Rent Payment, Tenant Management

What to Do When Your Tenant Is Not Paying Rent

tenant not paying rent

As a landlord, one of the toughest situations is dealing with a tenant not paying rent. Loss of rent leads to cash flow issues, so what should you do if a tenant stops paying?

Should you immediately file for eviction? Or should you send them an overdue rent notice first? There are several approaches to choose from, but which one will work best in your situation? In this article, we take a look at a few steps you should take when rent is late.

internal link Also Read: Understanding Rental Lease Agreements: A Landlord’s Guide

My Tenant Is Not Paying Rent, What Should I Do?

Whether you’re facing late rent payment for the first time, or your renter has a long history of paying late, it costs you time and money to resolve the situation. Here are a few actions you can take when a renter pays late.

1. Check payment records

Start with double-checking your payment records to ensure that your renter is actually late with their rental payment. Sometimes landlords can be mistaken about when something was (or wasn’t) paid, especially if you keep records on paper rather than digitally.

2. Document everything

Once you double-check and confirm that your tenant hasn’t really made a payment, it’s time to document everything. Maintain a thorough record of all communications, notices, signed lease documents, and a history of all payment records. This will come in handy if you have to go through an eviction.

3. Speak with the tenant

It’s a good idea to give your renter a call and inquire if they have already initiated a payment. Connecting on the phone is a quick and easy way to find out if the renter intends to pay and when they intend to pay. It’s also possible that your tenant might be struggling financially. In that case, you may offer a payment plan to ease their financial hardship.

4. Work out a payment arrangement/schedule

Set a payment schedule that makes rent payment easier for your renters. Easier payment methods will allow you to collect rent on time, decrease late payments, and keep your cash flow steady. Avoid accepting partial payment as it resets the eviction process in some places.

5. Enforce late fees

Enforcing late fees is important as it encourages renters to pay rent on time. It also serves as a justified consequence for renters when they don’t abide by the lease agreement. At the end of the day, managing a rental property is a business. Any lease terms that you have put in place regarding late payments are there to protect that business.

6. Issue an overdue rent notice

Also called a pay or vacate notice, an overdue rent notice is a form landlords can use to demand a late rent payment. The notice legally informs the renter that you are about to start eviction proceedings against them if the default isn’t rectified within a set number of days. Along with the primary applicant, any co-signers/guarantors are also responsible and should be included in all communications and notices.

Depending on local laws, you may also need to offer a payment schedule. Usually, renters have between three and five days to pay once they receive this notice. In some places like Seattle, however, the notice period is up to 14 days.

7. Offer cash for keys

Cash for keys is a cost-effective alternative to eviction. It allows you to remove tenants from your rental property by offering them a cash incentive in exchange for vacating the rental. You may do so around the same time that you would issue a pay or vacate notice.

Landlords can also offer cash for keys to a renter that has breached the lease agreement by paying consistently late. By proactively removing a non-paying renter, you can find a more reliable tenant.

8. File for eviction

Eviction can be a costly and complicated process. Most landlords don’t have the expertise that is required to carry out such a process. Some landlords may even become emotionally involved when having to evict a tenant.

As the eviction process and laws vary by city and state, it is best to hire a lawyer. They can help you understand the legal requirements in your area. They can also help you draft documents beforehand to avoid the recurrence of such problems in the future.

tenant is not paying rent

Tenant Not Paying Rent: Landlord Gurus Takeaway

Landlords can make it easier for tenants to pay rent by utilizing an online rent collection software that allows for automatic, recurring payments. You can also set up automatic late fees for any renter who falls behind. Our favorite rent collection tools include AvailRentRedi, and Hemlane.

You can download fully customizable and easy-to-use notices, such as late rent, pay or vacate, and early lease termination notices, from EZLandlordForms. All these notices are reviewed and approved by attorneys, accountants, fellow landlords, or industry experts.

Also, consider getting a pre-eviction support service from Hemlane. They communicate with the tenant not paying rent to understand why they are late on payment. Hemlane also provides resources and an action plan for landlords to get rent paid. If mediation doesn’t work, they also serve legal notices on your behalf and provide local attorney introductions.

