Late Rent Payments: What Can Landlords Do?

[blockquote share=”true”]I knew my rent was gon’ be late about a week ago,
I worked my ass off, but I still can’t pay it though. – Pitbull[/blockquote]

Tenants can come up with all kinds of excuses for late rent payments. With all the negative repercussions for tenants such as late rent fees, bad credit ratings and negative references from landlords, it’s surprising how common this issue comes up. Dealing with a tenant who is late in paying the rent, whether for the first time or a repeat offender, can throw up a number of troubling dilemmas for landlords. You need to have a process in place to handle this breach of contract in a consistent way which is in accordance with the law. This will reduce the strain on your time and energy, and give the tenant the clear signals they need to understand the consequences of not paying the rent on time.

Following the correct process from the start also means that if it comes to an eviction, the court proceedings will be much smoother. Here is a simple and quick breakdown of the steps you should take when a tenant is a late rent offender.

1. Act Quickly and Consistently

If you’ve double-checked your financial records, and the rent that was meant to appear on your invoice has not arrived, then it’s time to take action. According to the specific laws of your state and to the terms of your lease agreement with the tenant, there will probably be a grace period of 3-5 days after which a penalty for late rent payment may kick in.

A good first step is to get in touch and give them a polite reminder that the rent is overdue, and that the late rent fee will kick in accordingly within the next few days if they don’t make the payment. This demonstrates that you are on top of the situation and also gives the tenant fair warning if it was a simple error on their part.

2. Try to Find Out Why Late Rent is an Issue

Of course there should be no valid legal excuse for your tenant to fail the obligations on the contract they signed with you, but may be useful to try find out if they are struggling financially for whatever reason. Perhaps they have been laid off at work, sick, or struggling to manage their monetary affairs adequately. Being armed with this information will help you to build a picture of how you’re going to deal with this tenant and their late rent problem.

If you feel sympathetic to the tenant, and trust that they will make good on their rent payments in the future but are simply having a little financial blip, perhaps you can work out a late rent repayment schedule with them, spreading the overdue rent across the rest of the remaining tenancy. Get this agreement into a written document signed by both parties.

Landlords have different opinions on this matter, and it very much depends on the circumstances. If a dose of sympathy and patience is not appropriate for the tenant in question then proceed to serve the tenant a Late Rent Notice.

3. Serve the Tenant a Late Rent Notice

As a counterpart to your phone call, you can send your tenant a formal Notice of Late Rent. This should include a list of all the expenses that are owed (including the late fees), and a warning about the legal action you will take unless the rent is paid by the stated deadline. Keep your own copy of this document as well, to use as evidence in court later if it comes to that. It can be served to the tenant in person, email, or taped to the door of the residence. This step is not required in all states but it will help to make the tenants realize the gravity of the situation and hopefully encourage them to pay up the rent promptly.

4. Serve up an Eviction Notice

If the date of your deadline for payment has been reached and the situation still hasn’t changed, then it’s time to serve up an Eviction Notice, also known as a “Pay or Quit Notice”. You can find all the information regarding the details which need to be included in an Eviction Notice here. This is the formal beginning of the eviction process, which gives the tenant the option to pay the rent immediately or else they have 3 to 7 days to leave the property (check your state law to see what the regulations stipulate).

There are other ways to deal with troublesome tenants which might help you to avoid taking them to court. For tips, check out our previous blogpost, Avoid Serving an Eviction Notice: Five Golden Rules.

5. Go to Court

If the final deadline of the eviction notice has passed and the tenant has still refused to pay or vacate the premises, then consult with an attorney at the earliest possible opportunity and get a set date for a formal court hearing by filing a tenant-landlord complaint. Have all of your documentation ready, including the lease agreement and copies of all written exchanges between both parties. A judge will decide whether or not your claim against the tenant is valid.  If the court supports your claim, the tenant will be forced to vacate the property and a sheriff may be sent to supervise while the tenant removes their belongings from the residence.

Actions to Avoid at All Costs

There are a few things which it is highly inadvisable to do when a tenant is late with payments. Such actions could see you end up on the wrong side of a court case, and will likely prolong the eviction process for months longer than necessary.

• Get angry – becoming aggressive, violent or threatening with your tenants may give them cause to bring a case against you. It’s also unnecessary; the courts are there to help defend your rights as a landlord, so stay professional and calm in all of your interactions with your tenants.

• Accept partial payments – if you have any suspicion that a case will end up in court then do not accept partial payments of the money owed to you. This will void any legal action you take against the tenant and prolong the stay of unwanted tenants as you restart the lengthy process of eviction from the very beginning.

• Harass the tenant – showing up at your tenant’s property unannounced and demanding entry, or contacting them too frequently can be interpreted as harassment. You may find yourself being arrested if accused of this. If tenants are unresponsive to your communications, then follow through with the eviction process in accordance with the law. Send letters by Certified Mail and request a return receipt, which can be used as evidence that any communications sent to the tenant have been seen by them.

• Attempt to evict the tenants yourself – this is known as a “Self Help Eviction” and it is, simply put, illegal. Actions such as cutting off the utilities, forcefully removing the tenant’s property, changing the locks, or threatening the tenant give the tenant grounds to file a court case against you. Being sued for a wrongful conviction, assault, slander, battery, libel or the intentional infliction of emotional distress will cause you far more trouble long-term than simply dealing with a difficult tenant in the proper manner.

Alternative Options to Serving an Eviction Notice

If you want to avoid the costs and hassle involved with the legal process of an eviction, then you can consider simply asking the tenant to move out by a certain date and thus canceling late rent that they owe you. This may be a lifeline for tenants who are really strapped for cash, and could provide you with a quick and easy way to replace the tenant with someone more reliable who is able to foot the rent. 

Another option is to follow a process known as “Cash for Keys” which involves paying the tenant a certain amount in exchange for them leaving the property in a clean state and handing over the keys to the property.  Make sure any verbal agreements are put down in writing and signed by both parties. Don’t hand over any money until the keys are returned to your hands and their belongings are out of the property.

Of course if the tenants refuse to take up these offers, then you will be forced to take legal action against them to formally evict them. But if you follow these guidelines and adhere to the specific laws of the state, you should not have any trouble. The most important thing in the face of a late rent payment is to keep calm and respond in a professional and prompt manner.