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What should you do if your Tenant is not Paying Rent?

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Last revision: May 7th, 2019
Last revision:
Category: Housing and Real Estate

As a landlord, one situation you never want to find yourself in is chasing down your tenants for rent. Many landlords rely on their rent payments as a form of income, so when a tenant falls behind on their payments or refuses to pay, it can be a real headache.

Luckily, there are steps you can take to attempt to recover the rent from a tenant who hasn't paid. Although the process can be long and time-consuming, you, as a landlord, won't be left without options.

For the purposes of this guide, a landlord is any individual or entity that owns a property and leases it to another. The landlord may be a commercial landlord or residential; this guide will apply to both. A tenant is the individual (or sometimes entity) that is renting the property.

Here, we'll walk you through five important steps you should take to deal with a tenant who is not paying their rent.

 

1. Read over the lease and double check the tenant's prior payments.

The first thing to do in any situation where a tenant has stopped paying rent is to read over the Lease Agreement, whether you are dealing with a Residential Lease or a Commercial Lease.

Although it may seem like a step that can be skipped, the truth is many times landlords forget the details of the late rent provisions in their leases because they don't take the time to carefully review them.

Before taking any action, you want to first make sure that the tenant is actually late with the rent (or has reached the non-payment window). In other words, does the lease say the tenant has a five-day grace period? Or perhaps the tenant gets amnesty for being late once. It's highly likely that the tenant is already at a point where they are truly in default, but reading over the lease to ensure you have your ducks in a row is never a bad idea. Especially in commercial rental situations, these provisions in the lease can be complicated, so take some time to truly review the lease.

Once you look over the lease and have assessed what the provisions on late rent or non-payment of rent are, then it's time to look over the tenant's payment history.

Although a tenant's solid payment history won't excuse them from technically being in violation of the lease for late payment or non-payment, it may impact your decision on how to handle the situation going forward. For example, for a tenant that has never once missed a payment, you may wish to take a softer approach to communication than with a tenant who is chronically late or doesn't pay.

Regardless of the outcome, it's a good idea to have all the information on the late or non-payment provisions in the lease, as well as an overall view of the tenant's payment history, before taking any action.

Final takeaway: Review the lease to ensure the tenant really is late with the rent and take some time to review the tenant's payment history before thinking about next steps.

 

2. Discuss things with your tenant.

If in your review of the tenant's history, you found that this particular tenant was always late with the rent or had not paid for long periods before, you may wish to skip this next step. For a tenant who is teetering on default throughout the duration of their lease, a discussion may not be viable and it may end up being a waste of your time. That is up to you, however, as you may still wish to attempt a resolution through simple communications.

For all other tenants though, especially those who have had a solid payment history, the next step should be a discussion. The discussion can be done over the phone or in person, as you are comfortable with.

In this conversation, the first thing to do is simply ascertain, for yourself, why the tenant has stopped payment. In the case of a good tenant, perhaps some life situation has caused a fluctuation in finances. Although this won't matter for whether they are in default, it may change how you wish to approach the situation.

Then, it's important to make sure the tenant understands the consequences that can occur for non-payment of rent. In this conversation, review with the tenant the options that are available to you if the tenant continues not to pay, up to and including eviction.

If you decide to let the late rent slide for a tenant who has otherwise been really good about their obligations, make sure you draft a written agreement spelling out all of the terms you decided, with a firm deadline, and have the tenant sign it. If the tenant pays, you can assess late fees as spelled out in the lease and move on.

If not, however, and the tenant simply doesn't have the money to pay, you may wish to mitigate the damages by asking the tenant to move out. Although it may not be ideal and you won't get past-due rent back, it may be the simplest way to ease the damages to yourself and find a new tenant.

No matter what you decide, a simple conversation with the tenant is a good first step.

Final takeaway: Call or chat with your tenant to assess the situation and figure out why they are not paying rent.

 

3. Send a Late Rent Notice.

Hopefully, by this point, the tenant has decided to pay any past-due rent as well as the late fees which may be associated with such rent. If not, however, it's time to send an official Late Rent Notice.

A Late Rent Notice contains all of the details, in written format, that you need to start making a complete record of your communications with the tenant. Usually, a Late Rent Notice contains the original date the rent was due, how late the rent is, and any fees that will be assessed.

Sometimes, after receiving a Late Rent Notice, a tenant will decide to pay for fear of being kicked out of the property. Hopefully, that's the case. Otherwise, though, it's still important to send the Late Rent Notice in case you decide to pursue an eviction later, so you can have a clear record of all of your attempts to obtain the rent payment.

Final takeaway: Send a formal Late Rent Notice to properly document your attempts to get the tenant to pay.

 

4. Send a final "pay or quit" notice.

The next step is to send an official notice that lets the tenant know that if they don't pay, they will be kicked out of the property, in no uncertain terms. This is sometimes called a "pay or quit" notice and the reason for that is clear: all the notice says is pay up now or leave. The notice can also contain the details of prior notices: in other words, you can describe in the notice that you talked once before and if you want to, even attach the late rent notice, if you sent one.

Most states actually require this type of notice before further legal action can be taken. Many states have guidelines on the notice period that must be given to the tenant here. It's often not a long notice period; for example, three to five days is usually what is permitted. It is a good idea to touch base with a local landlord-tenant attorney licensed in your state, at this point, to make sure you understand the laws surrounding further communications with the tenant.

Regardless, however, this should be the very last communication before legal action is considered. Even if the tenant has made no attempt to pay, hopefully by getting a strongly-worded "pay or quit" notice, the tenant realizes that you, as the landlord, are absolutely serious about removing them from the property. Sometimes, that's all it takes.

If not, however, it may be time to think about filing an action in your local court for eviction.

Final takeaway: If no other attempts at repayment have worked, send a final "pay or quit" notice to the tenant.

 

5. File an eviction.

Unfortunately, if nothing else has worked, you must think about filing an action for eviction. You may wish to hire a local attorney that specializes in this area to help.

Keep in mind that as a landlord, you are never allowed to unilaterally disable your tenant's access to the property. In other words, you can't shut off the electricity or change the locks while the tenant is away. You must go through proper legal channels, which involve filing an action in your local court. You'll want to bring all of your evidence, which means any record of written communications you've sent, like the notices described above.

Your case will be set for a hearing, usually several weeks, maybe months, out. The tenant will need to be served. During this period all you can do is wait.

If you are victorious in court after your hearing, you'll get the local sheriff's assistance to forcibly remove the tenant from the property.

Final takeaway: If the tenant hasn't responded to any other ways you've tried to get them to pay rent, it may be time to file an eviction.

 

Having to go through an eviction process for a tenant that won't pay rent isn't easy. It can also be costly when you consider the payment for any attorneys you may have to hire as well as the local court fees, if there are any. Unfortunately, however, sometimes it may be the only way to get rid of a tenant that won't pay.

Ideally, however, following the steps on this list will help you get the rent you are owed from your tenant. Sometimes, all it takes is a bit more pushing for the tenant to know you are serious and are willing to take all steps necessary. No matter what, remember to always touch base with an attorney in your state for any complex legal needs.

 

About the Author: Anjali Nowakowski is a Legal Templates Programmer at Wonder.Legal and is based in the U.S.A.

 

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