Author Topic: What to do about a late payment  (Read 7049 times)

hoping2retire35

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What to do about a late payment
« on: January 06, 2016, 11:14:44 AM »
Well its the 6th now, one of my tenants hasn't paid and per the contract there is a late fee of $50 as of today. I have a townhouse in a college town and the kids I generally rent to are pretty good. Never really any trouble unless something honestly breaks, or some simple repair but nothing that has ever cost more than the deposit.

I texted her and she said she is waiting for her student loan to clear so she can pay. This, I know, can be weeks. I have never charged a late fee before, (usually just forgetfulness and they apologize and send right away) and am reluctant to this time. What is a typical prescient in this situation? Should I just be happy when the rent comes and not mention it? Not say anything and take from the deposit? Make a note on the recipt that it was late and there is a balance of $50?

Again, I grew up managing property with my folks and we had plenty of problems. All of my tenants have been responsible and paid on time, or close to it, but this seems like it could go beyond just a few days forgetfulness. If I say something they may be resentful -not pay rent again or keep being late. Or, if it does not seem like I am holding them to the contract she may continue to be late in the following months.

Blonde Lawyer

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Re: What to do about a late payment
« Reply #1 on: January 06, 2016, 01:08:10 PM »
She likely had little to no control over when her loan payment came in.  My law school screwed up my entire class' loans one year and due to their error, I got the money over a month after the school was supposed to disperse it.  She should have reached out to you.  However, if I were in your shoes I'd wait to get the payment and then say that you are waiving the late fee this one time because of her prior on time payments and because she said the late payment was due to a disbursement issue.  But, this is her one and only warning and the next late payment you will have to charge a late fee.

Also, re: the deposit, check your local laws.  In my state you can't use a deposit for unpaid rent or late fees; actual damage only.

iamlindoro

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Re: What to do about a late payment
« Reply #2 on: January 06, 2016, 03:30:35 PM »
Let the tenant know that as rent is now late, you will expect the $50 late fee to be paid with rent. Fees are deducted before rent, so until the full balance is paid, rent has not been paid. Ask when she will pay you. If she fails to pay that day, issue a pay or quit notice.

Do not waive the fee and do not fail to address it. Not following through on lease enforcement will only hurt you, now or down the road.

bobsmiley

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Re: What to do about a late payment
« Reply #3 on: January 06, 2016, 11:02:09 PM »
as a tenant in an apartment I would be extremely annoyed if I was charged a late fee on the first offense and it would be fought. It would definitely be on my mind when I come up for renewal. Right now my late fee is $250 and they force us to pay by check so it's a pain to remember every month.

Every other place I've rented has waived the first late fee occurrence as a courtesy and these have all been established businesses with 50 - 500 units. I don't think it will cause you problems, rather it will buy you some slack on maintenance requests if you adopt this as an internal policy. If I actually got charged a late fee I would definitely up the requests for ticky tack stuff.

Cathy

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Re: What to do about a late payment
« Reply #4 on: January 07, 2016, 12:09:02 AM »
Another legal issue to research here would be whether the $50 late fee is enforceable. In general, penalties in a contract are not enforceable. Under the law of South Carolina (as elsewhere), "[t]he test for determining whether a stipulation constitutes a penalty is whether the sum stipulated is so large that it is plainly disproportionate to any probable damage resulting from breach of the contract". Moser v. Gosnell, 334 SC 425, 431-32 (Ct App 1999) (citation and internal quotation marks omitted). There is no South Carolina case law specifically addressing what kind of residential late fees are enforceable, but such case law exists in various other states. See, e.g., Biggio v. Puche, 2013 NY Slip Op 31919 (NY Supreme Ct 2013) (flat $150 per day late fee was unenforceable penalty); Spring Valley Gardens Associates v. Earle, 112 Misc 2d 786, 787 (NY County Ct 1982) (flat $50 late fee was unenforceable penalty). But see, e.g., Buchanan v. Kettner, 984 P 2d 1047 (WA Ct App 1999) ($2 per day late fee was enforceable liquidated damages provision and not a penalty).

