In an ideal world, tenants always pay rent on time and do not escape late rent fees by making up excuses. In the real world, that is not the case.
Delayed rent is something a landlord can not avoid experiencing when renting out their property. It is part of the business because not all tenants have the same financial stability and integrity – two factors that often affect rent payment behavior.
Being able to handle late rent fees reasonably is vital for every landlord. Tenants work hard to earn their money, so unreasonably exorbitant late fees would send them complaining, causing conflict, which leads to a dent in a healthy landlord-tenant relationship.
What to Know to be Reasonable
For landlords to handle late rent reasonably, there are a few things they need to know about late rent first.
First, they need to acknowledge that not all delays in rent payment are intentional. It is vital to know how to identify if the delay is a one-time thing or is already habitual. Avoid the latter at all cost.
Secondly, a landlord must not consider the charging of late fees as a means to increase income. Instead, its purpose should be to discourage tenants from not paying on time.
Third, a landlord must know how to weigh when it is fair to give considerations, what kind of considerations, and when to firmly impose late rent fees.
There are several ways for landlords to charge late rent fees reasonably without failing to discourage late rent.
Do not overcharge
State laws allow a maximum amount that landlords can charge for late rent fees. It varies from state to state. A just way to determine a reasonable amount is by basing it on the problems caused by the delayed rent, and enough to deter the tenant from paying rent late again.
Just because a maximum amount or percentage allowable doesn’t mean the landlord should grab it as an opportunity to earn extra income. In a lawsuit, the court would determine if the amount is reasonable, so the landlord must justify it.
Meet halfway with tenants
If late payment has become habitual, a landlord must communicate with the tenant to know why there is a constant delay. Proper communication often leads to better solutions.
For example, a tenant’s payment schedule with his employer is a few days after the set due date for rent. Not all tenants have the luxury of having enough savings to cover the amount. A landlord may consider adjusting the due date by a few days. It is a little sacrifice for a landlord, but it may be worth it if the tenant would appreciate the gesture by renewing his lease.
Have a grace period
Most landlords give a grace period as a courtesy to their tenants. A grace period is the amount of time after the rental due date before a landlord charge a late rent fee. Usually, tenants get a three-day grace period.
Never waive the late rent fee
Regardless of whether the reason for late payment is valid or well made up, tenants must be held responsible for paying their rent on time. As mentioned earlier, the purpose of a late fee must be to prevent late payments from becoming habitual. Waiving a late fee could imply that a landlord lacks authority or is manipulatable. However, this does not mean that landlords should not make considerations.
Instead of waiving the late fee for a tenant who legitimately can’t afford it, the landlord can allow the tenant to pay the late fee in monthly installments. For example, if the tenant owes the landlord $60 as a late fee, he can pay $30 for the first month and the remaining $30 on the next month.
Landlords must be reasonable only to a certain extent. If a tenant continues to fail to pay rent on time despite countless considerations given to them, the landlord has the freedom to evict them. A vacancy may be a problem for a landlord, but avoiding it is not a good reason to tolerate a delinquent and abusive tenant. Rental agents like yourself can always find a tenant to fill in a vacancy. Publish a listing on Padleads and syndicate it to popular websites. That way, you can find new tenants quickly and save a landlord from a vacancy problem.