What Should You Do If Tenants Are Consistently Late On Rent

Dealing with tenants who consistently pay rent late can interfere with your finances. It's crucial to address these kinds of problems swiftly and professionally to prevent long-term problems. Some solutions can be simple. Others may require legal action. However, the goal is to maintain tenant satisfaction while reducing your vacancy and turnover rates, as these can be even more detrimental. 

Below, we’ll share three steps to help you manage tenants who are consistently late on their rent. 

Verify Your Lease Terms

The first thing you should do is review your lease agreement. Ensure your agreement states clearly what rent is due, if there is a grace period, and if there is a late fee associated with late payments. Some landlords give grace periods to their tenants, allowing them to pay rent two or three days after the first. It's possible that your tenant assumed a grace period was required by California. Following this, if a late fee was agreed upon, ensure you clearly communicate both the fee and how to avoid it in the future.

Remember that California doesn't have a law stating how much a late fee can be. It only says fees need to be reasonable, which, while not stated, is generally accepted to be between 5% and 10%. If your tenant continues to pay rent late yet never fails to pay their late fees, managing their late payments with a payment plan or restructured lease can be a mutually beneficial solution. Alternatively, you can get ahead of the issue by choosing not to renew the current tenant’s lease while preparing to fill the vacancy with a new, better-qualified tenant. 

Communicate With Your Tenant

If a great tenant begins to pay their rent late, before escalating, consider having a chat with your tenant. This can not only show your initiative to your tenant. It can be helpful to both the tenant and landlord. If the tenant in question is facing a temporary financial crisis and otherwise a great record, it may be worth helping them by breaking down their rent into more manageable installments over a set period of time.

If they can recover financially, then you’ve recovered a great tenant who will be grateful and likely a good candidate for a lease renewal. If this isn't possible, consider helping them downsize to another of your rentals. If still not possible, ensure your tenant that while you cannot renew their lease, you’ll be positive as a reference. This maintains goodwill with that tenant. Meaning they’ll view your rental in a positive light and maybe refer new qualified prospective tenants to your rentals.

Notice to Pay or Quit

If your tenant is consistently paying rent late, you have the option to give your tenant a 3-day notice to pay or quit. This simply means you’re giving your tenant three days to either pay the late rent along with the associated fee or move out (which is called quit in the notice). It’ll need the following information:

• The tenant(s) full name(s) 
• The rental home address 
• Exactly how much rent is owed
• All the past due rent must be paid within 3 days, or you must move out.
• The name, address, and telephone number of the person to whom rent is due.
• If you can pay in person, the days and times you can pay the rent and the address where you can pay it.
• If you can pay by mail, the Notice must give the address where you can mail the payment.

Remember to exclude the weekend or court holidays when determining the due date of the pay or quit notice, as California’s court rules state as such. Additionally, it’s always best to consult with a lawyer prior to exploring any of the options above.

Each case is different, and it can be difficult for any landlord to deal with late rent, especially those who are new to real estate or don't have the resources to deal with unique cases. If you need help collecting rent on time or if you need help managing Beach City rental property, we invite you to call us today at (562) 888-0247 or complete our Owner Application online.