You are a couple of days into the month and realize your tenant has not paid their rent. Best case scenario: your tenant has forgotten.
However, you are concerned about your bill payments without collecting that payment. Even successful landlords require the constant cash flow of regular rent payments. What do you do next? Your options depend on your financial situation, the law, your willingness to be flexible, and the quality of the tenant.
Keep reading to learn about six simple steps to follow when a tenant just can't pay their rent.
1. Don't Panic
Most rental property owners will have to deal with a late-paying tenant at some point in their career as a landlord. It does cost time and money to rectify the situation. However, if you follow the steps outlined below, you should be able to resolve the issue quickly and easily.
2. Check Your Lease and Payment Records
Before commencing this process, double-check your records to ensure that payment was not received. In most cases, rental lease agreements contain a clause giving tenants a three or five-day grace period to pay the rent after the due date.
Consult the lease and talk with your lawyer about the next steps. If your tenant's rent payment is past-due, your next actions are outlined in the leasing agreement with the extra fees you can charge for late payment. You can only charge a late fee if specified in the rental contract.
3. Send Notice for Past-Due Rent
Before you immediately begin the eviction process, send a late rent notice. This informal notice reminds the renter that their payment is past due.
You can send this letter via e-mail, hand it to them in person, attach it to their door, or have it delivered. This document should include the following:
How much rent is due
When the rent payment was due
What late fees will be charged
Consequences for unpaid rent
How to contact you with questions
All this information should be readily available in the lease agreement. However, outlining these details in an informal letter makes it easier for your tenant to be aware of the details pertinent to this situation.
This step is not a legal requirement, but it may help to remind a forgetful tenant or get a chronic late payer to take you more seriously. It is also advisable to have a record of these letters should the situation escalate to going to court.
4. Make a Follow-Up Call
While this is not a legal requirement, you might consider making a follow-up call to the tenant to inquire about the situation. A phone conversation can also be a quick way to work on a payment plan with your tenant. If there is financial hardship involved, you can work with them to find a solution.
Only call once. You do not want your tenant to have grounds for harassment should this eviction process end up in court.
5. Send a Pay or Quit Notice
You have sent a notice to inform your renter that payment is overdue and followed up with a call, but your tenant has still not paid. What do you do next?
The next step is to send a "Pay or Quit" notice. Effectively, this is the first step in the eviction process. This notice lets your renter know you are serious about following the protocol to elicit their rental payment.
The document should inform your tenant of the following points:
You intend to evict the tenant if they do not pay.
The full amount owed, which must include late fees if applicable.
The due date for full payment.
The consequences of not paying the total amount by the stipulated due date.
Depending on your state and local legislation, there will be specific requirements for how, when, and where the notice of eviction is delivered to your tenant. Usually, hand-delivering or posting an eviction notice on the door of the unit is sufficient.
As a backup, you might want to e-mail a copy of the notice of eviction to your tenant too. If the matter proceeds to court, you must ensure that you follow these guidelines. Be sure to familiarize yourself with local landlord-tenant laws.
When all else fails, pursue an eviction. What is eviction? Investopedia defines an eviction as a court-ordered removal of a tenant from the property where they reside.
As soon as the Pay or Quit waiting period has expired, you can file a tenant-landlord complaint in court. You can ask an eviction lawyer to help you with this process.
You will want to do this as quickly as possible because this process can take months. In most states, it is illegal to evict your tenant until the court proceedings are complete.
What Does it Cost to Evict a Tenant?
The consequences of illegal evictions are dire. Therefore, in most cases, asking an eviction attorney to assist you with the process is advisable.
Of course, property owners must pay attorney fees (including that for filing the tenant-landlord complaint and any necessary court fees). The minimum average cost of legal fees for eviction is about $500.
However, the most significant cost of eviction is often the loss of rental income and maintenance and repair costs if the renter has damaged the property.
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To avoid additional income loss or potential lawsuits, follow the legal process and work with the best property management Seattle Offers! Real Property Associates work with property owners and tenants who struggle to pay rent.