Best Way to Handle Late Fees and Grace Periods?
When a payment is due, it should be paid on time. This is true for all contractual agreements that require payment. When the payment is late, fees and charges are applied. This is standard with loans, insurance, mortgages, and other debt related to payments, so why not true in rental agreements? Late fees are generally imposed by experienced landlords. It is common with experienced landlords, and it is the accepted practice in many places and with many contractual agreements. In most instances, landlords or property managers may waive late fees, but we don’t encourage it.
While reducing late fees is a thoughtful act for a landlord, it may sometimes have unintended consequences:
1. The renter may keep paying late rent without consequences.
2. If you attempt to impose a late fee in the future, the renter may get dissatisfied.
3. Other renters who pay late may believe it is unjust to be charged a fee.
Some of your renters may be struggling financially, and as a result, you may have to deal with late payments or nonpayment of rent for a prolonged period. It is up to you to decide how to address the matter. As a result, what is the best way to manage late fees and grace periods?
Check and recheck your records to ensure that the renter in concern has, in fact, fallen behind on their rent payments. It may seem like a ridiculous thing to do, but it’s important. Landlords often maintain records on paper rather than in their minds and can forget when something was paid. Once verified, a face-to-face encounter with late payers is helpful. It allows you to confront them about why they haven’t paid their rent. You’ll be able to detect whether they’re lying if you chat to them in person.
You’ll also know if they’re dealing with anything beyond their control, such as an illness or a loss of job. The dialogue will reveal whether they need or are legally compelled to have rent grace periods. Knowing why the renter is late can assist you in determining what to do about it.
When you have a renter, your connection is going to be based on your prior experiences and expectations. If your tenant has maxed out the grace periods within their contract, adjusting when payment is due will be tough. Because of this, establishing basic rules and maintaining open communication with tenants is vital.
