In a perfect world, every tenant would ensure that they submit their rental payments on time, and you would never have to worry about how to handle late rent payments.
The reality is that everyone makes mistakes sometimes. Even if you have great tenants, they may mess up a due date and pay their rent late. In these situations or in situations where a tenant intentionally doesn’t pay their rent late, it’s important to enact a late fee.
Late fees ensure that you can keep your business running, and they also serve as a reminder to tenants to it is important to stay on top of their rental due date. After all, your business relies on their payments being on time! Don’t be afraid to charge a late fee to ensure the security of your business.
Today, we’ll address how to send out late fee notice to a tenant and when you should do this for the best results.
A Table of Contents for Late Fee for Rent Letter
- What is a Late Fee?
- How to Properly Handle a Past Due Rent Notice
- Example Late Fee for Rent Letter Template
What is a Late Fee?
If this is your first time dealing with late fees, you might not be entirely clear on what a late fee is, when it should be charged, and how to handle the collection of this fee.
A late fee is a fee that you can collect when rent payment is made after the due date and a respectable grace period has passed. Most leases or state laws give the tenant a 3- to 5-day grace period to pay rent. After this, the rent is considered to be late. If your lease does not contain a grace period, the tenant’s payment is late if it is received after the due date.
If a tenant has not paid rent on time, you can charge them a late fee. Some tenants will realize that they are late and send the late fee in with their rent payment; others will need to be alerted about the fee. You can use the late fee notice to a tenant to let them know about the late fee charge.
A Late Fee Notice Is NOT…
Remember that a late fee notice is not a late rent notice!
This form is used when the tenant has not paid a late fee yet, but it is not used when they owe you a rent payment.
This form tells the tenant that they owe a late fee charge, not that they owe you rent money. The past due rent notice is a different form that is used in those cases. This form is used to collect a late fee charge for rent that has been received late.
How to Properly Handle a Past Due Rent Notice
If a tenant you like a lot has not sent in their rent payment yet and it is late, you may be tempted to let it slide. After all, they’ve never caused problems before. While it may be tempting to do just that, you will be putting yourself into a risky situation if you do not handle the situation quickly.
When a tenant has not paid rent, work through the following steps:
Step 1: Check Lease & Payment Records
Double check that you haven’t missed any payments in your mailbox, email, or other method of accepting payment. You never know if you may have misfiled something, so it’s always best to confirm that you did not receive a payment before you move forward.
Then, pull out the lease for the property. Confirm the rent due date, check for a grace period stipulation, and review the late fee charge that will be applicable to the property. If this information isn’t in your current lease, revise your lease template immediately.
Step 2: Send a Reminder to Pay Rent
If it is the first time that a tenant is late with their rental payment, you may wish to send them a reminder rather than a late charge. This reminder can be a one-time thing since it is the first time that they are late.
If the tenant still has not paid rent, it is time to send them a late rent notice. An example of this type of form can be found here.
Step 3: Send the Late Fee Notice
Send two copies of a late fee notice (see example below) to the tenant. Send one by regular mail or email, and send another copy by certified mail to ensure receipt. It is important to have proof that you sent these letters in case you end up dealing with an eviction situation.
Step 4: Eviction Notice
If the tenant does not pay the late fee or their rental payment, you can send them an eviction notice after the appropriate amount of time has passed (for this, check your local laws). The late fee charge, while small, is still money that you are owed.
If you are planning to file for eviction for continuous late payments or missing late fees, be sure to refuse any attempts made by the tenant to pay you. Accepting rent after you have moved to file for eviction can negate your case, causing you to start at the beginning again.
For more about eviction and how to proceed with late rent-based evictions, check out our complete guide here.
Example Late Fee for Rent Letter Template
Now that you understand where the late fee for rent letter fits into the overall process of collecting late rent, let’s take a look at the free template we have for you:
|Late Fee Notice to Tenant|
In this notice, there are a few specific things that you need to be sure to include.
Basic Identifying Information
The first thing that should be included in most notices is basic identifying information. This includes tenant names, the date, and the property address. This information serves to make sure that the right legal document is received by the right people.
Rent Payment & Late Fee Information
Next, the notice should recap how much money was received and what date it was received on. Additionally, this section should cover what the late fee charge is and what date the rent was supposed to be paid on.
By clearly outlining all of this information, the tenant will be able to check their own records to see if your records match up with theirs. This is important to avoid any disagreements about conflicting information.
How to Pay
Finally, wrap up the letter with how much they should pay and what method they can pay the late fee by. Remember, some states have specific ways that you must allow the tenant to pay as well as specific maximum late rental charges.
Double check that your terms match up with those of your local laws and ordinances.
Use the Late Fee for Rent Notice Properly
Remember, the late fee for rent notice is a notice that lets your tenant know how much of a late fee they owe for paying their rent payment late. This is not a letter to collect rent; it is a letter to collected the incurred late fee.
When you use this letter, you’ll be helping your tenant to learn better tenant behavior while also protecting the integrity of your business. Be sure to use it properly, and you’ll be on your way to a more stable business!