The Effective Use of Late Notices: When, How, and Which One?

Extracting timely rent payments from tenants is an ongoing challenge for many landlords. Year after year, surveys reveal that non-payment of rent is one of the biggest headaches that those of us in the property management business face. Whether your tenant is facing financial hardship or is just too disorganized to make timely rent payments, the chain of events that is set in motion when one, two, or even more months’ rent are missed hurts everyone.

The late notice is the landlord’s best line of defense in the battle against delayed rent payments. When used properly, this humble little document can significantly increase the chance that your tenant will pay on time, every time. Here are a few tips to help you use late notices in a way that will maximize your rent collection rate.

• Check your state and local statutes. Virtually every state -- and some counties and municipalities -- have unique laws that set forth the legal when’s, whys, and how’s for late rent notices. As a starting point, research state and local laws thoroughly, and then develop your own late payment notification system based on the results of your investigation. If you’re unsure where to look to find this information, chat up a local landlord in the know, or consult a real estate attorney.

• Explain the rent collection process at the time of lease signing. Better yet, explicitly describe the rent payment procedures and consequences of late or missed payments in the lease itself. Well before the first rent payment is due, your tenant should have no doubt in her mind that you demand timely rent remittance and that you will pursue all collection avenues to the fullest extent possible if payments are not made on time.

• Don’t wait too long. Most experts agree that your first late notice should go out the day that the rent payment becomes overdue. For example, if the lease agreement states that rent is due on the 1st, your late notice should be dropped in the mail the morning of the 2nd. This will initiate the paper trail of documentation that most states require before formal collection proceedings can be started.

• Supplement written notices with phone calls or in-person conversations. From a legal perspective, written notices are of primary importance. But experts say that the most effective collection technique is one that combines both written and spoken communications. Remember to maintain a detached, professional tone and limit your discussion to a factual explanation of the consequences of late payments and the possible escalation of the case if full payment is not remitted.

• Continue to send additional late payment reminders as long as the balance remains unpaid. As the situation escalates, the intensity of the rhetoric in your late payment notices should increase, as well. If you’re already signed up as an EZ Landlord member, you have a choice of many different late notices to use, depending on the duration of the delinquency. We also have a form to establish the terms of a payment arrangement if your tenant has agreed to work with you to pay off the balance.

• If the balance due remains unpaid, don’t back down. You have a right to collect rent on your property. Your rental property is your business, and without income, that business is more vulnerable to failure. If your tenant has failed to hold up his end of the lease agreement, don’t hesitate to seek out all of the collection avenues that are available to you, up to and including eviction.

As a landlord, late rent notices are your best defense against the headache of delayed, slow, and missing payments. Just be sure to use these tools wisely and effectively in order to maximize your collection rate.