A landlord faces certain obstacles but undoubtedly the most difficult is tenants not paying rent. There are steps that you can take to minimize the stress and financial loss when the rent goes unpaid.
What do I do if my tenant hasn’t paid rent?
You must follow the standard legal process to collect unpaid rent:
1. Provide a Late Notice the day after the grace period has been exceeded, identifying any appropriate late fees. You may choose to talk to your tenant as soon as the grace period is exceeded. There is a possibility that failure to pay is based on a temporary financial situation and openly communicating could result in a structured payment plan satisfactory to both parties. You may also consider temporarily reducing the rent to avoid the hassles and expense of eviction. If you setup a payment plan or provide temporary reduced rent, put the terms in writing and have them signed by both parties. If job loss is a factor in the inability to pay then advise the renter to look into local housing allowances for help. If no agreement can be reached, then you might be best advised to let them break their lease and vacate the property. If you handle the situation calmly and fairly, the tenant will understand if/when you have to take further action later.
2. If you do not receive payment within 2-4 days of the late notice or within an arranged payment timeframe, make a Phone Call. Take the opportunity to ask the tenant about any updates in their situation but also to inform them of consequences such as eviction and credit reporting. If you are unable to reach the tenant then try contacting their financial guarantor if there is one or one of their references. Do not speak of un-paid rent to a reference; simply try to find out how you can best reach your tenant.
3. If you do not receive payment based on the arrangement you’ve worked out or within an additional 2-4 days then provide a legally sound Attorney’s Letter telling the tenant to pay rent in full and any assigned late fees to avoid an eviction notice and credit reporting.
4. If the attorney’s letter does not result in payment, it is time to send an Eviction Notice with a cure timeframe to pay rent and fees in full.
5. If the cure timeframe passes without payment, you must be prepared to move forward with the Eviction Process. Hire an attorney to handle the court eviction as there are complicated legal notices and procedures required for different situations.
a. A section 8 notice applies when a tenant is within the fixed term of their lease (typically within the first six months). It must be a written notice and detail exactly why you are asking to evict your tenant and regain possession of your house or apartment.
b. A section 21 notice applies when a tenant is outside the fixed term of their lease. Since it is a non-fault based written notice, you are not legally required to detail why you are seeking eviction and re-possession of your house or apartment. Note that a section 21 notice means that you will not be able to recoup any of the unpaid rental money and tenants have two months from the date of notice to vacate your property.
6. If you are left with money owed to you, then you are entitled to Report Bad Debt to the Credit Bureau. You are also entitled to use the security deposit toward any unpaid rent once you have proven the money is owed to you.
Landlord’s Insurance that covers for loss of rent may be a good investment. In addition, if you’re going through an eviction then the property may be in jeopardy of being mistreated so it would be wise to invest in insurance that covers damage by your tenants.
Please understand that you may not do the following things even if a renter is delinquent:
Enter the property without permission
Forcibly remove the renter or their property
Change the locks
Find new tenants before the old ones are gone
Unpaid rent is a serious issue and needs to be dealt with in a timely manner. If you follow our guidelines, you will be well on your way to handling any issues that arise.
