If your tenant runs late with the rent, here are steps you can take to resolve the situation and get paid.
When a new tenant moves into your unit, you expect that they’ll pay their rent on the first of the month like clockwork. But, that might not always be the case. Despite their best intentions, some tenants might be late paying rent and you’ll have to send a late rent notice.
Handling late rent payments is an inevitable part of owning or managing rental property. So, creating a process for late rent, including a standard letter to send to tenants, will make the situation run much more smoothly. Here’s an overview of how to write a late rent notice, when to send one to renters and what to do when the tenant doesn’t pay the overdue rent.
What is a late rent notice?
Simply put, a late rent notice is a letter written by the property manager (or owner) to the tenant informing them that rent is past due — according to what’s included in the lease agreement. The lease should specify the rent amount, when it’s due, when it’s considered late and how you will notify tenants of overdue rent.
The notice tells the tenant how much they owe, any late fees you’ll charge and when they must pay rent. You should also include the next steps for renters — either pay the rent and continue living in the home or what will happen if they don’t remedy the situation, such as starting the eviction process.
When rent is late, it’s a good idea to encourage tenants to discuss the situation with you. Good communication will help you find out if they’re struggling with financial problems or if they believe you’re not holding up your end of the lease agreement, such as neglecting repairs. To maintain a positive relationship with renters, try to work with tenants to come up with a resolution that benefits everyone.
What should a late rent notice include?
When drafting a late rent notice, first check your local rental laws to understand any regulations regarding late rent. For example, you’ll want to find out if you can charge late fees, whether there are specific time frames for what’s considered late rent and when you’re required to notify tenants that you’re taking action.
A late rent notice should include the following elements in most cases:
- The entire property address of the rental
- Date of issue for the notice
- Names of the tenants on the lease
- The rent balance due
- A list of late fees
- How tenants can pay the late rent, such as online or by check
- An explanation of what happens if they can’t clear up the late rent or continue to pay late
- A resolution date for the situation
- Signature of the property manager or owner
- Contact information for the property manager or owner
Sample late rent notice template
To streamline the process of late rent payments, create a standard letter that you can send all tenants. You can use this sample late rent notice template below. Simply download as a PDF or download as a Word document and customize it for your needs.
When to send a late rent notice?
Property managers typically require tenants to pay rent on the first of the month. They will also specify when rent is considered late, usually five or seven days after the due date. So, the best time to send a late rent notice is immediately after that grace period.
Local rental laws often include rules when rent is overdue, when to send notices, whether you can add on late fees and the late fees permitted. Some late fees are a percentage of the rent, such as 5 percent, or a flat rate. Include all of these details in your lease agreement.
You can deliver the notice in person or send it certified mail, which provides proof of delivery. Another option is to email it with a “read receipt” notifying you that the tenant opened the message. However you send it, maintain a copy of the late rent notice in your files.
What if tenants don’t pay the past-due rent?
After you’ve sent the late rent notice and the tenant doesn’t pay the overdue balance, you can begin an eviction. These processes differ by state (and even at the city level) so it’s crucial to learn about the requirements and legalities in your area. Consult an attorney for help before taking any action against a tenant.
An eviction is a formal process to terminate the lease agreement early because of failure to pay rent (or other reasons such as a tenant damaging property). Often, that starts with a pay or quit notice, a formal letter sent to the tenant stating that they need to pay the overdue rent or vacate the home. The notice usually gives tenants a few days, often three to five, to pay up or move out. If a tenant leaves the home without paying rent, you might be able to get a judgment from the court to recoup the missed payments.
In some states, a pay or quit notice begins the eviction process, while in others, you’ll need to take additional action to evict. That’s why understanding local landlord-tenant laws is vital.
How to work out a deal for rent repayment
No one wants to go through an eviction. Evictions are costly for property managers and owners and can mar a tenant’s credit and bring extra charges for them. If your tenant contacts you about the late rent notice, see if you can work out an agreement. After all, you don’t want to place more financial burden and extra stress on the tenant if they’re struggling with something like a lost job or another issue.
Finding a way to keep your existing tenant, especially if their struggles to pay rent are only temporary, will likely save you money in the long run. Some possible rent repayment agreements you can come to include:
- Adjust due dates: For renters with multiple bills, agreeing to change the rent due date in the future could ensure they’re better able to pay on time.
- Split rent into two payments: If tenants struggle to pay the lump sum, setting two smaller rent payment due dates might be helpful. Consider scheduling the due dates closer to when the tenant gets paid each month.
- Waive late fees: Consider not enforcing the late fees if the tenant is able to repay the rent balance.
- Set up a repayment plan: A repayment plan could help tenants repay the past-due rent in smaller increments, which they may find more financially doable. Consider dividing the late amount over six months or a year and adding it to the regular rent payment.
If you can come to an agreement with your tenant over the late rent, put it in writing. Include all the details that you’ve agreed to, as well as what happens if they violate the agreement, and make sure you and the tenant sign it.
How to make sure late rent doesn’t continue
Whether you’ve resolved the late-rent situation with your tenant or want to ensure it doesn’t happen with a new renter, establishing a few best practices can help. Though, late rent is inevitable sometimes.
- Charge a reasonable amount of rent: Check out how much similar properties in your area are renting for and charge something comparable.
- Screen tenants before signing a lease: Part of the screening process should include checking their credit, verifying employment and talking to previous landlords about the tenant’s rental history.
- Review the lease with tenants: Before signing, verbally go through the lease with each tenant. Explain when rent is due, when it’s considered late and what happens if they don’t pay on time.
- Accept rent payments online: Letting tenants pay rent online and encouraging them to set up automatic payments could help you get paid timely. Rent.com enables property owners and property managers to accept rent online.
- Send reminders: Set up automatic email reminders to send to your tenants a few days before rent is due. This might ensure no one forgets!
- Post notices in your apartment community: Hang posters in common areas of your apartment community, reminding everyone when rent is due.
- Keep the lines of communication open: Maintain a positive relationship with tenants and foster a sense of openness. Encourage anyone with a problem paying rent to discuss it with you as soon as possible, so that you can find a solution and avoid eviction.
How and when to send a late rent notice
Property managers and property owners likely don’t expect late rent payments to occur. But sometimes, events outside a tenant’s control come up and prevent them from paying on time. Being prepared and drafting a late rent notice will help resolve the situation easily. Consider listing your property on Rent.com, where you can reach potential renters, screen them and collect payments online.
The information contained in this article is for educational purposes only and does not, and is not intended to, constitute legal or financial advice. Readers are encouraged to seek professional legal or financial advice as they may deem it necessary.
Source: rent.com