Start the ball rolling
Does this scenario sounds familiar?
Rent is due on the first and late after the fifth. After 5p.m. on the fifth, you send a letter of demand via email and a text that says the tenant needs to pay or move from the property by the ninth. If not, you’ll have to file dispossessory at court.
On the morning of the ninth you get a frantic call from the tenant. They’re giving you every reason under the sun for paying late and promise they will get it fixed ASAP.
They say things like, “Please, please give me until next Friday.”
You do, but next Friday never comes … and neither does the payment they owe you. And before you know it, two months have passed, and you still haven’t been paid.
Can you relate to this?
Most landlords can. That’s because we let wanting to help others get in the way of doing what we should’ve done. I think we’re really hoping our tenants will just perform so we won’t have to go to court and possibly face doing a sit-out. But, waiting to see if your tenant will do what they promised can easily get you into trouble. So what should you do? Start the ball rolling as soon as possible.
We changed our lease agreements to say rent is due on the first and late on the second. So, on the second of each month, we notify anyone who did not pay that they must do so or move from the property with a letter of demand. This letter is called a pay-or-quit and looks like this:
Dear Mr. and Mrs. Tenant,
The purpose of the letter is to let you know that we did not receive your rental payment this month. This means you are in violation of your residential lease contract.
Your account is now delinquent in the amount of $900 in unpaid rent. (This sum includes your late monthly payment of $850 plus a $50 late fee.)
If we have not received your full delinquent payment in certified funds by 5p.m. on the fifth, you will need to move from the property. Otherwise, we will have no choice but to begin immediate eviction proceedings.
As soon as you see payment has not been made by the first of the month, you need to get this letter to the tenant. Most people either hand deliver the letter or send it by certified mail. We’ve started just emailing and texting the letter to our tenants. This gets a faster response, and our communications are now time stamped and dated, which is valuable evidence if you ever go to court.
The letter should let the tenant know how much they need to pay in order to bring their account current. It should also let them know how long they have to do so. There is no law that states how long a tenant has to bring their account current, but the general practice is three days.
Do the pay or quit even if the tenant has been in contact with you about making a payment. Let them know you have to do it as part of your policy and procedure. They will understand.
David Tilney says, “Be easy on people, but hard on the problem.”
So, the whole time you’re working on the money problem, make sure you have started the eviction process in case the payment doesn’t come. This includes filing for dispossessory at the end of the time given in the letter of demand.
We had to send out a pay-or-quit letter this month that led to filing dispossessory. The tenant responded to us letting us know they would be moving from the property and that they understood we had to file as part of our policy and procedure.
We let them know we could stop the eviction at any time as long as they vacated when they said they would and left the property clean.
Starting the ball rolling on the pay-or-quit and then actually filing dispossessory was us being hard on the problem of nonpayment and getting the property back. Being proactive also allowed us to be easy on the people. They moved out on time and we paid them some money for moving and for leaving the house so clean.
“Be easy on people, but hard on the problem.”
Joe and Ashley English invest in real estate in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com
Adapt to your state. California has strong tenant protections. If you say “immediate” and in fact have to wait 5 days, you’re exposing yourself. Also “action” means “legal action” according to least sophisticated debtor interpretations.
But, point is exactly right. If they’re late, don’t wait. These days there’s always a better tenant out there.