As a landlord, it is ideal to always have good tenants who pay on time. However, that is not always the case and no matter how well you screen potential tenants, you will end up with some less than pleasant tenants.
When one of your tenants isn’t paying rent, it is important to have a plan with how to manage the situation. Here are some steps and words of advice for confronting and dealing with a tenant who won’t pay rent:
Keep records and review the lease
When managing rental properties there is a lot to keep track of, especially with multiple units and properties. It is especially important to keep records of payments including when and how much is due. Schedule My Rent offers an organized and simple landlord dashboard that automatically documents when and how much tenants have paid and highlights missing payments in red making it easy to know who owes what. There is also the option of saving and sharing documents with tenants, such as lease agreements and move-in pictures.
Review late fees
Before taking any action, review the lease agreement to make sure late and other fees are specified in the lease agreement. It is also a good idea to review federal laws, state laws (summary from the American Apartment Owners Association), and make sure that any grace period for making rent has expired. Late fees are a great motivator for tenants to pay on time. Some property managers have an initial late fee after the grace period, then have daily late fees until the rent is paid. Daily late fees help to ensure that a tenant will pay as quickly as possible since the tenant is charged for every day until the rent is fully paid. Schedule My Rent provides features that allow landlords to set grace periods, late fees, and daily late fees automatically. The system will remind tenants when rent is due, when rent is late, and when late fees have been added.
Communicate with your tenant
As a landlord, if you consistently let your tenants pay late or make late partial payments without any late fees or consequences, chances are they will do so every month. You are probably relying on getting rent payments every month for your personal finances or to pay your mortgage, so if your tenant doesn’t pay on time it could set you back.
It is important to communicate with your tenant and let them know that you can’t afford not to receive rent. If your tenant doesn’t communicate with you about why they aren’t paying rent on time and create a plan with you, it might be time to take action. Let your tenant know that if they can’t pay their rent, then they can’t stay. You could offer them the option to get out of their lease early without penalty if they leave by the end of the week or month. Sometimes if the tenant is faced with the prospect of losing their unit, they will be more proactive and responsible about paying their rent. If your tenant doesn’t want to move forward with that option, let them know that you will be giving them a formal eviction notice.
Hire a property manager
If you aren’t interested in managing tenants who won’t pay their rent, or you are too lenient on enforcing timely rent payments, you might benefit from hiring a property manager. A management company is a neutral third party who has policies for handling late rent payments, and a tenant who isn’t paying you rent will probably not try to skip on rent if a professional is in charge. Using property management software may also help since the software will automatically remind tenants and add late fees so this message doesn’t have to come directly from you.
Use rental property management software
If you would like to still be in control of your property, but don’t want to have to hassle tenants for rent, you can use a rental property management software. Schedule My Rent has features that allow you to send rent reminders to tenants, add customizable late fee policies, and stop rent collection from a tenant in the eviction process. Our system will take out the hassle of managing a property, giving you full control of your business.
Send your tenant a “pay or quit” notice
In most states, landlords are required to send a “notice to pay or quit” to their tenant who isn’t paying rent. This formal letter or email says something like, “You haven’t paid rent. You have X days to pay rent in full or your lease will be terminated and you will have to move out.” Normally, the X number of days is between three and five. If your tenant doesn’t move out or pay their rent, you are able to formally terminate the lease and your tenant will lose the right to live in the unit. This formal notice often gets a tenant’s attention and prompts them to pay. If your tenant doesn’t either pay or move out, you can file an action with an eviction court.
File an eviction action
A landlord is never allowed to force a tenant out of a unit without a sheriff. The sheriff is legally necessary and landlords are not allowed to cut off utilities or lock a tenant out. If your tenant didn’t respond to the “pay or quit” notice as discussed about, you can go to a local courthouse and fill out the paperwork for an eviction hearing. It is important to bring the “pay or quit” notice that you sent your tenant for the court’s records. After paying court fees, the administrator will schedule your hearing (usually two to six weeks from now). Then you or the court will serve the tenant a subpoena (a document requiring the tenant to come to court).
On the court date, show up to court and argue your case. If you win a judgement against your tenant then you can hire a sheriff to legally remove your tenant.
Alternate to an eviction: Pay your tenant to leave
If your tenant still is not paying rent after your conversation, you can still avoid the eviction process. If your tenant is having financial troubles and that is the cause of them not paying rent, you can motivate them to leave by paying them.
This seems like an odd solution since you are the one who is supposed to be receiving money. Overall if you weigh the costs and benefits of the decision it might work out for the better. An eviction will most likely get a tenant out of your property, but the process is long (typically one to three months). If your tenant leaves immediately for an amount that is less than one month’s rent, you will probably save yourself some money and the stress of an eviction process. If you don’t have everything for the court (all paperwork filled out correctly, all late fees added per state law, all notice timeframes and court notices served with the proper timeframes and methods, etc.), the court may delay the hearing or rule in favor of the tenant.
For more information on Rental Property Management Software and collecting rent online, visit http://www.ScheduleMyRent.com or call us at (844) 465-3339.
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