As a landlord, you place residents who you believe will pay rent on time, take care of your property and follow the terms of your lease. When rent suddenly doesn’t come in, you might feel nervous and that’s normal, but try not to panic. There could be a simple explanation.
Today, we’re discussing what happens when your resident doesn’t pay rent. We have a list of best practices that we use at Mynd Property Management and we want to help you handle timely rent collection whenever possible.
The process of collecting late rent will depend on where your rental property is and how you feel it’s best to proceed.
Set Yourself up for Success Early
One of the best ways to deal with late rent payments is not to have any late rent payments at all. When you’re screening residents, do everything you can to get an idea about whether they’ve paid rent on time in the past. A review of credit, rental, and eviction histories will usually tell you what you need to know.
Make sure you have a written lease agreement in place. That lease agreement should include a clear and consistent rent collection policy. Your rent collection policy should state how much rent is due, when it is due, whether there’s any kind of grace period in place, and where to send rent to make a payment. The rent collection policy and the lease agreement should also include information about late fees and other penalties that will be enforced if rent is not paid.
When you have late fees and penalties in place, make sure you enforce them consistently. You don’t want to train your tenants to pay late. Show them how important it is to you that the rent comes in on time. Don’t let them get away with late payments. If you accept a late payment one time without charging a late fee, your tenants will have no incentive to pay on time.
Offer Online Payments if Possible
We strongly recommend that you provide a platform for tenants to make electronic payments. You won’t have to hear excuses like “the check is in the mail.” You will increase the likelihood of on-time rental payments, and you’ll also be able to track when those payments are made. Residents also appreciate the ease and efficiency of paying rent online or electronically. They can set up recurring payments or reminders so that they aren’t late or running behind.
If you don’t have the technology that allows for online rent payments, see if you can still accept electronic transfers. There are plenty of digital platforms such as Paypal, Apple Pay, and Zelle, among others. When you give your residents multiple ways to pay rent, you will increase the likelihood that you’ll be paid on time.
Collect Late Rent in Accordance with the Law
It’s really important to know your local ordinances and state laws in terms of how you can collect late rent and what the timelines and steps are for the eviction process. There are normally a lot of things that happen between the rental due date and the eviction hearing in court.
Eviction Steps: Communicate with Residents
If the rental due date comes and goes and any grace period has expired and you still haven’t received the rent payment, there are a few things you can do.
First, be swift with communication. Reach out to your residents via phone, text, or email. Try to get ahold of the tenant and ask where the payment is. Maybe they just paid the rent or they put it in the mail that morning. Find out what the situation is, especially if this is a resident who usually pays on time without any issue.
You can wait a few days before you make a legal demand if you want to, especially if you’re trying to preserve the relationship you have with your tenant. As soon as a notice is served the situation can heighten. If you have a resident who is normally pretty great and this late payment is uncharacteristic, it might be better to give them a chance to pay before you escalate the situation.
However, if this is a tenant who routinely pays late or you have a specific rent collection process that you’re committed to following, file the legal demand immediately. That’s a good and valid option, too. It really depends on your relationship with the resident and whether you have any confidence that rent will ultimately be paid.
Legal Notices and Demands for Payment
When we talk about legal demand notices for rent, you need to remember that these are called different things, depending on the state that your rental property is located.
When we mention a legal demand notice, we’re talking about the documentation you serve on the resident to actually start the formal eviction process. In many states, this is a three or five day notice to pay rent or quit. You’re giving the tenant a written notice that rent is late and they have three or five days to either catch up with the late rent payment or move out of the property. Usually, a delinquent tenant will respond and pay the rent as soon as they receive this notice because they don’t want the eviction process to go any further.
Again, this process varies by state. Make sure you know what kind of notice you need to serve, how you need to deliver it to your tenant, and what sort of documentation you need to get the process going.
The creation and delivery of this demand for payment is critical and you may have to show proof that it was done later on if the issue goes to court. So, make sure you know the requirements. If you’re unsure about how to proceed, seek legal advice or talk to a property manager.
Once you’ve served the notice, if the tenants don’t respond or pay within the stated time period, you have a couple of options on how to proceed.
The market you’re in definitely matters. It’s important to know your jurisdiction and whether the eviction process will be quick or slow. In some states, it will take two to four months before you even get a court date. This will be expensive for you because the tenant won’t be paying rent for those months. In other jurisdictions, there could be a mediation requirement before you can get a court date. In cases like these, it might be worth your time and resources to try something new. You could try to set up some kind of payment plan with your residents. Maybe you can come to an agreement so that the tenant gets back on track and you can avoid the time and expense of a legal process.
If you do reach a payment plan agreement, make sure you put it in writing. Have both parties sign it and then enforce it. If the tenant does not meet the requirements of the payment plan, you’ll want to move forward with the eviction.
Knowing the legal complexities or simplicities will help you make the best decisions when you’re attempting to collect late rent. If you have to wait for two to four months and there are high filing court fees, so be creative. You might want to settle with your resident in another way. For example, you could find yourself in an extreme circumstance where you just want to get the property back. You could offer to waive the overdue rent and just let the tenant move out without an eviction on their record. Stipulate that you want the property returned in good condition, and then just let them go and cancel the lease. This may be more cost-effective if you have a lengthy court process looming.
No matter where your rental property is, it’s important that you know the laws there. Even a small mistake during the eviction process can get your case thrown out. And then you’ll have to start over and you’ll just lose more time and money doing it again.
The process of collecting rent and filing for eviction can be complex. You’re absolutely required to follow the law. You cannot change the locks on the tenant or turn off the utilities. You cannot make threats. Stay professional and remove the emotions you may be feeling from the matter. Trust the legal process or work directly with the tenant to get what you want – whether that’s caught up payments or possession of the property.
Unfortunately, when it comes to eviction, you have to be an expert. If you’re not an expert, we strongly recommend that you consult with an attorney. Also, you should make sure you participate in your local apartment association.
We are always happy to help landlords who find themselves in a tough spot. If you’d like to learn more about our success with rent collection, lease termination agreements, and evictions, please contact us at Mynd Property Management.