Please note that I express no view on the specific circumstances of the original poster. I offer no view on whether the particular late fee proposed by the original post is or is not enforceable. This post is not, and does not purport to be, a comprehensive review of all the law relating to late fees. I've merely identified an issue here that requires further research. I have not actually completed that research. The application of the law will also depend on all of the facts, including the exact wording of any written agreements. The law is different in every jurisdiction. Readers should verify any assertions contained in this post, and in all of my posts, using independent research. The expectation is that readers will conduct their own research and not rely on the contents of this post or of any of my posts.
« Last Edit: February 02, 2016, 02:50:36 PM by Cathy »

arebelspy

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Re: What to do about a late payment
« Reply #5 on: January 07, 2016, 02:22:29 AM »
Let the tenant know that as rent is now late, you will expect the $50 late fee to be paid with rent.

+1.

If you would like, granting a one time exception is fine too.  Especially if they've been there awhile and never paid late.  Since it's a student, I assume since September? I would probably do a one-time waiver, here. 

I typically grant a one time waiving if they've been there awhile, but I also make it clear it's a one-time thing, and specifically say "the next time it's late, you will need to pay the late fee, which is___ and due if the rent is received after the ___, per the lease".

Whether you waive it, or not, clear communication about expectations is key.

as a tenant in an apartment I would be extremely annoyed if I was charged a late fee on the first offense and it would be fought. It would definitely be on my mind when I come up for renewal.
...
If I actually got charged a late fee I would definitely up the requests for ticky tack stuff.

What if it took two more weeks for her loan thing to clear, so you were paying 3 weeks late? Would you still fight it?

What other parts of the lease would you feel fine violating, and then fighting when the landlord wants you to follow the lease?

I'm guessing the landlord, with this type of attitude, might be okay with you not renewing (or might not even give you the option to renew).
« Last Edit: January 07, 2016, 02:24:15 AM by arebelspy »
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hoping2retire35

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Re: What to do about a late payment
« Reply #6 on: January 07, 2016, 06:30:38 AM »
Let the tenant know that as rent is now late, you will expect the $50 late fee to be paid with rent.

+1.

If you would like, granting a one time exception is fine too.  Especially if they've been there awhile and never paid late.  Since it's a student, I assume since September? I would probably do a one-time waiver, here. 

I typically grant a one time waiving if they've been there awhile, but I also make it clear it's a one-time thing, and specifically say "the next time it's late, you will need to pay the late fee, which is___ and due if the rent is received after the ___, per the lease".

Whether you waive it, or not, clear communication about expectations is key.

as a tenant in an apartment I would be extremely annoyed if I was charged a late fee on the first offense and it would be fought. It would definitely be on my mind when I come up for renewal.
...
If I actually got charged a late fee I would definitely up the requests for ticky tack stuff.

What if it took two more weeks for her loan thing to clear, so you were paying 3 weeks late? Would you still fight it?

What other parts of the lease would you feel fine violating, and then fighting when the landlord wants you to follow the lease?

I'm guessing the landlord, with this type of attitude, might be okay with you not renewing (or might not even give you the option to renew).

They are seniors, so unless they go to grad school probably will not renew. If I remember correctly, the time frame of when the university will distribute reimbursements will be friday the 15th. Given it is 10 days late and this is the first serious lateness (once before was only like a day), AND based on what others, including Cathy, have said about the legality and actual ability to collect a late fee I will let this one slide.
I am also concerned she could get a little bitter and could nick pick about tiny things that are not a problem but would give me a lot of hassle(door that needs slightly more pressure to click; water temp is not optimal or whatever).

To me this rental is about the least amount of hassle for the most profit. I'll probably write an email asking her to confirm her date for reimbursement and stating that I will waive the late fee this time since she has been a good tenant etc.

Another legal issue to research here would be whether the $50 late fee is enforceable. In general, penalties in a contract are not enforceable. Under the law of South Carolina (as elsewhere), "[t]he test for determining whether a stipulation constitutes a penalty is whether the sum stipulated is so large that it is plainly disproportionate to any probable damage resulting from breach of the contract". Moser v. Gosnell, 334 SC 425, 431-32 (Ct App 1999) (citation and internal quotation marks omitted). There is no South Carolina case law specifically addressing what kind of residential late fees are enforceable, but such case law exists in various other states. See, e.g., Biggio v. Puche, 2013 NY Slip Op 31919 (NY Supreme Ct 2013) (flat $150 late fee was unenforceable penalty); Spring Valley Gardens Associates v. Earle, 112 Misc 2d 786, 787 (NY County Ct 1982) (flat $50 late fee was unenforceable penalty). But see, e.g., Buchanan v. Kettner, 984 P 2d 1047 (WA Ct App 1999) ($2 per day late fee was enforceable liquidated damages provision and not a penalty).

