Did you know there are more than eight million Americans who can't pay their rent on time?
While it's not ideal, as a property owner and landlord, there may be times when you have to implement a late fee if your tenants don't pay rent on time. The process isn't as simple as it may sound. There are laws that protect both you and the tenants and it's crucial that you are up to date on current legislation.
This article is going to tell you everything you need to know about charging late fees and collecting rent. Read on so you're prepared for the future.
Charging Late Fees
The state of California states that late fees for missed rental payments have to be "reasonable." However, there is no number given. As a property manager, you'll have to decide how much you want to charge.
You can choose a flat fee, for example, $50. You can also charge a percentage of the rent. Many landlords choose between 5% and 10% which are classified as "reasonable".
When you're discussing late fees and rent collection with your future tenants, it's important that you include all the information in the lease. If you don't include the late fee amount of the fee for a bounced check, you won't be able to charge them.
Grace Periods
More than half of Americans are living paycheck to paycheck and typically people get paid on the 1st of the month. If you have rent due on the same date it can make it difficult for people to pay as they are still waiting for their paycheck to hit their account.
It's not required by law to implement a grace period, but it can be beneficial for you and your tenants. You are legally allowed to charge a late fee the second-day rent is due, but waiting three to five days can help you establish a better relationship with your tenants.
Online Payments and Checks
Before slapping your tenants with a fee, be sure to contact them first. If you have online payments set up for your tenants, there may have been an issue with the system that prohibited them from paying rent. Technology isn't always reliable and talking to renters can help prevent any awkwardness or tension if they did try to pay.
The grace period can also come in handy if your renters pay by check. While it's not as common, some people do prefer to pay rent the old-fashioned way. If there is a delay with the mailing system because a storm hit San Deigo or an unexpected event, their check could be late.
Bounced Checks
If your tenants do pay by check, it's important to know what to do if one of the checks bounces. You could get hit with a penalty from your bank and then you would need to charge the tenant.
However, there are limits on how much you can charge. For the first one, it's a maximum of $25, and for any more after that, it's $35.
Property Management Guide
When you're managing a property, it's your job to stay informed about the changing laws. You can be fined if you break them. It can be overwhelming to manage properties and charge late fees.
However, we have a team of professionals that are trained to do those tasks to make life easier for you. Contact us today, and we will help you manage your property in San Deigo and take care of any future issues with late rent payments.
