Tenants in rental arrears can be a problem for your rental business. This situation isn’t good for both tenants and landlords, but sometimes this happens. As a landlord, you must know how to handle when your tenants are late on rent.
First and foremost, a landlord should protect the rental business from a financial deficit. At the same time, it’s crucial to acknowledge your tenant's rights.
So, how to act when your tenant is in rental arrears? Is it okay for a tenant to pay late? Will you allow a partial payment? Or is it time to evict the tenant? Read this blog post for the answers.
Before we go into how to handle rental arrears, perhaps you’re new to the term. Although not commonly used in American English, landlords should know the definition of rental arrears.
Rental arrears is an amount owed and should have been paid on due time by a tenant. Late rent and rental arrears are phrases of the same meaning. When a tenant is late on rent, he is in rental arrears and can suffer serious consequences, such as eviction.
You don’t have to evict your tenant who is late on rent immediately. There are ways to resolve the matter without quickly resorting to eviction.
Any issues with tenants should be discussed before making a drastic move. If a tenant is in arrears, you should approach and ask him the reason why he’s late on rent. Maybe, the tenant just forgot about it or got confused with the due date. Or, probably, an emergency expense prompts the tenant not to pay the rent.
You can better understand the whole situation if you talk about it first. After discussing the matter with your tenant, you can now consider the best solution to the problem.
It’s risky to allow tenants to make partial payments on late rent. This bad move can hold off eviction proceedings. It’s also likely that the tenant in arrears won’t pay what he owes in full.
You can prevent this unfortunate thing from happening if you create a deferred payment plan. Just make sure that the tenant will pay the entire amount at the time you agreed on. Stipulate in the agreement the money that must be paid, the date of payment, and the consequences of not meeting the demands.
Failing to meet what’s written on the agreement will render it void, and the tenant can suffer eviction. A deferred repayment plan is proven more advantageous to landlords than accepting partial payments.
During Covid-19 lockdowns, when many people are in financial difficulty, landlords use this option to lighten the financial burden of their tenants while keeping their rental business intact.
There are local organizations that provide financial assistance to tenants. If your tenant has a financial problem and couldn’t pay rent, tell him to apply for one of the renter assistance programs in your municipality. Always look for ways to help your tenant pay the arrears and keep your rental business stable.
When push comes to shove, your last option is to evict the tenant. If the tenant who’s late on rent doesn’t have the means to pay what he owes or give you any viable plan to resolve the problem, you can start the eviction proceedings.
Make sure that you abide by state laws regarding eviction. This process can consume some of your time, but it’s a smart way to protect your rental business.
If you don’t want to deal with all the hassle of resolving rental arrears, there are ways to prevent it from happening. The solution is to put a system that addresses such issues early and prevents them from becoming bigger problems. Here are some examples of how you can avoid dealing with rental arrears.
It can be difficult to find yourself in a situation in which you’re dealing with your tenant’s late rent. As a landlord, it’s one of your duties to resolve such matters. Thankfully, there are ways to properly handle rental arrears and protect your rental business. The guide we discussed above can be of great help to you.