Please note that I express no view on the specific circumstances of the original poster. I offer no view on whether the particular late fee proposed by the original post is or is not enforceable. This post is not, and does not purport to be, a comprehensive review of all the law relating to late fees. I've merely identified an issue here that requires further research. I have not actually completed that research. The application of the law will also depend on all of the facts, including the exact wording of any written agreements. The law is different in every jurisdiction. Readers should verify any assertions contained in this post, and in all of my posts, using independent research. The expectation is that readers will conduct their own research and not rely on the contents of this post or of any of my posts.

have to laugh when I read this. Makes me wonder if you do this a slight joke or are you actually concerned someone could sue for misinformation about $50, or you are in law school and practicing your 'lawyer talk'. Nonetheless, I am leaning toward what you and blondelawyer said and probably will avoid the late fee.

Kitsunegari

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Re: What to do about a late payment
« Reply #7 on: January 07, 2016, 08:54:54 AM »
She likely had little to no control over when her loan payment came in.  My law school screwed up my entire class' loans one year and due to their error, I got the money over a month after the school was supposed to disperse it.  She should have reached out to you.  However, if I were in your shoes I'd wait to get the payment and then say that you are waiving the late fee this one time because of her prior on time payments and because she said the late payment was due to a disbursement issue.  But, this is her one and only warning and the next late payment you will have to charge a late fee.

Also, re: the deposit, check your local laws.  In my state you can't use a deposit for unpaid rent or late fees; actual damage only.

+1

I agree, as this in the first time a good tenant messes up I'd let it slide, but I'd mention it as a one-time favor.

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Re: What to do about a late payment
« Reply #8 on: January 07, 2016, 10:45:37 AM »
as a tenant in an apartment I would be extremely annoyed if I was charged a late fee on the first offense and it would be fought. It would definitely be on my mind when I come up for renewal. Right now my late fee is $250 and they force us to pay by check so it's a pain to remember every month.

Every other place I've rented has waived the first late fee occurrence as a courtesy and these have all been established businesses with 50 - 500 units. I don't think it will cause you problems, rather it will buy you some slack on maintenance requests if you adopt this as an internal policy. If I actually got charged a late fee I would definitely up the requests for ticky tack stuff.
If remembering to pay rent is a problem, you may want to consider using an automated bill pay system from your bank or credit union.

If I had someone who chronically forgot to pay rent on time and fought late fees, it would be on my mind when it came up for renewal - and they'd likely be looking for a new place to live.

Cathy

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Re: What to do about a late payment
« Reply #9 on: January 07, 2016, 11:36:48 AM »
have to laugh when I read this. Makes me wonder if you do this a slight joke or are you actually concerned someone could sue for misinformation about $50...

Any clarifying comments that I post are intended to avoid misunderstandings and to ensure that my posts are correctly understood. You may have understood my post just fine without the second paragraph, but this is a public forum and some people may benefit from the additional clarification.

That said, late fees are no laughing matter. :) The following has no direct relevance to this thread, but this post wouldn't be complete if I didn't mention my all-time favourite late fee litigation, Garland v. Consumers' Gas Co, 2004 SCC 25. The plaintiff, Mr. Garland, was a man who really did not appreciate late fees. Between 1983 and 1995, he was late paying his utility bills from time to time and his gas company charged him a total of CA$75 in late fees, which he paid. Naturally, he later sued to recover the late fees. The gas company put up a vigorous fight, raising every conceivable argument. In order to resolve the case, the courts were forced to consider many interesting and novel legal questions spanning the domains of contract law, criminal law, administrative law, the law of unjust enrichment, constitutional law, and equitable defences. After literally 10 years of litigation, the Supreme Court of Canada ruled in Mr. Garland's favour and ordered the gas company to refund most, though not all, of the late fees.
« Last Edit: January 07, 2016, 11:39:11 AM by Cathy »

Lowerbills

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Re: What to do about a late payment
« Reply #10 on: January 08, 2016, 10:01:35 AM »
I have a 5 day grace period.  With one particular tenant the payment was often sent on Day 4 or 5, then it became day 7, day 8.

