When A Tenant Won't Pay Rent On Time

If you have been a landlord for longer than a year, chances are you have run across a tenant who does not pay rent on time or worse, doesn’t pay the rent at all. This is a common problem for landlords and the best way to handle it is to be firm, fair and consistent with this problem tenant.

We have all experienced it. Rent is due on the first; here we are on the third and still no check. You call the tenant who tells you that “the car has broken down and needs to be fixed so I can work” or “my check doesn’t clear until Monday, I’ll have it for you then”. Monday comes and you hear “I’ll have the money on Wednesday for sure”.

As soon as you let the tenant start calling the shots, they won’t stop. Next month they will remember the power that you have relinquished and will stretch rent collection out all over again.

How should you deal with this tenant? There are several steps you can take to help them get the rent to you on time, every month.

The first step you can take is to be firm is from the start. When you sign the lease with a new tenant inform them that the rent is due on the first of the month and they will be paying late fees for every day the rent is late. Tell them that communication is key and to call you if the are going to be late with the rent. It’s up to you if you are going to give them a grace period or waive late fees the first time rent is late if it’s not habitual. This way you are the one calling the shots, not the tenant.

The second step is to enforce late fees every month. Tenants hate to pay extra rent and when they know you are going to charge them $5 every day the rent is late they will make every effort to get that rent to you on time. Charging late fees and more importantly enforcing late fees also takes some of the stress out of not having that rent in hand. You know you are making $5 extra per day and if they don’t pay the fee immediately you can deduct it from their deposit at any time. Be sure to inform them you made this deduction and don’t let the security deposit go to low using this method.

The third step is, when the rent is 2-3 days late, issue a 10 day notice to pay rent or quit. It doesn’t matter how nice this tenant is, or how great your report is with this tenant. This gives you the OPTION to file for repossession. Chances are they will pay you before you have to repossess the apartment but incase they don’t pay you, you can file after 10 days. A lot of landlords wait too long to issue this 10 day notice. By the time they want to start the legal path, the tenant will have 10 additional days before the landlord can file to repossess the apartment because of the requirement to deliver the 10 day notice.

The fourth step is to leverage the power you have over the tenant’s rental history by reporting them to any or all of the different credit bureaus and tenant databases. To report to the credit bureau you need to pay for membership to a service that can submit this for you. To report them to the Deadbeat Database you need to join their website which costs about $70. Finally, the free option is to join the FreeLandlordSoftware.com which gives you access to a database for landlords to post and browse tenant rental histories for free. Whichever option you choose, you should inform the tenant of your intention and this may encourage the tenant to pay what they owe you.

Remember, you are the one with the control. It is your property and it’s up to you to protect your investment. When you apply the pressure to pay the rent early in the process, you can always ease up after you are paid. When you wait for the tenant to string you along, you give up the control and you are the one that will loose.

Remember, be firm, fair and consistent with your tenants and you will always keep your losses at a minimum.