How to Handle Late Rent Payments and Late Rent Fees

Are you struggling with late rent payments from tenants? Learn how to avoid overdue rent and what is the typical late rent fee to charge.

How to Chase Your Tenant for Late Rent Payment

Like most in things, prevention is better than cure when it comes to overdue rent. And cutting down on late payment of rent takes just a few simple steps.

Take the time to give problem tenants a gentle reminder a few days before the rent is due. You can send them a simple email or give them a quick call. The way they can't pull the all-too-common "Oops I forgot" excuse on you when it's time to pay up.

It also helps to make it easy for them to send you the rent. You can collect rent from tenants online or collect the rent in person if you happen to stay near your rental property.

Impose a penalty for all late rent payments - See the next section for more details

If your tenant still falls behind in the rent payments, then send him a late rent notice (which doubles up as a warning letter) - Click here for our late rent letter.

Should You Charge Your Tenants Late Rent Fees?

There are two schools of thought when it comes to imposing late rent fees.

Some landlords belong to the "Mr Nice" camp where they do not impose fees for overdue rent because they want to build goodwill and trust. They are more casual and will let their tenants off without late fees as long as they receive the rent in the end.

However, we highly recommend that you ask for late rate fees. From our experience, we have discovered that some new tenants like to test the waters with their landlords. They will purposely pay their rents late for the first month to see how the landlord will react. If you give in to them this first time, they will take it that you will be willing to accept late payments in the future as well.

It's human nature to hold onto their hard earned cash. It's that type of mindset that drives tenants to delay their rent payments even when they can afford to pay up right now. By charging tenants for late rent, you are sending them clear message that you mean business.

To impose overdue rent fees, your lease agreement should have a clause that reads like this:

" If rent due is not paid on of before the _____ day of the month, Tenant agrees to pay a late charge of $_______________ plus an additional late charge of $_______________ per day until the rent is paid in full.

What is a Reasonable Late Rent Fee to Charge?

Typical late rent fees are 5% to 10% of the monthly rent (e.g. $50 to $100 late fee for $1000 of rent). Some landlords may also demand an additional fee for each day that the late is rent. (e.g. $15 additional charge per day).

Do remember that the whole point of late rent charges is to compensate landlords for any losses - It's not a tool for exploiting tenants.

While the most landlord tenant laws do not state a specific percent or amount for late rent fees, it is implicitly understood that the fees have to be reasonable.

If you go wild and randomly overcharge for late rent payments (fees above 30% of the monthly rent are generally considered excessive), your tenant can refuse to pay you a single cent and challenge the fees in court.

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