At first I was a little too lax on enforcing, but then I printed vouchers for each monthly payment and sent them to him at the start of the year. 

Printed on the voucher says (for example)  $1000 Due Jan 1, 2016.  After  Jan. 5th, $1030 Due (late fee).  Then I had a very brief conversation with the tenant and said "I don't want to charge you late fees, it's not my goal, I want you to pay your rent on time and avoid paying the late fee."

It seems to have helped.  Now with every payment, he mails in the voucher.  And if it's late, includes the late payment fee...


hoping2retire35

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Re: What to do about a late payment
« Reply #11 on: January 08, 2016, 10:19:51 AM »
I have a 5 day grace period.  With one particular tenant the payment was often sent on Day 4 or 5, then it became day 7, day 8.

At first I was a little too lax on enforcing, but then I printed vouchers for each monthly payment and sent them to him at the start of the year. 

Printed on the voucher says (for example)  $1000 Due Jan 1, 2016.  After  Jan. 5th, $1030 Due (late fee).  Then I had a very brief conversation with the tenant and said "I don't want to charge you late fees, it's not my goal, I want you to pay your rent on time and avoid paying the late fee."

It seems to have helped.  Now with every payment, he mails in the voucher.  And if it's late, includes the late payment fee...

These have been a bit nit picky but they are graduating and will probably not *want to* renew. Mine have paid either on like the 30/31st or they just forget I have to text them on the 5th. I may try this on the next tenant though.

supomglol

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Re: What to do about a late payment
« Reply #12 on: January 08, 2016, 02:14:57 PM »
I would charge them the late fee.  I would have only considered waiving it if they would have reached out and communicated to you sooner.  The fact that you had to contact them first speaks volumes about where paying rent falls in their priority. 

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Re: What to do about a late payment
« Reply #13 on: January 08, 2016, 02:17:41 PM »
I would do what your lease says you will do.  If you don't abide by the lease in this instance, is there now precedent that it is ineligible to rule other ones?

I was lucky to have an amazing tenant. The two times we hadn't gotten her payment the day before the grace period was over she actually drove up to my work to give me a check.

Quote
I would have only considered waiving it if they would have reached out and communicated to you sooner. The fact that you had to contact them first speaks volumes about where paying rent falls in their priority. 
That is a very good point.

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Re: What to do about a late payment
« Reply #14 on: January 08, 2016, 10:36:21 PM »
Another legal issue to research here would be whether the $50 late fee is enforceable. In general, penalties in a contract are not enforceable. Under the law of South Carolina (as elsewhere), "[t]he test for determining whether a stipulation constitutes a penalty is whether the sum stipulated is so large that it is plainly disproportionate to any probable damage resulting from breach of the contract". Moser v. Gosnell, 334 SC 425, 431-32 (Ct App 1999) (citation and internal quotation marks omitted).

The sale was for $585,000 and the penalty for breaching the contract was also $585,000. It's plain to see why this is "plainly disproportionate," especially since the breach wasn't applicable to all of the $585,000 sale (i.e., there were other assets in the sale).

Quote
There is no South Carolina case law specifically addressing what kind of residential late fees are enforceable, but such case law exists in various other states. See, e.g., Biggio v. Puche, 2013 NY Slip Op 31919 (NY Supreme Ct 2013) (flat $150 late fee was unenforceable penalty);

It wasn't a flat $150 fee; It was $150/day. Per the landlord, the renters owed "$3,600 in unpaid rent for June, July and August 2009, and $62,7000 in late fees for October 2008 through July 2009 at $150 per day." (Lol. It's surprising that the landlord tried to pull that one off.)

Quote
Spring Valley Gardens Associates v. Earle, 112 Misc 2d 786, 787 (NY County Ct 1982) (flat $50 late fee was unenforceable penalty).

This is more like it. The flat $50 fee on a $405 rent is "an annual interest rate of about 450%!" Further, NY also has the Emergency Tenant Protection Act, which requires a landlord to to submit rental changes to the State Division of Housing and Community Renewal (Division). The landlord's lease states that the $50 is "additional rent," which means that the landlord would need approval.

Quote
But see, e.g., Buchanan v. Kettner, 984 P 2d 1047 (WA Ct App 1999) ($2 per day late fee was enforceable liquidated damages provision and not a penalty).

