As a landlord, you may have expenses such as mortgages, utilities, insurance, and maintenance that are covered by monthly rent payments. If your tenant cannot pay the rent on time, this may not be just an inconvenience. This can lead to financial difficulties or make you late in making a payment.
In the best case, tenants who do not arrange their monthly rent take up valuable time or administrative resources and cause additional stress. For this reason, it is in your interest to set a late rental policy in each rental agreement you sign.
Below are frequently asked questions about overdue rent and the steps to take if your tenant is late.
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Are late fees legal?
In order to legally enforce late fees for overdue rents, your signed rental agreement with the tenant must state which fees are charged when. Some states and municipalities have established guidelines related to the amount of late fees or the length of the grace period. So it's best to speak to a lawyer to make sure your guidelines comply with the law.
How many days can a tenant rent late?
In some states, you can charge a late fee even if the rent is only a day late. Other states require a grace period. While overdue rentals can sometimes be fixed with a late rental notification and rental payment schedule or late rental agreement, you may need to take additional action.
While clearing is often more expensive and time-consuming than just negotiating with your tenant, you usually only have to wait at least 3-5 days before starting the dish. The exact number of days depends on your state and community.
Currently, due to the limitations of the COVID 19 clearance moratorium, you may not be able to vacate the tenant until a later date, or you may have to grant the tenant a longer notice period. If you are pursuing this option, it is strongly recommended that you work with a lawyer to determine when you can submit a clearance notice.
Regardless of your policy, it is important to be fair and firm and to ensure that you apply it consistently.
What is the legal maximum late fee?
Some states require late fees to be treated as "flat-rate damages", which means that the fee must accurately reflect the lessor's actual losses from late payment of the rent. If your state or local jurisdiction does not limit late rental fees or treats them as flat-rate damages, you have a little more leeway in charging them.
Most reputable online resources for landlords suggest charging late fees between 5 and 10 percent of the monthly rental amount, although late fees over 5 percent are not acceptable in all states or in all situations. Another option is to charge a flat fee for every day that the rent is delayed, provided that this is legally justifiable under applicable law. Ask a lawyer for information on the maximum late fee for your rental unit.
Find the right balance as a landlord
Understanding your rights and responsibilities as a landlord is vital, as is finding the right balance that will enable you to be successful and avoid time-consuming disputes with tenants. Find out more legal resources for landlords or ask a lawyer if you have specific questions or concerns.
This article contains general legal information and no legal advice. Rocket Lawyer is not a law firm or a substitute for a lawyer or a law firm. The law is complex and changes frequently. For legal advice, please contact a lawyer.