Property managers can have leeway when dealing with tenants. However, when it comes to tenants with late payments, you must be firm. Leniency or improper handling of late rent payments can lead to major problems down the line. To protect your property, here’s how to handle late rent payments.
Why Do Property Managers Need to Handle Late Rent Payments?
Collecting rent is one of the main responsibilities of a property manager. Though the task may seem simple, there are a lot of circumstances that can make it quite difficult. One of these instances is late rent payments. Tenants will have different reasons for not paying rent on time, and they may also have varying reactions to your rent collections process.
While it’s important to understand your tenants’ personal circumstances, property managers must be firm when collecting rent payments. A single overdue payment might not be a big deal but if tenants see that you are lenient, they are more likely to continue paying rent late. This can lead to high delinquency rates and can potentially put your property in the red.
A Guide to Handling Late Rent Payments
Property managers should have a standard procedure for handling overdue rent payments. A uniform approach allows you to treat each tenant exactly the same way, regardless of their personal circumstances. It can also protect you from potential liabilities in case a tenant decides to pursue legal action. Here are important steps to follow when collecting late rent payments.
1. Check Your Standard Lease Agreement
The manner by which you handle overdue payments will depend on the rent guidelines outlined in your standard lease agreement. A good lease agreement should have the following information:
- How much rent is due each month?
- When is rent due?
- How should tenants pay their rent? (payment channels)
- Are there late fees for overdue payments? If so, how much?
- Do you have a grace period? If so, how many days?
- What happens if tenants do not pay rent? (specify the procedure for terminating tenancy)
If your lease agreement does not have a clause on late fees, you cannot simply decide to collect late fees when tenants do not pay rent on time. Similarly, tenants cannot demand a grace period for rent payments if it was not stipulated in the lease agreement.
Depending on the location of your property, state, and local laws regarding late rent payments may also come into play. Florida has an established Landlord and Tenant Law so this should be followed by property managers operating in the state.
2. Honor the Grace Period
Property managers must honor the grace period stipulated in the lease agreement. For example, if the grace period is three days, tenants should not be penalized for not paying rent within those days.
3. Send a Written Notice to Pay Rent or Vacate Premises
If a tenant still has not paid rent after the grace period, the property manager can then send a written notice to pay rent or vacate the rental property. A tenant will have three business days to respond to your written notice. According to Florida law, all notices must be hand-delivered or mailed. If the tenant is not home, you must leave a copy at the residence.
4. Begin the Eviction Process/Terminate Lease Agreement
If a tenant still has not paid rent three business days after receiving the written notice, you can begin the eviction process or file legal action to terminate the lease agreement.
5. Send a Written Eviction Notice
Property managers must give tenants a written eviction notice. If they are a weekly tenant, they have 7 days to vacate the premises. For monthly tenants, the notice is extended to 15 days. Meanwhile, yearly tenants are afforded a 60-day notice.
6. Dealing with Partial Payments
If a tenant provides a partial rent payment, the property manager should issue a receipt with the date of payment and the amount received. The receipt should also indicate the remaining balance and new due date.
If the tenant fails to pay the remaining balance on the agreed-upon date, the property manager should once again send a written notice to pay rent or vacate premises. If the tenant still does not pay, continue with steps 4 and 5.
7. File a Suit in County Court
If you want to gain rent payment or possession of the rental property, you must file a suit in the county court. The court will send the tenant a summons. If they do not meet the requirements of the summons within the specified time frame, the court will issue a “Writ of Possession” and deliver it to the sheriff.
Once the tenant is served, they will have 24 hours to vacate the rental property — or else they will be forcibly evicted.
When Should You Make Exceptions for Late Rent Payments?
While the standard procedure for handling overdue rent payments may seem callous, it is the best way to ensure that tenants pay their rent on time. However, there are some circumstances where property managers can make exceptions on late rent payments.
For instance, during a pandemic like the coronavirus, property managers can surely become more lenient when it comes to rent payments. In times like these, it’s important to have open communication between tenants and property managers. Both parties can come up with feasible solutions such as negotiating the rent, setting up deferred payments, and changes in payment schedules. Property managers should also check with federal, state, and local governments for mandates like protection for renters.
In less serious circumstances, property managers can still choose to have discretion over late rent payments. However, just make sure that tenants will not abuse your leniency.
How Can Property Managers Reduce Late Payments?
Another way to reduce the stress involved in collecting late rent payments is to implement strategies that will reduce the occurrence of late payments in the first place. Here are some helpful tips to keep in mind.
1. Screen Tenants Carefully
A more thorough screening process will allow you to weed out potentially difficult tenants who will not pay rent on time. You should choose applicants with a solid credit score and a well-paying, stable job as they are the ones who are more likely to pay rent on time.
2. Implement a Payment Reminder System
It’s possible that late rent payments are simply due to tenants forgetting to pay. You can create a system that reminds tenants of the payment due date, or utilize one of the many available tools online. The system can send a text message or email to tenants prior to the due date. Just make sure to send the reminder at least three days before payment is due. You should also send a late reminder a day after the due date in case payment was not made on time.
3. Enable Electronic Payments
Making the payment process more convenient can also encourage tenants to pay rent on time. In some cases, tenants simply can’t pay their rent because they can’t go to the HOA office or payment center. Likewise, it takes a lot of time and effort for a property manager to manually collect rent from tenants. If you enable electronic payments, tenants will be able to pay rent wherever they may be. Online payments will also make it easier for you to track and document all payments.
The Impact of Late Rent Payments on Your Property
Having a strict procedure for handling late rent payments is one of the best ways to protect your property. Property managers need the money collected from tenants to pay for operating costs and other related expenses. Without that money, the property will not look as beautiful or well-maintained. If you are a property owner who is having a hard time collecting late rent payments, it’s best to have a property manager who can accomplish the task professionally and compassionately.
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