On-time rent payments are key to a successful rental property business. Without consistent income, landlords are faced with covering bills out of their own pockets. Unfortunately, you’ll likely come across a tenant who doesn’t pay their rent on time–or at all. While these situations can be frustrating, handling them the right way is essential to avoid legal trouble. Today, we’ll review when rent is considered late, how to handle late rent payments and tips for avoiding late rent.
Contents of This Article:
- When Is Rent Considered Late?
- Should You Offer a Grace Period?
- How Should You Handle Late Rent Payments?
- How to Avoid Late Rent Payments
- Ensure On-Time Payments With PPM
When Is Rent Considered Late?
Property managers in Northern Virginia know how important it is for tenants to pay their rent on time and in full. After all, nobody wants to track down a tenant because their rent is late or impose fees if they don’t pay on time. So, as a landlord, it’s important to include in your lease agreement when rent is due and the consequences for not paying on time.
If rent is paid later than the date you set, it’s considered late. That said, most landlords require rent payments by the 1st of each month. However, you can generally choose any day you’d like, as long as it’s consistent each month. Additionally, you may make exceptions for weekends or holidays if the due date falls on them.
Regardless of which day you set and any exceptions you may make, it’s important to put it all in the lease agreement. That way, you and your tenants will be on the same page, and you can avoid late payments.
Should You Offer a Grace Period?
A grace period is a small window of time after the rent is due that tenants can still pay without penalty. While you don’t always have to offer a grace period, some state or local laws may require one. Additionally, you can choose to give your tenants a short grace period if they miss a rent payment.
Most grace periods are five days, although you can choose how many days you think is fair as long as no laws require a specific amount of time. That said, if the grace period has passed and your tenant still hasn’t paid rent, it is considered late.
How Should You Handle Late Rent Payments?
When a tenant doesn’t pay rent on time, your initial reaction may be frustration. After all, without rental income, business-related bills, like mortgage payments, taxes, and management fees, may come out of your pocket. So, how should you handle tenants who pay late? Here are a few things you can do.
- Check Your Lease
- Send a Late Rent Notice
- Talk With Your Tenant
- Offer Reasonable Solutions
- Take Legal Action
Check Your Lease
Before doing anything else, you’ll want to read over your lease agreement to fully understand the terms you and your tenant agreed upon. In your lease, you should find the rent due date, information about a grace period, and applicable fees for late rent payments. You may have also included legal procedures for late or nonpayment of rent. Either way, reviewing this information ensures you stay compliant with rental laws.
Send a Late Rent Notice
If the rent is late and the grace period is up, you’ll want to send a late rent notice to your tenant. This is an official notice that reminds them to pay rent immediately. It should state the amount owed, any late fees, and the date rent is due. That said, sending this notice as soon as the rent is late is crucial to avoid any disputes later on.
Talk With Your Tenant
Once you’ve issued a late rent notice, contacting your tenant to check in with them wouldn’t hurt. They may have completely forgotten to pay rent, or they may be going through hard times and unable to pay rent. Some landlords are willing to negotiate a payment plan or suggest assistance programs for tenants struggling to pay rent. Regardless, directly speaking with them can help clear up any misunderstanding and strengthen your landlord-tenant relationship.
Offer Reasonable Solutions
If your tenant is struggling to pay rent due to financial difficulties, you may consider reasonable solutions to help them catch up. While you’re not obligated to do so, and it’s important to receive rent payments on time, being flexible can benefit both parties. There are plenty of ways to go about this, whether you allow your tenant to split payments into smaller amounts over a set period or you decide to waive their late fees to alleviate some of their stress. Either way, helping your tenant can also help you receive your payment faster.
Take Legal Action
You may need further action if you’ve done your best to work with the tenant by sending them a late notice or offering payment solutions but still haven’t received rent. This may include sending a Pay or Quit notice, which is a formal notice that gives your tenant one last opportunity to pay rent or vacate the property. If they still fail to pay after this, the next step is eviction.
How to Avoid Late Rent Payments
No landlord or property manager wants to track down a tenant because they missed a rent payment. Late rent payments throw a wrench in a landlord’s cash flow, and they can also strain relationships. However, there are certain things you can do to avoid late rent payments, including the following.
- Offer Incentives- If you want to reduce late payments, consider offering incentives for paying on- time or early. For instance, you can offer perks like a gift card, a small discount, or other reduced fees.
- Simplify the Process- If paying rent is a dreadful process, tenants may be more likely to pay late. However, if you make it easy, like offering online payment systems, it’s more motivating to pay on time. You can also encourage tenants to set up automatic payments to avoid missed deadlines.
- Enforce Late Fees- Some landlords threaten late fees but don’t actually enforce them. However, you can only be burned so many times. It’s important to consistently enforce late fees so tenants know they must pay on time or face a higher payment for being late.
Ensure On-Time Payments With PPM
Late rent payments, or no rent payments at all, are a landlord’s worst nightmare. Nobody wants to track down tenants to remind them to pay rent. However, it’s easier with a property management company. Most rental management companies, like PPM, make it easy to pay rent, reducing the amount of late payments you receive.
Professional Property Management in Northern Virginia is here to help you with your rental business. Whether it’s marketing your rental, screening tenants, or collecting on-time payments, we’ve got you covered. Contact PPM today to learn more about how we can help your rental business succeed.