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Late Paying Tenants

It is a nightmare for landlords when tenants do not pay their rent on time, or worse, they do not pay at all. This nuisance can lead to filing fees and evictions which is can cost a lot of $$. Here are some ways you, as a landlord, can prevent late rent payments.

  1. Keep your property in good condition. High quality tenants have choices and a poor property will only attract poor quality tenants.
  2. Always verify an applicant’s background.  Ask for pay stubs from their job and a credit check report. Request for a co-signer or proof of other income with bank account statements.
  3. Call their previous landlord and inquire about any previous delinquency.
  4. Keep the details of rent collection in the lease clear. Be sure to include payment due dates, late fees, payment methods, action taken when a check bounces. Consider a 2-5 days grace period, holidays and weekends. Make aware of the consequences that can lead to an eviction notice.
  5. Build a good relationship with your tenants. However, know when to be firm and not be too lenient at the right time.

Your tenant is late on payment, now what? Here are some steps you can follow before it gets out of hand.

  1. Enforce your lease agreement. Always send out a payment notice a day after rent is past due. If you can gather renter’s emails and phones, you can offer to email/text them monthly rent payment reminders.
  2. Always charge a late fee.  The amount is usually no more than 3-5% of rent. If your unit is in a rent controlled area, your housing regulation may determine the amount. You can also opt to moderate increases daily. For example: $5 each day rent is late with a  maximum of 3-5% of rent.
  3. If your tenant does not include the late fees in their rent, your best bet is to deduct the late fees from their security deposit. You can also take the late fee and apply it to the next rent payment and issue an outstanding balance of unpaid rent.
  4. Being consistent will help your case in court or eviction. It will show you are fair to every tenant.
  5. You have the right to inform credit bureaus about any late payment. This can affect their credit score.
  6.  Consider the history of the tenant. If this is a new tenant, you will need to be firm and send the message that late payments would not be tolerated. If this tenant have rented for years and have never paid late, you will need to figure out if this is just a one-time thing.
  7. Contact the tenant personally and find out why they are late on payment. If it is likely to occur again in the future because of a financial situation, you may need to work towards a voluntary move-out.
  8. If the tenant is not following through with their claims, you will need to move forward with a pay rent or quit notice faster.
  9. If you have tried several times and your tenant is unresponsive, you may need to move forward to the next steps faster.
  10. Serve a PAY RENT OR QUIT notice. After a couple weeks, you can ask your tenant to move out in a specific period of time. Usually 15-30 days is fair. However, you cannot ask for late fees or other charges. But it is better to cut your losses now.
  11. Evictions should be your last option. You will need valid reasons and proof to take action. This is expensive, time consuming and not guaranteed due to rental laws favoring tenants in California. If it takes months to evict your tenant, they may get away without paying rent! However, it may be your only choice at this point.

Hopefully these steps will help you reduce the number of late payments! Remember, it is always to take preventative measures before dragging it onto the eviction stage. Unfortunately, sometimes one may have no other option.