How Can You Collect Late Fees?
Contact your tenant to find out why the rent has not been paid. Your tenant may have a temporary financial problem that should be resolved, allowing you to negotiate when and how the rent will be paid. Negotiations can include dividing the rent into installments or agreeing on a specific date for full payment. Inform your tenant that you will take legal action if the rent is not paid as agreed.
Late fees are charged for unpaid rent, especially for tenants who are in the habit of default. The amount landlords can charge varies depending on State laws. Some allows for one-time flat fees, percentages, or daily fees. Some states also have a mandatory grace period. The grace period is the amount of time between when the rent is due and when the late fee takes effect. Contrary to popular belief, the grace period does not allow for rent to be paid late; it merely postpones the application of the late fee. For example, if rent is due on the first and the grace period is three days, the late fee takes effect on the fifth. Alternatively, if rent is due on the first and the grace period is zero days, the late fee takes effect on the second.
Include a late fee in every lease agreement. Let your tenants know that late payments are much more expensive than on-time payments to encourage them to pay on time. If a good tenant makes a deal with you because of a temporary financial problem, you can waive their late fees.