What do you do when your tenant is behind on rent, and you’re left wondering how exactly to handle a late rent notice? It can feel very awkward to send out a late rent notice to tenants you like. Nothing strains a relationship quite like someone owing you money.
It’s important to remember you are a landlord in this situation and your business relies on you to act quickly and efficiently. Allowing tenants to consistently pay rent late may seem like the nice thing to do, but it could also be causing you unnecessary losses.
In this guide, we’ll discuss everything you need to know about late paying tenants and how to properly serve them a late rent notice.
Learning when and how to use late rent notices doesn’t need to be a difficult task. Break down this process into manageable pieces as you understand the ways of handling late rent payments:
You can click any of the links above to jump to that topic on this post.
Below we’ve also included downloadable notices you can use. We’ll explain how to use these in the video you’ll see further down this post.
A late rent notice is an official document that notifies the tenant they are late with their payment of rent. The late rent notice clearly communicates that the tenant is late on rent (according to the rules laid out in your lease) and formally informs the tenants of next steps.
Your late rent notice should detail how much is due, any fees that will be incurred, and when rent is due.
A late rent notice is also called a “Pay or Quit” notice or a “Pay Rent or Quit Notice.” These should always be served before an eviction notice.
Do you have a general idea on how to handle late rent but need a late payment notice template to help you finalize the process? These free templates by RentPrep can be used by landlords looking to serve notice to late-paying tenants.
Your late rent notice should include all of the following:
For your easy reference, here is what that late rent notice template PDF looks like.
Notice of Past Due Rent
Date: ____ /____/____
Rental Address: ____________________________________________
Tenant Name: __________________________________
__________________________________
__________________________________
__________________________________
This notice is to inform you that your payment for te month ________ in the amount of $_____________ has not yet been received and is now considered past due.
If the rent is not received by __________, a late fee of $___________ will be applied.
Rent to be paid by cash, check, or cashier’s check and made payable to _____________.
A “3-day notice to pay or quit” is essentially a more official late rent notice. The document indicates that the tenant has 3 days to pay or they must quit (be removed from) the rental property.
Some states require you to provide the tenant with a warning in the form of a late rent notice before issuing the 3-day pay or quit notice.
The State of California also offers a 5-day pay or quit notice option. But in whatever state you are located, you can choose to serve it.
What is important is to make sure you follow your local laws when deciding which form to use.
When presented with different options to let a tenant know that rent is late, landlords may not be sure which form they should use. These are the simple steps to determine which form might be right for your situation.
When delivering any type of past due rent notice, be sure you are able to keep a record of how and when it was delivered. The best method is to mail the notice with signature confirmation so you have documentation of the notice being received.
For more information on how to handle a tenant paying late, check out this video of Ask A Property Manager:
On our Facebook Page, we have a video series called “Ask A Property Manager.” In the series, Andrew Schultz, who manages over 120 doors in the Buffalo, NY area, answers questions from members of our private Facebook group of over 11,000 landlords and property managers.
In episode #35, he walks us through why he stopped using a late rent notice and started going straight to the 3-day notice to pay or quit form. (Kindly note the conversation picks up at around the 0:50 mark.)
Notes from the video:
In his experience, Andrew found that a late rent notice was redundant because the 3-day notice to pay or quit already covers a tenant’s late payment. However, he stresses that he is able to skip the first step as the State of New York allows it.
Some landlords go the route of …
Andrew believes you’re adding an extra step with the late rent notice, unless your state specifically requires it.
He individually mails a 3-day notice to pay or quit to everyone who is on the lease via certified mail and first class in addition to posting the notice on the door. This method is sometimes referred to as “nail and mail.”
If the tenant is at the point where they are late on paying rent, the “3-day notice to pay or quit” will get you moving faster towards collecting rent or proceeding with an eviction.
Wait a full four days before following up with an eviction notice, so you’re not caught up in any technicalities on if it was actually a full three days.
Some states such as Texas and New York State require you to charge a “reasonable” amount for late rent fees while other states are more specific.
The state of Florida says, “A facility or unit owner may charge a tenant a reasonable late fee for each period that he or she does not pay rent due under the rental agreement… For purposes of this subsection, a late fee of $20, or 20 percent of the monthly rent, whichever is greater, is reasonable.” (For more information, see 83.808.)
This is why it’s important to research your state’s late fee policy.
These are the items you should consider when charging a late fee in your state:
These questions are mostly answered by looking at your lease and reading up on your state laws.
If your lease does not address a late fee policy, you cannot charge a late fee. In this instance, you’d want to insert an addendum to your lease on your policy and have your tenant(s) sign it. Back to the question at hand …
Here’s a screenshot of landlords debating how much to charge for late rent in our private Facebook Group.
If your tenant is more than a month behind on rent, you need to begin the eviction process.
Landlords can sometimes feel apprehensive about serving a “Pay or Quit Notice,” but it’s a necessary step to begin the formal process. An eviction can take months, so you don’t want to delay serving a notice.
The “Pay or Quit Notice” lets your tenant know you’re serious about collecting rent. The notice gives them a specified period of time (3 days in many cases) to pay both the rent and late fees to avoid an eviction.
If rent is due on the first of the month, then it is late on the second.
Typically, you’ll want to serve the “Pay or Quit Notice” on the second and your state will determine the number of days the tenant has to pay or quit. If your tenant does not pay by the specified date, they’ll be removed from the property once you go through a formal eviction process.
