Q: I manage a very large rental property and while the majority of our residents are great, we do have an occasional "problem tenant" who is making life miserable for neighbors. Is there anything you can suggest?
A: You may be able to negotiate a voluntary move-out with your tenant. Some rental owners have negotiated agreements with their problem tenants in which they forgive the unpaid rent if the tenant agrees to leave by a mutually agreed-upon date. Other owners have agreed to refund the tenant’s full security deposit immediately after the tenant has vacated the property (as long as no significant damage has been done to the property).
Although you may feel strongly that your tenant should keep up his end of the lease, you may come out ahead by avoiding legal action and not having to worry about the problem anymore. You are also minimizing the chance that your problem tenant will chase away the great tenants that you want to keep. Of course, you should never count on a verbal agreement, and any voluntary move-out agreement must be in writing.
Q: I am an apartment manager and have some great tenants who always pay their rent on time. But in the last year many of my tenants have fallen into a pattern of paying a little bit later each month. This is becoming a real problem, and it almost seems like the tenants are talking to one another and conspiring. Many of them still get it in just before the late charge kicks in on the sixth of the month, but the owner is now telling me he is worried that because so many tenants are paying late he won’t be able to pay the property mortgage when it is due on the 10th. Do you have any suggestions?
A: One of the toughest issues you’ll encounter is how to deal with a tenant who is consistently late in paying his or her rent. In other respects, the tenant may not create any problems, but he or she just can’t seem to get the rent in on time. You may have even had to serve a "Notice of Nonpayment of Rent" in order to get the tenant to pay — and even then, your tenant may have not included the late charge.
In my experience, this nagging problem won’t go away unless you put a stop to it. The first step I would suggest is to send out a letter to all tenants reminding them that your rental collection policy calls for the rent to be paid on or before the first of the month. I would also send the required legal notice to formally change your current grace period of the sixth of the month to the third of the month.
When you’re faced with a tenant who just can’t seem to get the rent check in on time, you have many factors to consider (such as whether the tenant is creating any other problems for you or your other tenants). But the strength of the rental market is usually the most important issue. If it’s a renter’s market (as is becoming increasingly common in many areas) and you know that finding another tenant to rent the property will be difficult, you may be willing to be more flexible and tolerant.
Even if you know you’d have trouble finding another tenant, you shouldn’t ignore the problem of a tenant you consistently pays late. Clearly inform the tenant in writing that he or she has breached the lease or rental agreement and be sure to do so each and every time you receive the rent payment late. If you fail to enforce your late charges, the tenant can later argue that you’ve waived your rights to collect future late charges. Be sure to let the tenant know in writing that chronically late payments are grounds for eviction even if you’re not necessarily willing to go that route just yet.
The landlord’s comment is also valid, and many tenants forget or don’t care that the property owner in many cases has a mortgage plus all of the other operating expenses that must be paid each month. Some landlords may also be having financial challenges of their own and they really appreciate those tenants who have continued to pay their rent on or before the due date each month. Tenants and landlords need to be flexible and cooperative in today’s challenging economic times.
This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of "Property Management for Dummies" and "Property Management Kit for Dummies" and co-author of "Real Estate Investing for Dummies."
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