Interestingly, the late fee was a flat $20 of $275. Per the Spring Valley case, this is a annual rate of 230% (if I understand the NY court's methodology). This wasn't contested, at least in this case.

It's the $2/day that the renters claim is onerous at an effective annual rate 261%. The $2/day is affirmed as reasonable given the landlord's uncertain damages, including mortgage and utilities and taxes, etc.

Quote
Please note that I express no view on the specific circumstances of the original poster. I offer no view on whether the particular late fee proposed by the original post is or is not enforceable. This post is not, and does not purport to be, a comprehensive review of all the law relating to late fees. I've merely identified an issue here that requires further research. I have not actually completed that research. The application of the law will also depend on all of the facts, including the exact wording of any written agreements. The law is different in every jurisdiction. Readers should verify any assertions contained in this post, and in all of my posts, using independent research. The expectation is that readers will conduct their own research and not rely on the contents of this post or of any of my posts.

Likewise.

Cathy

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Re: What to do about a late payment
« Reply #15 on: January 09, 2016, 12:38:02 AM »
The sale was for $585,000 and the penalty for breaching the contract was also $585,000. It's plain to see why this is "plainly disproportionate," especially since the breach wasn't applicable to all of the $585,000 sale (i.e., there were other assets in the sale). ...

I cited Moser for the statement of the test for whether a provision is a penalty under South Carolina law. It was not cited for its application of that test to its facts or to the facts of the original poster.

In legal writing, every claim has to be supported by an authority, no matter how obvious the claim is. This is why court opinions usually contain citations even for the most well-known legal propositions that everybody already knows are true. E.g., Schott v. Kalar, 20 Cal App 4th 943, 946 (CA Ct App 1993) ("Counsel correctly noted this assertion is not supported by reference to statutory or case authority. While the accuracy of this assertion is beyond doubt and is a principle generally accepted by practitioners and judicial officers alike, we sought specific binding authority containing such a holding.") (footnote omitted), review denied 1994 Cal LEXIS 842.

The concept that contractual penalties are generally not enforceable has been a part of the common law for hundreds of years (albeit for varying definitions of "penalty"). See generally Halsbury's Laws of England, Vol 47 (2014), ¶ 220 ("Relief against penalties") [free link not available]. Nonetheless, by convention, I still needed to give some citation for my assertion that penalties are unenforceable and for the test for a penalty under South Carolina law. Hence the citation to Moser.

I explain one of the many rationales for this convention below.


Quote
Biggio v. Puche, 2013 NY Slip Op 31919 (NY Supreme Ct 2013) (flat $150 late fee was unenforceable penalty)

It wasn't a flat $150 fee; It was $150/day.

In this specific example, you have identified an error in my parenthetical, and I apologise for that. I am generally careful in what I write, but mistakes can slip through sometimes. The reason I provide citations for claims is so that people can verify those claims. After all, the United States is a nation of laws, not of people. To post a legal claim without citation to primary authority is to act as a Queen or King, as if one's own word dictates the law. This is one reason why I emphasise the importance of primary sources. Ideally, all members of the forum would provide primary source authority for any legal claims they make, so that we could all readily verify those claims without having to conduct significant research. I don't claim that I am perfect and sometimes unsupported propositions might sneak into my posts, but if they do, they should be challenged, as you have done here. Thank you.

That said, the three cases I listed after "see, e.g.," were not being cited as authority for any general proposition of law. In particular, I did not suggest that Biggio stood for any general proposition of what late fees are allowed. I provided those three cases just so that readers could look at the type of reasoning that judges might use in applying the test to various fact patterns, without suggesting that the outcomes could be generalised to other facts. I certainly did not suggest that those cases led to a conclusion that late fees in leases are generally penalties, or that there is an upper bound on a permissible late fee, or that the specific late fee proposed in this thread is a penalty. On the contrary, as I indicated in my first post, the only purpose of my post was to suggest that somebody may want to research this issue:
          Another legal issue to research here would be whether the $50 late fee is enforceable. ...

This post is not, and does not purport to be, a comprehensive review of all the law relating to late fees. I've merely identified an issue here that requires further research. I have not actually completed that research. ...
(Emphasis added.)

The three examples cited were intended only to support the claim that this topic is worth researching. No further inference was suggested.
« Last Edit: January 09, 2016, 03:48:03 AM by Cathy »

phred

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Re: What to do about a late payment
« Reply #16 on: January 09, 2016, 09:22:02 AM »
I don't charge a late fee.  Instead, I give a rent discount if rent is in by the first.  It works out the same.  If they pay by the year I give an even larger discount.

