One of the most common disputes between landlords and tenants is late rent payments. Regardless of the reason for overdue rent, it’s vital to enforce the terms of rent collection in the lease agreement tenants signed by sending a late rent notice.
In this article, we’ll review what a late rent notice is, how it works and provide some tips on how to avoid late rent plus a free late rent notice template.
What is a late rent notice?
A late rent notice is a written letter to notify their tenants that their rent is past due. Sometimes these forms are called a Notice to Pay Rent, Failure to Pay Rent Notice, Demand for Payment of Rent, and Notice to Cure.
This isn’t an official eviction notice. The purpose of a late notice for unpaid rent is to request payment before starting the eviction process. Sending a late rent notice also keeps a record of communication if the tenant continues to default on rent payments.
Sometimes it can be a genuine mistake. After all, everyone can forget now and then, so the late rent notice might just be a necessary kick for your tenants to avoid paying rent late again.
How to write a late rent notice?
Before you draft a notice of late rent, check your rental agreement and local laws or any regulations regarding overdue rent. For example, most states have specific rules for what is considered late rent, when to send a late rent notice, and if you can charge late fees.
In general, this is what to include in a late rent notice letter:
- Date of the late rent notice
- Rental address
- Tenant name(s)
- Overdue rent amount
- Due date when rent must be paid
- Grace period (if any)
- Late fees if the rent is not paid in full
- What will happen if current and future overdue rent isn’t paid
- Landlord(s) name and contact information
Download our free late rent notice template to simplify the process. Simply fill out the details and send it.
How to send a late rent notice?
The most common ways to deliver a late rent letter are in person, by certified mail or over email. No matter which method you choose, it’s recommended to keep a copy of the notice in the tenant file, including proof that it was delivered.
When you should send a late rent notice will depend on your state laws, local regulations and the conditions of the lease agreement. Most states allow landlords to send a notice as soon as rent is past due. Grace periods for paying late rent vary by state, generally ranging between 2 to 5 days, with some states allowing up to 30 days.
A late rent notice should be used the first time a tenant misses a rent payment. In many states, if a tenant is late with rent a second or third time within a specified number of months, they can face immediate eviction the moment rent is overdue. When this happens, you will typically want to write a pay or quit notice or send an eviction notice to begin formal eviction proceedings.
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What is a reasonable late fee?
State laws also regulate the terms for charging fees for late rent payments. Some states, like Texas and New York, only specify that landlords must charge a “reasonable amount” for late rent fees, while other states are more specific.
For example, owners of Florida rental properties can charge a late fee of $20 or 20% of the monthly rent, whichever is greater. In Virginia, landlords can charge 10% of the monthly rent amount or the remaining balance of past due rent that is owed, whichever amount is less. On average, late rent fees tend to fall between 5% and 10% of the monthly rent.
Keep in mind that high late fees can backfire. Some tenants won’t have the money to pay a high late fee on top of their overdue rent. Pricey late fees can also leave a bad taste in the tenant’s mouth, deterring them from renewing their lease (if that’s what you want).
It may be tempting for some landlords to accept partial rent payments to keep the peace with tenants. However, it’s generally not good practice to accept partial payments for rent because it can send the wrong signal to tenants that rent due dates are negotiable.
Accepting partial payments may also impact the eviction process. In some states, you have to start the process of evicting a tenant all over again if you accept a partial payment for overdue rent.
How to Avoid Late Rent Payments
We know conversations surrounding late rent can sometimes be unpleasant. The best way to handle late rent payments is to put steps in place to avoid them in the first place, which can include:
- Thoroughly screen tenants before signing a lease by contacting their previous landlords and verifying employment.
- Include terms for collecting rent and late rent payments, the grace period, and your state’s rental laws in the lease agreement.
- Let tenants pay rent online via bank transfer or card.
Baselane’s online rent collection is one of the easiest ways to help prevent overdue payments. Tenants can make one-time or automated payments via ACH or card from any device deposited directly into your account.
Unlike payment apps, such as Cash App or Venmo, Baselane automatically sends reminders and charges late fees to help keep tenants on track. Payment history and outstanding rent are all documented, so you don’t have to worry about losing records.
FAQs
When is Rent Considered Late?
Generally, rent is considered late one day following its due date. However, some states will make exceptions for any delay in the payment delivery, such as late mail delivery or holiday. State or local laws may also give tenants a grace period, generally ranging between 2 to 5 days. The terms of late rent should be clearly outlined in your lease agreement.
Can You Evict Tenants for Paying Rent Late?
Most states allow evictions for overdue rent payments, although the eviction timeline will depend on your local laws. Once you remind the tenant that rent is overdue, they must pay the rent in full before the grace period ends.
If the tenant still hasn’t paid by the due date specified in the late rent notice, the landlord can file for eviction with the local court and begin the eviction process.
Can Landlords Charge a Late Rent Fee?
Depending on state laws, it’s acceptable to charge the tenant a “reasonable” late fee. Tenants who make a habit of paying their rent late affect your cash flow, so late fees help offset any costs incurred and incentivize the tenant to pay rent on time.
If you’re going to charge a late rent fee, be sure the terms are laid out in the lease.