We recommend RocketLawyer’s Pay or Quit notices as they are specific to each state’s laws. The firm’s attorneys provide online legal advice on eviction of tenants according to the laws of your state.
To write a late notice for rent, make sure to include the following information:
Remember, this is not a formal notice that can lead to eviction. It is a late rent payment letter.
While it is an official document, you will still need to send a late rent formal notice to pay or quit if the tenant does not pay so you can kick start any legal action that is needed.
A grace period is a period of time after rent is officially due during which a tenant can still pay rent without serious penalties.
Many states mandate an official rent grace period during which tenants are allowed to pay late without it being considered as eviction-worthy. Whether or not late fees can be applied when rent is paid during the grace period is dependent on the state.
Texas requires a two-day grace period on rent; other states do not offer this provision.
The best way to make it clear for both you and your tenant is to research whether or not a grace period is applicable in your region and put it in the lease terms. Some landlords even choose to add a one- or two-day grace period to their lease, even when it is not required, as a means of making things a little bit easier for their tenants.
When a tenant is late on rent, every landlord has their own method of handling the situation. Generally, the process looks something like this:
Do you know what you will do if a tenant doesn’t pay rent? Now is a great time to get your plan ready.
Here’s an example timeline to follow when serving your tenants. This example is for states with 3-day notices and rent due on the first of the month.
Again, be sure to check with your local laws before beginning this process. Some of the details may vary depending on them, and it is important that you adjust your plan accordingly.
Rent is due on the first, late on the second, and the tenant should be served with a pay or quit notice on the fourth.
All residents with any amount of rent due are served a three-day notice to pay rent or quit (NPRQ) form.
These forms must have the complete, legal name of each and every “ADULT” resident on it and be accurately filled out. If the forms are not filled out properly, the court will have to start the process over again and this could amount to losing three months of rent.
These forms must be personally handed to an adult and must never be handed to a person who is 17 years or younger. They can be handed to anyone in the apartment as long as they are 18 years of age or older.
Alternatively, you can deliver the notice via certified mail so you have proof that the tenant received a copy of the notice. You should keep the original copy in case you need to file it with court documents later on.
Only accept payments in full once the 3-day pay or quit notice is served. If partial payments are accepted, then the whole process will have to be started again.
On the sixth day of the month, you should gather the following documentation and prepare to file for eviction with the local court system.
At this time, do not accept any partial payments; accept only payments in full! If a partial payment is accepted, the whole process must be started over. This can lead to big losses and major slowdowns in your business.
Yes, it is possible to evict a tenant for late payments.
Most states allow landlords to serve a notice to pay or quit the property. This means tenants who are late on rent payments must pay up or leave the property before the deadline. If they fail to pay their rent, you can move forward with eviction proceedings.
Whether or not you can evict a tenant for being two weeks late on rent will depend on the state you work in. Most states, however, might allow evictions for late rent payments of more than just a few days’ grace period. A notice of 3 to 5 days is required before eviction proceedings can begin.
To be sure about your circumstances, check local landlord-tenant laws and find out the required period for eviction after late rent payments.
It can be a tough situation when a tenant asks about paying rent late around the holidays due to increased bills.
Unfortunately, this can lead to a situation of “give an inch, they’ll take a mile.”
If you bend your rules with your tenant on special occasions, you’re opening yourself up to other future requests. The easiest thing to do with this sort of situation is to remind your tenant of your late fee policy, and stick to it.
You should be consistent with the way you screen your tenants and also the way you enforce your policies. If you deviate, you could be accused of discrimination in that you may have bent the rules for one tenant and not another.
Stick to your policy. If you treat a non-paying tenant as a non-priority even for one month, that’s what it will become … a non-priority.
Many landlords charge a flat fee for late rent, and it is often paired with the daily late rent fee. For example, a landlord might have a $50 flat fee if the rent is not paid by the first of every month and then charge $5 fee per day until it’s paid.
States that enforce maximum late fees that landlords can collect often structure it so the flat fee and the late days combine until they meet the limit. For example, a landlord might charge $45 after the fifth of the month, plus $5 per day until 10% of the rent adds up because their state law allows just up to 10% of the total rent to be collected as a late fee.
Landlords everywhere struggle with collecting rent money from their tenants. They have also heard just about every excuse for why the payment is late. Sometimes, tenants offer to make split payments for rent, but is this good for landlords?
Before landlords accept split rent payments, there are several things they need to consider. This video helps explain some of the reasons:
The bottom line is that when tenants give excuses for paying the rent late, it should be a warning sign to landlords that they may be looking at months and months of late rent. For most savvy landlords, they don’t allow a tenant to split rent payments.
If you are processing rent payments through a rent portal that reports rent to the credit bureau, late rent payments could show up on a credit report. The exact way it would show up is dependent on the specific credit report used.
FICO scores do not include any rental history, even if it is on file, while Vanguard scores do.
As awkward or frustrating as it can feel at times to send out late rent notices, there is no doubt that using these notices is going to be necessary from time to time. Landlords who never ask for the rent they are owed may never get paid, and that would be bad for business.
To keep your business going, be organized when approaching late rent payments:
It’s never fun to chase down a tenant just to get the rent paid, but it is an unfortunate part of the rental business at times. To avoid facing this situation again in the future, make sure to run a background check on your prospective renters in an effort to get the best tenants.
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