Anyway, you're in a college town.  You should realize students have cash flow problems not always of their own cause.  Charging a self-righteous late fee seems really anal.

I am far happier that I have good tenants who don't tear the place up as I have seen in other complexes who are greedy and rigid beyond compare.  A week late is, what, 90 cents in interest lost?

hoping2retire35

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Re: What to do about a late payment
« Reply #17 on: June 30, 2016, 09:10:26 AM »
june payment was late. even the date on the check was the 7th. I realize i pretty much have to inform her there is a late fee...ugh. this is stressful.

any advice on tone would be helpful. this will be a written email not actually in person. 
« Last Edit: June 30, 2016, 09:13:39 AM by hoping2retire35 »

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Re: What to do about a late payment
« Reply #18 on: June 30, 2016, 12:03:59 PM »
I would keep it businesslike and factual.  Don't overexplain or get personal.

Dear xxxx,

As you are no doubt aware, your rent for June was late by eight days. Your lease contains the following language regarding late payment of rent:

"<quote lease section verbatim>"

As a result, a late payment of $50 is now due. Please remit this payment immediately to avoid further charges and fees. As a reminder, all payments are applied in the following order: 1) Late fees, 2) rent. If this fee is left unaddressed, it will be deducted from any payments made for July. If this results in underpayment of July rent, then further late fees may be assessed.

Thank you in advance for your prompt attention to this matter.

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Re: What to do about a late payment
« Reply #19 on: June 30, 2016, 02:17:13 PM »
I don't charge a late fee.  Instead, I give a rent discount if rent is in by the first.  It works out the same.  If they pay by the year I give an even larger discount.

Anyway, you're in a college town.  You should realize students have cash flow problems not always of their own cause.  Charging a self-righteous late fee seems really anal.
Just hearing you phrase it as a discount rather than a fee makes me want to throw money at you. What sorcery is this!?

Kitsune

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Re: What to do about a late payment
« Reply #20 on: June 30, 2016, 03:23:01 PM »
I don't charge a late fee.  Instead, I give a rent discount if rent is in by the first.  It works out the same.  If they pay by the year I give an even larger discount.

Anyway, you're in a college town.  You should realize students have cash flow problems not always of their own cause.  Charging a self-righteous late fee seems really anal.
Just hearing you phrase it as a discount rather than a fee makes me want to throw money at you. What sorcery is this!?

In the same way that you get a discount on your credit card bill by paying it on time!!? *gasp*

... Huh. I actually need to phrase it this way to a few of my friends. They might listen.

hucktard

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Re: What to do about a late payment
« Reply #21 on: July 01, 2016, 09:10:17 AM »
-I think it is OK to waive a late fee for a first offense. I also think it is perfectly fine to charge the late fee. It is in the lease, and the tenant didn't even notify you ahead of time.
-It does not matter that the "reason" for the late rent payment is financial aid. The actual reason for late rent payment is a lack of money management by the tenant. Everybody always has an excuse. This is the real world, college kids need to put their big kid pants on and learn responsibility.
-I can't believe the people who say they don't charge late fees. So if somebody continued to pay rent 3 weeks late every month you would be OK with that? The problem is not just that they are paying rent late. The problem is what if they decide to not pay rent at all? Then three weeks have gone by, and you still haven't put in a 3 day pay or quit notice. So if you end up evicting them, you just lost out on an extra 3 weeks of rent.
-Not paying the rent is serious, you need to let the tenant know that it is not acceptable to pay late, and that there will be penalties for it. AT MINIMUM. you need to tell your tenant that rent is past due and that you are going to waive the late fee one time only, and notify them that a late fee WILL be charged for all future late payments.

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Re: What to do about a late payment
« Reply #22 on: July 01, 2016, 09:23:14 AM »
I'm an experienced landlord (15+ years), with experience in single-family, multi-family, single-room, and commercial investment real estate chiefly in the United States but with some of experience in Canada also.

Landlord-tenant law is a special type of contract law with protections and processes built in to protect both the landlord and the tenant, but chiefly the tenant. It's a very user-friendly system and anybody with 8th-grade reading skills does not actually need a lawyer to understand and follow the law, provided they're willing to look up the statute, read it, and follow it.

