Overdue Rent: When to Let it Slide — and Why
“My dog ate my rent payment!” – soon-to-be-evicted tenant
As a property manager, one of your most regular jobs — literally regular, like clockwork — is collecting rent. Usually, every tenant you oversee has signed the same lease agreement, which means that they all owe their rent on the same day, with the same length of grace period attached. Hopefully, in 90%+ of cases, all of that rent arrives on time, through the efforts of the tenant, and you don’t have to stress about it. But what about the other 10%? When should you respond immediately and mercilessly, as opposed to perhaps waiting a day or two and then inquiring politely about the payments?
The answer is complex not because it’s actually complex, in a technical sense, but because it’s the opposite — not technical at all. It’s a purely intuitive endeavor — but there are some pretty reliable guidelines that you can use as a basis for your intuition.
The Human Side
The first thing to consider in any situation like this one is the human story behind the nonpayment. If the tenant is a basically good one, and the story is one that explains a single late payment without promising more in the future — a “we had to pay for a car repair” as opposed to “I got fired and my unemployment was denied,” it’s probably best to charge a nominal late fee and then set it aside. Everyone gets in a bad stretch from time to time.
Obviously, if you haven’t heard anything from the tenant, you don’t know the story — but unless you have a good reason to do otherwise, you should ask for the story before you make any assumptions. It may be that the tenant isn’t home because they were unexpectedly hospitalized, or their parent was and they had to drive a couple of towns over to help watch the grandkids. In general, unless one of the exceptions below applies, try to get information first. But if you can’t get any, and no one is responding to your messages within a day or two, move forward: you can’t afford to wait too long.
Poor Payment Habits
If your tenant is the kind of tenant who consistently pays their rent on the last day of their grace period — we’ve even had some who went so far as to consistently pay their rent via mail-drop after our office had closed on the last day of the grace period, so we didn’t take the money out until the next morning — lean more toward strict. In our case, we haven’t hesitated to simply revoke the grace period for people who consistently abuse it. But essentially, the thought here is that if they’re going to regularly abuse the technicalities of the rules in order to ‘get away’ with something, you very much ought to enforce the technicalities of the rules, because if you don’t, they’ll push harder to try to get away with more.
Crappy Tenants or Worse
The second obvious exception is if you have a tenant that isn’t properly maintaining the home or is greatly upsetting the neighbors in the first place. These are the kind of tenants that you kind of look for an excuse to get rid of, because the constant maintenance they require can cut deeply into your profit margin. If you find yourself complaining or rolling your eyes every time the tenant’s name comes up, don’t wait for a story — make a straight line toward a legal eviction the moment they screw up enough to let you.
When in Doubt…
Move forward with the eviction process. You may occasionally make a mistake of being too aggressive, but the majority of the time it’s better to start the eviction clock instead of delaying.
With any luck, most of your late payments will be of the first variety — but every landlord has to deal with genuinely crappy tenants from time to time, no matter how excellent your screening system is. Some people just become crappy tenants eight or fifteen months in, and the only thing you can do is pay attention and respond accordingly.