One of your properties is meant to generate some income. Maybe you purchased it to flip. Alternatively, you might use it as supplementary income from a primary source.
Obviously, one way to achieve this is by receiving your monthly rent check on time. However, what happens if a tenant is not paying rent?
Stress no more because you’re in the right place.
Reading this guide, you’ll learn how to deal with tenants that are late on rent payments. You’ll also find out what to do when they stop paying altogether.
Analyze the Lease Contract
If a tenant is not paying rent, the first step should be to analyze the lease contract. The lease should outline the process should a tenant fail to make a timely payment which may be referred to as the nonpayment clause or late fee section. If the lease does not include language for a late fee, then the landlord can include this in the demand for payment.
Additionally, the lease should provide the landlord with the ability to file a formal demand for payment and/or the option to pursue eviction proceedings.
If the tenant is unresponsive to the landlord’s attempts to remedy the late rent, it is wise to retain rent reporting services to review the lease. You can discuss legal options, such as filing a 10-day notice before pursuing an immediate eviction.
Inform the Renter That It is Time to Pay
Make sure to do this in writing, either via an email or a letter, so that the tenant has evidence of the request that they have to pay. Be sure to be polite and straightforward when informing the tenant that their rent is overdue.
Explain the consequences of not paying, such as being served a notice of eviction, being taken to court, or having a bad credit score. Reiterate that there are solutions, but the tenant must take action for them to take effect. Lastly, provide the tenant with resources to look into for assistance if needed.
Send a Pay-or-Quit Letter
This is a legal document that requires the tenant to either pay their rent or vacate the property within a certain amount of time. It is typically five to fifteen days. The letter should also include important information such as the amount of rent due and the date of the deadline.
After the deadline has passed, if the tenant has still not paid rent, further actions can be taken, such as filing an eviction lawsuit, depending on the state laws.
A landlord should also keep detailed notes regarding communication with the tenant and any attempts to collect the rent, as this can be helpful in the event of an eviction lawsuit.
Avoid Exchanging Keys for Money
Exchanging keys for money is not a recommended approach as it opens up the property to potential losses or damages. A tenant may try to negotiate an installment plan for past due rent, and the owner may try to offer other payment options such as a credit card, electronic payment, or money order.
If negotiations aren’t successful, then the landlord will have no choice but to take legal action. This might involve filing an eviction complaint with the courts and getting a court order instructing the tenant to pay back rent or move out.
The landlord should always make sure to follow the law when evicting a tenant and should never attempt to use their “keys for money” approach. Doing so is illegal and could lead to hefty fines.
Start the Eviction Process
The landlord should contact the tenant to inform them that the rent is overdue. The tenant should be given a reasonable amount of time to pay the rent, but if they do not, the landlord should start the eviction process.
The landlord should inform the tenant of their intent to start the eviction process and provide a notice of termination or notice to quit, which should be served in compliance with local and state eviction laws.
After providing the notice, the landlord should file the required paperwork with the local court and attend the eviction hearing if necessary. The tenant should be aware that if an eviction proceeding is successful, they will be responsible for court costs, attorney fees, and unpaid rent.
Avoid Accepting Part-Payments for Rent
The landlord should explain to the tenant that they must pay their rent on time and in full. The landlord can remind the tenant of the lease agreement and the right to legal action if the tenant does not comply with the agreement.
The landlord should also consider offering options such as payment plans if the tenant is willing to commit to paying their overdue rent and resuming regular payments. It is important to note that a landlord should never accept part payments for rent. This will create a system of preference for part payments for future and future tenants, which is unfair and illegal.
Ultimately, the landlord may need to pursue legal action if the tenant continues to refuse to pay their rent but should not resort to this until they have exhausted all other potential avenues first.
Understand Your Options When Tenants are Not Paying Rent
In conclusion, if a tenant is not paying rent, it is important to remain organized and to stay in communication with your tenant. Ensure that you are up to date with all legal paperwork, and be sure to document everything.
Contact a lawyer if the situation devolves to its worst. Don’t hesitate to take action; take back control of your rental today.
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