is further pursued. This gives the tenant a reasonable opportunity to respond accordingly, while also avoiding the accusation – should it go to the courts – that the landlord acted unreasonably in any way.

At this point, landlords should hire an eviction lawyer and a complaint should be issued to the relevant court at the earliest opportunity. Landlords should never forcibly evict the tenant, or harass the tenant in any way, as this can lead to legal action against the landlord.

It may take time, but tenants should be removed according to the letter of the law. Failure to comply by state and federal legislation opens a Pandora’s box of legal complications. This also shines a light on why landlords should only secure the very best tenants for their investment.

Dealing with late rent payments is an unnecessary burden for landlords. It’s time-consuming and, in the long-term, has the potential to undermine the income potential of that investment. Landlords should be prudent, aware of the law, and understanding of individual tenant circumstances, when dealing with late rent payments.