The late rent notice is the way to deal with tenants who always pay rent late. Collecting late rent payments is one of the most frustrating things about being a landlord. Overdue rent interferes with your cash flow and could mean you’re unable to pay your mortgage or bills. Also, tenants who are late with rent incur late rent fees—and this can increase tension between you and your tenants.
If a tenant’s rent money is habitually late, you may be forced to start eviction proceedings. Cutting your losses to get the tenant out can sometimes be the best solution. Unfortunately, the entire process costs you time and money, not to mention sleepless nights due to worry. Then, you have angry tenants to deal with who seem to think it’s your fault they receive an eviction notice.
There are ways you can deal with tenants to encourage on-time monthly rent payments. Thankfully, filing an eviction lawsuit is usually the last resort. This article explains the best steps to take with tenants who never pay rent on time. Knowing this information allows you to focus on your core business—being a great and successful landlord.
Before looking at how to deal with late tenants, it’s vital to know about any legal action you may have to take. Of course, before you file for eviction, it is essential to follow your state’s laws before starting an eviction process.
What is a Late Rent Notice?
A late rent notice is a formal, written notice to tenants who have missed a rent payment. The notice informs tenants that rent is past due and that you request immediate payment of rent. The notice also states the late fee charge as per the lease agreement.
Also called a “Notice to Pay Rent” or “Notice to Cure,” the document becomes part of any future eviction process. However, the notice of failure to pay rent is a polite first step before any non-payment situation must escalate. Hopefully, the tenant will take heed and make the appropriate rental payment.
When to Serve a Notice of Late Rent
You can serve a Late Rent Notice after any grace period that local laws or the lease agreement stipulate. Typically, you can serve the notice five to seven days after the rent was due. This also allows time for the rent check to arrive in the mail.
Of course, it’s not always necessary to slap “Failure to Pay Rent Notice” on every tenant who misses the rent deadline. For example, suppose you have a good, long-term tenant who is late with rent once. A better approach would be to find out the issue and allow them a few days to make the payment.
You must follow local laws on serving a late rent notice.
What is a 3-Day Notice to Quit?
A 3-day notice to quit is the start of the eviction process. You can only serve a “pay rent or quit” notice when tenants are always late with rent payments. The three-day notice to quit gives the non-paying tenant three days to pay rent in full or vacate the rental property.
There are different types of notices depending on your state rental laws. Some states give tenants more time to pay up or get out. So, check to see if you have to serve a five-day notice or 14-day notice. If the tenant fails to pay rent in full, you can serve an “Unconditional Quit Notice.”
How to Deal with Tenants Who Make Late Rental Payments
Dealing with late tenants is one of the most challenging aspects of being a landlord. On the one hand, you want to be reasonable and show compassion. On the other hand, you have a business to run, bills to pay, and properties to maintain.
What should you do when a tenant is a few days late, or even longer, with their payment?
Here are six steps to take when dealing with late rent payments.
1. Check your lease agreement and payment records
It’s always best to check the late fee policy in the tenant’s lease agreement. You will see how many days grace period the tenant is allowed. You can also double-check the late payment fee that you should charge.
Here are a few things to keep in mind about the late fee policy in your lease agreement:
- You can’t stipulate a shorter grace period than the law allows.
- Some local laws set caps on how much you can charge in late payment fees.
- If there is no late fee clause in the agreement, you can’t retroactively charge fees.
- Late payments are lease violations even if you don’t have a late fee policy.
- Withholding rent is in a tenant’s right if you have neglected property repairs. This is also a breach of contract on your part.
2. Send a late rent notice
If you haven’t received rent by the due date and the grace period is over, your next step is to send a formal notice of unpaid rent. Even if the tenant has only forgotten to make their payment on time, you should send the notice. Proper notice of late rent should include the date when rent was due and any late fees they owe.
Of course, if it’s the first time the tenant was late with their monthly payment, you could waive the late fee. You may also want to avoid threatening the tenant with eviction if they’ve never been late with rent before.
Many successful landlords use rent collection apps such as RentDrop. Automated payment features help tenants never miss a rental payment. It also means that tenants avoid late fees. The best rent collection apps also offer several payment options, including paying by debit card, credit card, or ACH bank transfers.
3. Make a friendly phone call
As a responsible landlord, it’s helpful to call the tenant a few days after you served the notice. You should confirm that they have received the information. You should find out when they intend to pay. There could be a few reasons why the rent money hasn’t arrived in your bank account.
If they are withholding rent for maintenance issues, you will need to work with your tenant on resolving those issues. It’s always good to check any lease clause in the rental contract to see under what circumstances they can withhold rent.
4. Work out a solution with your tenant
If your tenant says they can’t pay — what then? Depending on the circumstances, you could work out a financial hardship plan. For example, they could have lost their job or had unexpected medical bills. Of course, a late payment is always a breach of contract. But in this circumstance, it may be better to come to a mutual arrangement.
Suppose your tenant has always paid rent on time. You also know that they are excellent tenants who look after the rental unit. Serving an eviction notice won’t help them, and it won’t benefit you.
Maybe it’s possible to work out a flexible rent payment schedule. This could include allowing for deferred payments. Or they could make partial rent payments for a couple of months, then stick by a payment schedule to make up the shortfall. Whatever agreement you come to, put everything down in writing with both parties signing it.
It may be better to keep a good, trustworthy tenant and allow some flexibility. If you can prevent an eviction lawsuit, you will save money and time.
Of course, you may not be able to offer a hardship deal. After all, you are running a business and need to keep a healthy cash flow.
It’s never a good idea to offer flexible payment arrangements to tenants who are always late with rent. In some cases, you can offer them a “cash for keys” deal to get them out of the rental unit fast. This deal avoids the need for a costly eviction.
5. Serve a Pay or Quit Notice
Before you take eviction action, you have to serve a “Pay or Quit” notice. This formal termination notice informs the tenant that they have a certain number of days to pay rent in full or vacate—quit—the unit. The tenant is under obligation to pay the total amount of rent and the late payment fees owed.
Always check with state and local laws about serving a notice to pay or quit. Some states require a 3-day notice, and others stipulate a 5-day notice.
After serving a notice to pay rent or quit, it’s vital to remember that you shouldn’t accept partial rent payments. If you do, you are back to the start with trying to get a delinquent tenant out of your property.
6. Eviction Notice
If the non-paying tenant doesn’t pay rent within the time limit, you can file an eviction lawsuit. You will have to provide documented evidence of non-payment of rent. Also, you should show proof that you have served the appropriate notices before eviction.
During the eviction proceedings, you can’t take action against the delinquent tenant. And you must avoid entering the property or carrying out a self-help eviction—this is an illegal eviction.
Tenants Who Always Pay Rent Late — In Conclusion
Serving a late rent notice is the best way to deal with tenants who always pay rent late. The notice is a polite reminder that rent is due and how much they must pay in late fees. A notice of due rent is a crucial document. If tenants always pay rent late, the document is a vital part of an eviction lawsuit.