When a tenant skips rent, do this.

3/11/2022 7:23:06 AM

WHAT TO DO IF A TENANT SKIPS RENT

OVERCOMING LOST REVENUE DURING TENANT TURNOVER

 

PURSUING PAYMENT FROM CURRENT TENANTS WITH DELINQUENT RENT

The main component of a lease is the agreement the tenant has made to make timely payments of the agreed amount in exchange for the right to occupy the rental. When they pay late or less than the agreed amount, they have violated the lease agreement and you have options on how to proceed.

First and foremost, become the expert regarding your local and state regulations regarding tenant payments and your options to pursue and how to document and navigate those choices.


Payment Arrangements

If local regulations allow and rent payments have become severely delinquent consider allowing the tenant a fresh start where they pay their next rent amount in full plus an installment amount to put towards the past debt.

When making this type of payment arrangement, create a lease agreement addendum outlining the payment arrangements to pay current plus partial back rent.

An easy way to calculate the amount due is to divide the past rent debt by the number of months left in the current lease. If the lease will end soon or that amount is too great a burden, you might consider asking them to sign a lease extension, giving them longer to pay off the debt.


Payment Incentives

Depending on your regulations, you might be able to offer a rental discount for on-time, full, or partial payments.

Regardless of how you choose to work with your tenants to bring their account current, it is important to be aware of what you cannot do.

 

WHAT NOT TO DO WHEN COLLECTING RENT

Don’t Go Rogue

In the news are reports of landlords taking matters into their own hands to get tenants to pay rent or leave such as removing front doors and turning off utilities. This passive-aggressive behavior is not only unprofessional but is absolutely illegal. 

Don’t Harass Your Tenants

Tenants have the right, regardless of their payment status, to quiet enjoyment of the home. That includes the freedom from harassment. To ensure you are careful not to cross the line, know and follow all regulations regarding written notices as well as verbal and electronic communication. 

Don’t Give Unauthorized Notices

Notices such as late rent notices, notice to quit, notice to vacate, and demand letters are legal documents. Your state and local area have specific laws on which notices are appropriate and how to serve them. If following legal guidelines that require posting a notice on the door, be certain to place that notice in a sealed envelope. 

Don’t Call Outside of Business Hours

Follow guidelines for calling within normal business hours outlined by your local regulations. It’s not only polite but can save you from being accused of harassment. 

Don’t Abuse Electronic Communication

It may seem easy to shoot a text over or send a quick email but make sure to only text during business hours and keep all communication (electronic, verbal, or written) very professional and appropriate. 

Don’t Show up Unannounced

It needs to be repeated, do not show up unannounced. If you need to go to the home, provide the proper notification. Just know, going to their home for the purpose of collecting rent is considered as landlord harassment unless the tenant has agreed to a payment pickup.  

 

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