What’s Your Policy?
In a recent housing court case, the judge reviewed evidence submitted by my client as to the defendant-tenant’s payment history. Upon reviewing those well-kept records, the judge noticed that my client (prior to retaining me) had permitted a pattern of accepting rent due on the 1st of the month as late as the 15th or even the 20th of the month. The landlord then tried to move for eviction without providing the tenant any written instruction or corrective information reminding the tenant that rent is due on the 1st of the month, and informing the tenant that late payment of rent would no longer be accepted after a certain date each month, the new policy to begin 30 days after delivery of such notice.
Needless to say, this was a problem in court. We managed to overcome it by arriving at an agreed-upon moveout date which fortunately wasn’t too far beyond the date we would have otherwise obtained through the eviction process had my clients’ rental practices been done correctly.
As part of your real estate investing playbook, make sure you have a consistent policy about when the rent is due and whether or not you will accept late payments. I know that with one particular tenant who has rented from me for over 20 years, I’m a bit soft and allow him to pay as late as the middle of the month. If I ever need to evict him for nonpayment, I will have to let him get a full month behind, or I will need to put him on notice that from now on, all rent must be paid on or before a certain date of the month. After waiting a minimum of 30 days after delivery of that notice, I can begin enforcing that policy.
Make sure your policies and procedures are in place in your real estate investing playbook. If you need to make any adjustments or corrections, learn how to do it properly by consulting with a housing expert in your community.