Tenant Not Paying Rent?
Regardless of how many times it has happened, it is never a good feeling when you have a tenant not paying rent. It can be uncomfortable, disheartening, and upsetting.
While this is never a fun scenario, there are plenty of things property managers can do to resolve the situation. The key is to stay professional at all times and know the tools and resources at your disposal.
Keep reading to find out what to do if you have a tenant not paying rent.
1. Communicate from the Start
You need to have strong communication with your tenants from the beginning of your professional relationship. This is especially true concerning rent payments.
The most important time for a property manager to have strong communication is the first time a tenant misses the rent due date. Clearly communicating with the tenant following their first late rent payment demonstrates this behavior is unacceptable.
Setting the standard that late payments are unacceptable the first time it happens can prevent property managers from dealing with it in the future.
2. Implement a Late Fee
In every lease, include a clause about late fees. This forces tenants who are late on their rent payments to pay an extra fee. The amount you’re legally allowed to charge varies from state to state. You want to charge the maximum fee to ensure your tenants don’t miss their rent again. A late fee is an excellent motivator for tenants to pay rent on time.
It is important to never let tenants slide on paying late fees. This is especially true the first time a payment is late because you do not want to set an expectation that late payments are acceptable.
3. Send a Formal Notice
If you’ve implemented the late fee and they’re still not paying, it is time to take the next step, and send a formal notice to the tenant. This notice is sometimes called a “Pay or Quit” notice.
It’s a formal letter that says a tenant must either pay rent immediately or move out in three to five days. You can give them a few days to pay the rent. Once this notice gets sent, you must take it seriously and enforce the consequences. It is important to keep a record of any formal notices as they will be used later on during the rent collection process.
4. Keep Detailed Records
During the process of trying to collect rent, document everything. You should already have rent receipts from past payments and their dates. For most modern property management companies, these records will be stored automatically in the accounting system.
Include paper copies of any notices or written communication. You can even include notes on in-person interactions or meetings. It is also important to include any emails, if this is how you communicate with tenants. This is because you can use emails in court as examples of communication about missed rent payments. Having detailed records makes the eviction process go much smoother.
5. File an Eviction Notice
If your pay or quit notice didn’t spur payment and they haven’t moved out, it’s time for an eviction notice. For this, you’ll have to apply to your state’s laws. It’s crucial that you go about this in a legal and professional manner.
During the eviction process you must prove all the steps you have taken to collect past due rent. That’s why documentation is so important. Prior to beginning the eviction process, it is helpful to compile all of the communication records into a folder, so they are readily available.
The legal process for evicting a tenant is usually very complicated and changes on a case by case basis. Therefore, it is always a best practice to consult with lawyers who are experienced working in the local jurisdiction.
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