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How to Enforce Late Fees |
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What do I do when the tenant won't pay the late fees?By John NuzzoleseHave you ever had a tenant who pays the rent late, but always ignores the late fee? How about when you repeatedly send late fee notices? Are those notices ignored too? Don't you just hate that? You are not alone. I know the feeling. Many, many landlords experience this frustration.
You might also be thinking that you can collect these unpaid charges from the security deposit. Depending on the particular situation, that might be an excellent idea. You may be able to stall the inevitable, but sooner or later, things are going to come to a head. Eventually, late charges will accumulate to a level higher than the security deposit. Is there a better way? The LPA Lease provides that late charges are classified as "added rent", which means you may legally collect those late fees in all the same ways you are allowed to collect rent, because "added rent" is rent. In light of the fact that we have "Added Rent" explained in our lease, we have also updated the lease to include another hard hitting sentence. Copy and paste this into your lease if you don't already have the most recently updated copy of The LPA Lease.
What does this mean? It means that you have the right to apply the tenant's next payment towards past due unpaid late fees. If you choose to apply your tenant's current rent payment towards past due balances, keep in mind that this action will obviously offset the current month's rent to a deficiency. The amount of the past due charges will determine how far delinquent the tenant's current rent will now be. With that in mind, you may decide not to pay off the full amount of past due charges in one shot, but over a few months. Once you have paid past due charges out of the latest rent payment, you should inform the tenant of exactly how the rent was applied and what the balance now due is. I have done this using the Account Status Notification or the Rent Deficiency Notice . This method of late fee collection can be a delicate one if your intention is to preserve the tenancy. It can also be a propellant to an eviction, since most judges will be far more apt to evict for unpaid rent rather than unpaid late fees. Copyright © 2008 - 2014 The Landlord Protection Agency, Inc. All Rights Reserved.Would you like to re-print this article on your website or publication? Permission to use this Landlord Protection Agency article is granted upon the following terms:
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Because the tenant pays the rent, though late, most landlords are willing to let it slide. You may be tempted to look the other way, reasoning that the tenant isn't so bad. "At least the rent is getting paid", you might think. Why rock the boat, right? "At least I'm not dealing with an eviction... yet."