We also recommend purchasing rent guarantee insurance. It protects property owners against loss if a tenant defaults or is unable to pay rent for some reason out of their control. This insurance pays the monthly rent for a set period if the covered renter stops making payments.

internal link Also Read: Rental Loss Insurance: Best Ways Landlords Can Protect Against Lost Rent

Frequently Asked Questions

How long does it take to evict a tenant?

Although eviction timelines vary by state, most removals take 1-3 months to actualize. From the moment a landlord issues a notice to vacate to the moment a renter moves out, the timing depends on the kind of eviction and the responsiveness of the renter.

How much notice does a landlord have to give a tenant to move out?

If renters have a fixed-term lease, landlords must send a notification to vacate at least 60 days before the lease end date. But if renters have a month-to-month lease, landlords must send a notice to vacate at least 30 days before the lease date ends. It is imperative for landlords to check their local laws.

What does it mean to offer cash for keys?

Cash for keys is when you offer a renter an amount of money in exchange for vacating the property. This is a cost-effective way to remove a renter who is already delinquent on the rent, and may be able to prevent a costly and time-consuming eviction.

Can a landlord change the locks or lock a tenant out of the premises?

No. A landlord can’t remove a tenant from a rental property without a court order. Evictions must be ordered by the court and must be served by a county sheriff, who will also oversee the removal of the renter from the property if they haven’t already vacated.

Until you have the judgment in hand, it is also illegal to try to force the renter to vacate by changing the locks or otherwise stopping them from safely accessing and living in the property. Although it can be frustrating, you have to patiently wait for judgment.

Can a landlord take a tenant’s property for non-payment of rent?

No. A landlord can’t confiscate the tenant’s property as “compensation” for missed rent. Under most state laws, however, a landlord can terminate the tenancy when a renter doesn’t pay rent.

Termination is not the same as an eviction. When the tenancy is terminated, a renter receives a notice from the landlord, perhaps a second chance to pay rent, and a deadline by which a renter must move out. The landlord can begin an eviction lawsuit if a renter doesn’t abide by the terms of the termination notice.

How should I deliver an overdue rent notice?

Typically, you can serve a pay or vacate notice by personally delivering the notice to the tenant, sending via registered mail, or both. However, each state has its own rules for serving the overdue rent notice.

So, make sure that you follow the laws in your state or check with an attorney. Some states require landlords to use a process server or sheriff, send the notice by mail, or post it at the door of the property that the renter occupies.

Disclosure: Some of the links in this post are affiliate links and Landlord Gurus may earn a commission. Our mission remains to provide valuable resources and information that helps landlords manage their rental properties efficiently and profitably. We link to these companies and their products because of their quality, not because of the commission.

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About Eli Secor

Eli Secor, Co-Founder, Landlord Gurus Eli purchased his first rental property at the age of 20, a fourplex in Gold Canyon, Arizona. He was lucky to have the advice of a shrewd real estate investing grandmother, as well as special incentives for first time buyers following the savings and loan meltdown in the late ‘80’s. In 2004 Eli and his wife purchased their first property together, a triplex in Portland, Oregon. The neighborhood was improving, light rail was coming in, and the property needed a significant rehab. They traveled back and forth from their then home in California, improving and managing the property. Eli did a full remodel on the biggest unit, living in the construction zone while doing so. The property has been cashflow positive since day one, and is now worth 3-4 times its original purchase price. Eli has been involved in residential construction since 2001, having remodeled several houses from top to bottom, rehabbed or improved rental units, and built his family’s primary residence. He leverages his knowledge of buildings to improve and maintain rental properties cost and time-effectively. Since 2007 Eli has been managing property in Seattle for family members, and now oversees 20 apartments and 3 commercial spaces. He has a great handyman, who helps make repairs, maintenance, and improvement smooth and easy. Otherwise Eli is a DIY landlord, and single contact for all of his tenants.When Eli isn’t managing rental property he is working on home projects, sailing, mountain biking, skiing, or spending time with friends and family. Once or twice a week Chris and Eli get together to run their dogs, Lola & Peanut. These meetings do double duty as Landlord Gurus planning sessions!Credentials: - BA in History from Whitman College - General Contractor (Ex) - USCG Licensed Captain (UOPV Six-Pack)
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