05 Jan
As a landlord, you expect that your tenants pay rent but there will be occasions when a tenant doesn’t pay rent in full or on time. Each situation can be different, so it’s important to know what steps to take next. In this article, you will learn the best practices to handle a tenant if they don’t pay rent.
Potential Scenarios
There are several potential scenarios that could occur when a tenant doesn’t pay rent. Perhaps they haven’t paid in full from last month, or they have refused to pay rent at all. Here are some different situations that you may find yourself as a landlord.
Tenant gives a warning – The tenant has called, emailed, or written a letter to inform you that they aren’t able to pay rent on time.
Asked for an extension – The tenant has contacted you asking for an extension on rent. Some landlords build in a 3-5 day grace period after the normal due date in order to combat this problem. Keep in mind that there are certain requirements for grace periods that differ from state to state.
Hasn’t paid in full – The tenant has not paid the last month’s rent in full, perhaps even after they have left your property.
Consistently late on rent – The tenant is constantly late on rent for months at a time.
Refusing to pay rent – The tenant refuses to pay rent at all and will not cooperate with you.
Exceptions – There may be some extraneous situations why your tenants aren’t able to pay rent. Currently, many tenants are struggling financially due to COVID. Learn more about how you can aid tenants in getting financial help.
Steps You Can Take
There are a series of steps to take when dealing with a tenant that hasn’t paid rent. What steps you should take depend on the individual scenario that you are dealing with.
1. Remember the lease agreement – The best thing you can do is stick to the lease agreement and follow it. If the lease agreement contains any rules about grace periods and late fees, it is important to follow the rules outlined. By always following the rules and guides that are outlined in the lease, you are protecting your rental income. Learn more about how you can protect your rental income during COVID.
2. Give an informal notice – A late rent notice can be emailed to them, mailed, or even taped to the door if rent has not been paid. It should contain information about what fees are due and warn them of further legal action that will have to be taken if these fees are not paid.
3. Call them on the phone – Give them a phone call and let them know the same information as what was on the informal notice. Only call once, as any more could be considered harassment. It is better to talk to the tenant over the phone instead of through a screen like e-mail.
4. Send a pay or quit notice – A pay or quit notice is a formal and more official than an informal notice and is considered to be the first step in an eviction process. It tells a tenant that you have intent to evict, tells them the full amount that needs to be paid, and the deadline for the payment before legal action will be taken. Landlord Guidance gives help on how to write a Notice to Pay or Quit Notice for each state.
If none of these steps work, the last resort is legal action.
Legal Action
Legal action should only be taken when all else fails. Every state and county has different rules when it comes to taking legal action against tenants, so be sure to check with your local legislation before taking action.
Most states allow landlords to begin the eviction process after three consecutive months of missing payments. It would be wise to get an eviction lawyer. An eviction lawyer can draft a pay or quit notice for you, as well as help you handle the eviction process.
It is also important to not take any form or amount of payment if you think that the case will go to court because this can potentially void any previous legal actions.
Legal Nature provides more about the full eviction process from a legal perspective.
Be Proactive
There are some proactive steps you can take to ensure that tenants will be more likely to pay their rent.
1. Screening: By doing background checks and credit checks, you can determine whether or not a prospective tenant is financially responsible. You could also look into their rental history and see if they have any eviction history.
2. Lease agreement: Make sure that there is a rent collection policy in place and that any rules about late fees included in the lease agreement. This way, there is a written and signed agreement that the tenant must stick to.
3. Payment plans: Setting up a payment plan is a great way to make sure that your tenant will start and continue paying rent on time. Payment plans are best used when a tenant has fallen behind in rent and can help them catch up by spreading the burden of the missed payments out over time.
4. Automated rent collection: Automated rent collection is an online collection process that allows tenants to set up automatic rent payments each month. By setting up an automatic payment plan or allowing them to pay online, it makes it easier for tenants to pay rent. With Particle Space’s Property Management platform, tenants can make payments, sign leases, and set up automatic payment plans to make sure they always pay rent on time.
The proptech infrastructure for the internet