Exactly how much of a late fee is legal depends on two things: where your rental site is, and what terms you built into your rental contract.

The Uniform Owner Resident Relations Act (UORRA) in the United States is tailored by each state to meet the specific economic and cultural needs of that state. Some states are more tenant-friendly than others.
The important thing to remember is that nothing you put in your lease or rental agreement is enforceable if it violates your state's version of the UORRA, and if your lease or rental agreement doesn't mention something, the UORRA provides the default assumptions and rules of behavior. (By "your state" I mean the state in which your rental property is located because that's the state that has jurisdiction. Where the landlord lives is irrelevant. You could be gone for an extended missionary trip to Mozambique for a year, and you still have to follow your state's UORRA.) Other nations have some kind of landlord-tenant act which may or may not be modifiable at the provincial or state level.

One of the things in the original UORRA template is a section that limited what landlords could do if the tenant did not pay the rent on time. What varies from state to state is the cap on the late fees a landlord may charge. The intent is to make sure landlords don't engage in a form of predatory lending that results in a tenant being constantly in debt. Yet late penalties or penalties for returned checks are seldom forbidden outright, because the law recognizes that it's important to give tenants incentive to pay rent on time. Therefore most states do allow landlords to charge a late fee of some kind.

In New Mexico, for example, it's not legal for a landlord to charge more than 10% of the monthly rent in late fees. Other states have different percentage caps, and some places may forbid late fees altogether because they are regarded as an excessive interest rate on borrowed money and they violate the spirit (and sometimes the letter) of usury laws.

One means that is permissible under every state's version of the UORRA is the Notice To Pay Rent or Quit, commonly called a "3-day notice", which basically tells the tenant to pay up or leave within three days (although states have the right to require more than 3 days, there can never be less). Should the tenant stay longer than the three days, the landlord begins the formal eviction process which may involve a court date for the judge to break the lease and free you (and the tenant) to make other arrangements. It permanently damages the business relationship with the tenant, and I only use the 3-day notice when the business relationship with the tenant is not salvageable.

If I have a tenant who is chronically late with the rent, or has a problem that is impacting his or her ability to pay the rent (compulsive gambling, for example), then my policy is to accept late rent ONCE, with the maximum late penalty allowed by law, but I'm nice about it. After that, the moment they step out of line and are late a second time, it's a 3-day notice the day after rent is due. They can either take off, or pay up. If they take off, I follow my state's process for using the damage deposit to pay for any necessary repairs or cleaning, and for covering as much of the rent shortfall as possible. At the end of the month, I send the tenant a full accounting plus receipts by registered mail. If they pay up, if there's a third offense I hit them with another 3-day notice, at which point they either take off or pay up. If they pay up, I terminate the month-to-month agreement from my end at the start of the next month. You can't keep people like that around. They drive out your good tenants, they're very hard on your property, and they're bloody irritating to have around.

If I have a tenant who is basically reliable and easy to live with, who has a history of paying rent on time and who doesn't make trouble, then my policy is to accept late rent ONCE, with the maximum late penalty allowed by law, but I'm nice about it... etc., etc. Actually, come to think of it, the process I use for bad tenants is identical to the process I use for good tenants, except good tenants never get to the 3-day notice because they don't step out of line the second time. It's because they have a desire to hold up their end of the deal and the wherewithal to act on that desire.

Overall, based on what you've said, it appears to me that you have a basically good tenant. Accept the late rent since it's due to a matter beyond her control, but collect the maximum late penalty allowed by law IF your rental agreement or lease permits you to do so. If your contract doesn't include a clause that lets you do this, fix it before you rent out the space after this tenant leaves.

Be nice about it, but if the law allows you to charge a late penalty and your rental agreement or lease allows it, don't be a pushover and don't let your tenant off the hook.

sokoloff

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Re: What to do about a late payment
« Reply #23 on: July 02, 2016, 10:33:08 AM »
The way I look at it, you're being given a golden opportunity to train your tenant.

Enforce the late fee, without apologizing for doing so. Reinforce the consequences for not living up to their obligations. Will the mortgage company charge you a late fee if you're late(r than the grace period)? Will the property tax office charge you interest on late bills? So should you.

Most anything else, even including the "one time exception" or other such niceties, is training your tenants in a way you don't want to do it.