“My toddler ate my rent check, and it was my last one!” – soon-to-be-evicted tenant
One of our most regular jobs, that happens like clockwork is collecting rent and implementing late fees. The majority of our tenants are on the same lease, which means that rent is all due on the same day, with the same penalties for not paying on time. And with the systems, consequences, late fees, and education we have put in place for our tenants 95% of our tenants do pay on time. So, how do we handle that 5%? When should we respond immediately, and without mercy or compassion, as opposed to giving them the benefit of the doubt and waiting a few days to politely inquire about payments?
For us, the answer is very simple. We have a strict process that happens to all of our tenants, all of the time each month, if rent is not received when it should be the same late fees happen for all our tenants. It is important to treat all of your tenants fairly, and equally. We have a process of both phone calls, and emails that get scheduled and pushed out, regardless if a tenant calls and says they are going to be late. That is the technical and logical side. However, we have to remember that we are dealing with human beings, and you know? Life does happen sometimes…
We are not robots. We get it. Life really does happen and makes things difficult sometimes. So here are some of our guidelines for determining if we will waive late fees. But I would like to preface this with the understanding, that no matter what a tenant communicates about when they will pay rent, we stick to our company policies because in our experience the “I will pay you this Friday”, can often turn into next… and next. So by choosing to stick to our policy and process, our tenants understand that there are direct consequences for not paying rent on time, and at a certain point the eviction process will begin regardless of what has been communicated. Does that mean we will not give them the opportunity to do what they say they are going to do? Absolutely not. So if Friday rolls around, and they pay, those eviction papers get thrown away. But if they don’t pay by Friday, Monday morning those papers can get filed if we have not received payment.
Some guidelines that you can use for your personal judgement about waiving late fees for your tenants:
- Being human
There is always a story right? When someone is unable to pay, you will hear the million reasons why that is the case. That does not mean that there are not some legitimate reasons. One example when we worked with a tenant was they recently got laid off, and their unemployment was actually denied. The tenant did a great job of having savings and was able to dip into that to pay rent for the first month, and they actively communicated with us about the status of their appeals and what was going on. They were amazing tenants, never late once, in fact always early. They kept the property in mint condition. And were always prompt to respond. So for this specific situation, we implemented our company policy of waiving late fees one time. A note gets put on their account of the situation and the date it was waived. On the flip side, if we get a call that a tenant “just forgot” or our favorite “Monday was a holiday”, and they have already utilized their get out of a late fee card. We can simply remind them of when we already helped them out and remind them of great ways to avoid this happening in the future such as utilizing auto pay for rent. It is our obligation and our duty to ensure that we teach tenants to be responsible and that there are consequences for their choices. Good and bad. Credit card companies certainly are not as human, or as forgiving.
- Communication – Good or bad.
Communication is KEY in determining if a tenant deserves some compassion when it comes to their late fees or not paying rent on time. Great upfront communication is essential in knowing what to plan for. Although as I mentioned before, it is still important to stick to a specific process and policy because this Friday can turn into 3 more, and you don’t want to put yourself a month past when rent was due, with no eviction paperwork started. You would then likely have to wait until the next time rent is due to start that legal proceeding. When our tenants are upfront and honest with us, it allows to hold off a day or two before filing the paperwork with the court. We have served all previous required notices just as normal, and our tenants understand that. But we can choose when, or if we need to actually file with the court when that time comes. Obviously if you hear nothing from the tenant, there has been no response, and no communication, you should never wait to start the process required for your state to begin that eviction process.
- Past behavior, predicts future behavior. Rent payment history
Is your tenant one who always pays early, or on time? Or do they wait until the very last minute to avoid a fee to get their rent in? We have some tenants who wait till the evening of the very last day to stick it in the drop box just to extend when their check will come out of their bank account. This is a really good area to consider if you are deciding to give your tenant some slack or not. If a tenant is already pushing the boundaries and trying to maximize all the time they have, cutting them slack may send the wrong message and worsen those boundaries and expectations you have for them.
- Not the best tenants…..
One of the last things to consider is, if this is a good tenant? If they are constantly getting HOA violations, keeping the house in poor condition, continually causing you to have to pay for maintenance, incredibly needy and unrealistic, always having issues with neighbors or the city…. These kinds of tenants can just drain you, and your cash flow and profits!
Overall…… when in doubt. Stick to your guns, and your process for handling late payments and beginning that eviction process. We rarely ever regret sticking to our policy and procedures. More often than not, that Friday turns into next Wednesday, then next Friday… and our saving grace is that we have already sent notices and have everything prepared to send to the court to file. Best practice advice, is hold everyone accountable and clearly define your expectations and educate your tenants beforehand so it does not come as a surprise when they get their notices. Even your really great tenants can have some major life changes and turn into not so great tenants. Just remember to look at the overall picture, the habits, the communication, and clearly define your process and policies for all of your tenants across the board!
Need help making a policies and procedure manual? Give us a call – 801-541-7400 – or email us and we can help set that up for you! Our Landlord starter kit is a great tool to reduce your risk, and your stress!
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How to write your own lease agreement. The devil is in the details.
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