Top 6 Critical Things to Do When Your Tenants Are Behind on Rent

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It’s a tricky situation for landlords and tenants alike when rent is due, and the tenants cannot pay it for whatever reason. On the one hand, many landlords strive to be compassionate, understanding that life circumstances like unexpected medical emergencies or job losses may be causing a tenant to fall behind on rent. On the other hand, being a landlord is not a charity venture; if you don’t receive the rent you’re owed, then you’re stuck footing the mortgage bill for as long as it takes them to repay you.

What to Do When Your Tenants Are Behind on Rent

Since most cities and states have their own unique tenants’ rights laws and eviction regulations, let’s explore some general options you may have available to you when a tenant falls behind on rent.

Talk to Them

First and foremost, you should reach out to them to see what’s going on. This is typically easier for landlords who are familiar with their tenants and/or live close by, but if an in-person conversation isn’t possible, then call them on the phone to see what could be causing them to fall behind.

Wait a couple of days after the rent due date to contact them; sometimes, it may be as innocuous as them forgetting the pay date or receiving a late paycheck from their own employer. To preserve an amicable landlord/tenant relationship, you must assume the best intentions before taking more drastic measures to get what they owe you.

Send a Written Late Notice

If an interpersonal conversation isn’t possible or didn’t work out, your next step would be to review the lease contract you both agreed to and send the tenant a written late notice that references the lease agreement’s clause(s) about what happens when payment is late.

If this is a first-time issue and/or your tenant has a reasonable justification for being behind on rent (e.g., recent medical emergency or lay-off at work), then you may consider waiving the late payment fee this time as a gesture of goodwill. It’s important to send the late notice in writing to have documented evidence ready if the issue escalates later on.

Connect Them with Financial Assistance Resources

Many communities have nonprofit organizations dedicated to helping individuals and families cover their rent expenses in times of need. A quick Google search will enable you to identify groups in your area that could help your tenant pay their rent, and the U.S. Treasury Department may also have resources available. Your tenant often needs to fill out an application and go through an approval process to access funds to cover rent, so they must apply for assistance as early as possible to avoid falling farther behind on rent.

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Propose a Reasonable Payment Plan

If there are no local financial resources available, then your next option could be offering a payment plan just between you and the tenant. This option is best for short-term issues like unemployment.

This option assumes your tenant is actively applying for jobs to regain their income as soon as possible. And, once again, you must put the payment terms in writing, including the amounts, due dates, what happens if payments aren’t made, etc., to protect yourself legally in case the nonpayment issue persists, and eviction may be on the horizon.

Raise the Stakes

If none of the other options work out for you, then it may be time to issue a “pay or quit notice” informing them they may face eviction for nonpayment if they continue to miss payment deadlines. This option goes beyond merely informing the tenant that they’re behind on rent.

A pay or quit notice outlines how many days the tenant has remaining to pay off their outstanding balance to continue occupying the unit. Be sure to double-check your local housing regulations for more information on specific requirements for landlords dealing with possible eviction.

Barter Services as Repayment

This option is best for small-time landlords who own 1-2 rental properties or tenants with specialized skills valuable to the landlord. It is not a long-term solution for paying rent, but it may be preferable to dealing with the hassle and frustration of evicting someone. If you’re familiar with the tenant and know they have both the time and skills necessary to complete a task(s) you need help with (e.g., landscaping, electrical work, repairs, etc.), then it may be worthwhile to let them work off a portion of their overdue rent.

Eviction is an uncomfortable topic for landlords and tenants alike, and there are many other options you should consider before going straight to the pay or quit notice stage. What you’re willing and able to do to accommodate their late rent payment depends on how much money you have available to cover your mortgage costs for the rental property in the meantime, as well as how confident you are that they will be able to repay you on time.

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