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Property Management and late paying tenants

By
Services for Real Estate Pros with Libertas Holding Inc.

You will have to look at your provincial rules, or contact a legal specialist, to determine if being late 30% of the time is grounds for you to seek an eviction order. But you also have to consider the practical side. An eviction will take some time, and the tenant may decide to stop paying altogether, or do damage to the rental property. Which is most always the main issue.  If it is possible to talk to the tenant and work something out short of an eviction, that could be in your best interests.

This is where your relationship skills mater.  Working with people to a successful conclusion is always best.  Reminding the tenant that you will need to provide a reference to his or her next landlord could provide incentive to pay on time. Be careful how you treat each late payment. A landlord can actually train a tenant to be habitually late with the rent. Behaviours that encourage late rent include:

  • Not laying down the law from the beginning of the lease about when rent is due, no exceptions.
  • Allowing several late payments in a row without any action.
  • Not depositing tenant rent cheques right away – tenants interpret that as a sign the landlord doesn’t need the money on time. It is also important to treat all late paying renters the same way to avoid the appearance of discrimination.
  • Sometimes landlords pay a small sum of money to the tenant — called “cash-for-keys”, as incentive for the tenant’s agreement rather than incurring the expense of an eviction. This option works best in a good rental market, where you are not likely to have a prolonged vacancy while you look for a new tenant.

 

Comments(3)

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Rebecca Nystrom
RE/MAX Renaissance - Phoenix, AZ

Great advice.  Very similiar to what I tell my investor clients.  It's always best to cooperate with the tenant to avoid costly damage to the property.

Dec 22, 2010 03:29 AM
Pat Champion
John Roberts Realty - Eustis, FL
Call the "CHAMPION" for all your real estate needs

You are right a Property Manager needs to handle late paying tenants right away to let them know paying late is not acceptable.

Dec 22, 2010 03:30 AM
Travis Behem
Jane Rowe Realty - Terre Haute, IN

Good points Keenan, I've been in property management for about 8 years now, and seen or heard it all.  I have one tenant I work with when they do get behind, because I know there will be some major repair bills once they leave, but working with them once in a while when they get behind has been okay, but doesn't always work.  They have always caught the rent up when they said they would, so I know I can work with them, and have been long term tenants.  You do have to be careful though you don't let people keep saying they'll pay next month or the month after, becuase they start living for free on your dime, and that's not good for you as the owner or an investor. Good post and points!

Dec 22, 2010 03:35 AM