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What to do if a Tenant Won’t Pay Late Fees

A widespread practice among landlords is to administer late fees when rent is not paid on time by tenants. A late fee generally motivates tenants to pay rent on time and saves landlords from having to hear multiple excuses about why rent may be late. However, some tenants may refuse to pay late fees by simply paying the late rent and not including the late fee. The frustration that landlords feel when tenants do not pay rent on time is increased dramatically when the tenant will not pay the late fees. It is essential that landlords take action against tenants that refuse to pay late fees. However, these steps begin before a tenant even signs the lease.

  • The late fee policy must be in the lease and comply with State and Local Laws: Each state has their own rules about whether you can charge a late rent fee and how much you can charge. Generally, you have to wait a few days after rent is due until you can charge a late rent fee and the fee cannot be more than 5% of rent. In addition, the lease must include the late fee policy.

  • Include an “allocation of payment” in the lease clause: In your leases, you should include a clause that payments made to you go first towards unpaid fees from the previous month. The reason for doing this is that it is easier to sue a tenant for unpaid rent, and since their payment will go first to fees, their end of month balance will be for unpaid rent.

  • Remind tenants about late fees and paying them: Include a sentence in your rent invoice that reminds tenants there is a late fee. If a tenant has not paid the late few make sure to remind them in an invoice that they owe a late rent fee and how much they owe.

  • Deduct the fees from the Security Deposit: It does not make sense to evict a tenant for late fees, but you may decide not to renew their lease if they keep paying rent late. You can then deduct any leftover fee from their security deposit at the end of the lease.

Late rent fees are just one of the many types of fees and charges you may need to keep track of in your rental property management system every month. Accounting can be one of the most difficult tasks that a landlord or property manager must deal with every day. The right Software for Property Management can help you save time and money if it includes a complete ledger program.

This post is provided by RISSOFT Residential and Commercial Property Management Software, specializing in innovative and cutting-edge property management software for all 50 states. Request a demo or contact us today to receive more information.

Disclaimer: The information provided in this post not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.


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