Collecting On Late Fees
Hey people, I usually do Lease Options but i have a few rentals. At the moment we are trying to evict some sorry tennants. They practically are living off the gov and went to a free legal agency to get a lawyer. Here's the story, In our rental agreement there is a 15% charge of the rent amount if you are late on the rent. Of course they were late and we sent a 3 day notice with the additional fees of late charges. Well we get a notice to dismiss from their lawyers stating we cannot include the late fees in the 3 day notice (Florida law?)
Get to court and that is the Law. ? is at what point can we collect this after a tenant is LATE? Don't we all deserve to collect late fees? Seem,s the Rental Contract that they signed would allow us to collect late fees but the Judge said NO. Hmmm. thanks for any help. Great forums! Brannon
:-?
Every state has different laws, but most states and most judges feel that 5 days is a reasonable grace period before inflicting late fees. I don't agree, but then I'm a landlord. I charge late fees from day 1, and my late fees can get even higher than what you have it set at. But it's a risk. Most tenants pay. Some grumble and pay. I have yet to find a tenant refuse to pay them at all. Though if they did I'd end up evicting them just like you did with your tenants. Some landlords take a more conservative approach with late fees and charge strictly according to the law. The law in NY State, as in most states, leaves some room for interpretation. I choose to interpret it in a particular way and I realize that a judge may interpret it another way. That's just one of the risks on being in this business.
My lease has a clause (similar to those you find in most mortgages) that all monies will apply first to late fees, then towards managements' costs (like utilities I had to pay to prevent pipe freezes, or damage they caused like broken window, etc.), then towards rent.
That way, if they paid anything at all for a given month, it covers late fees first. I try to at least get that much from the tenant before going to court which I've almost always been able to do. Then when I go to court, I'm only collecting rent. I've never had a problem with it yet.
In a worse case scenario, I would try to recoup these fees in the repair costs after the Tenant moves out.
Perhaps you will have a contractor help you out in this area.
In Illinois, you must have an actual paid bill in order to collect repair costs. I don't know how complicated you want to get, but I have a seperate maintenance company that owns all our tools and bills my property management company for repairs. Then I write a check from my management company to my maintenance company.
I also do this because in Illinois, if you do your own work, you are not able to collect for any labor costs. By having a maintenance company, I am now able to get paid for the work I do. In cases where I end up in court, I will usually get a few quotes and end up billing closer to the lowest or middile quote.
Good luck.
Wow, good answers, thanks.
Melissa, thats a great idea about the clause in the lease. I will try that. Many thanks! Brannon[ Edited by Brannon on Date 12/24/2004 ]
Brannon, In florida yuo cannot accept partial payment and still evict. You either need to not accept any payment and evict them or accept payment and try again the next month. Highly reccomend you read the landlord book by Mark Warda.
[addsig]
Brannon,
In my area of the country, in particular my county in MD, rents are due on the first. They are not late until after the fifth. If the rent is still unpaid after the fifth, I can then assess a late fee for the amount of unpaid rent.
My late fee is 5% of the unpaid rent, or any portion thereof. While I can not charge a late fee for rent paid during the five day "grace period", my entire late fee is charged to the tenant on the 6th day for the amount of rent still unpaid at that time. The amount of the late fee does not change whether the rent is paid on the 6th or the 26th, nor is the late fee prorated if paid on the 6th or the 26th.
It sounds to me that you may have a timing issue. Did you serve the 3-day notice during the grace period, or after? If you served during the grace period, then it may be a technical violation of your local landlord-tenant law to include late fees in your notice before they are actually assessed.[ Edited by NewKidinTown2 on Date 12/25/2004 ]
NewKidInTown2, we sent the late notice out after the 5th day. But I think Ray mighta gave me some inportant info on the Florida law. Thanks all,
I'll keep yall updated...they have until the 5th of Jan to get out....or pay just rent for Nov.&Dec. No late fees. Per the Judge.
Thanks Again. Brannon
Or read the FL. landlord-tenant law.
You CAN change your leases this way: If rent is paid on the first, the rent is $550. If you pay late, it's $600. So they signed to pay $600/month, it's in the lease, but they get rewarded if they pay on time.
Quote:
On 2004-12-24 07:34, ray_higdon wrote:
Brannon, In florida yuo cannot accept partial payment and still evict. You either need to not accept any payment and evict them or accept payment and try again the next month. Highly reccomend you read the landlord book by Mark Warda.
Or read the FL. landlord-tenant law.
You CAN change your leases this way: If rent is paid on the first, the rent is $550. If you pay late, it's $600. So they signed to pay $600/month, it's in the lease, but they get rewarded if they pay on time.
Quote:
On 2004-12-24 07:34, ray_higdon wrote:
Brannon, In florida yuo cannot accept partial payment and still evict. You either need to not accept any payment and evict them or accept payment and try again the next month. Highly reccomend you read the landlord book by Mark Warda.
All right, check out your laws on this.
I accept a partial payment and still evict all the time. I just need to have a five day issued - after - the payment has been taken.
In other words, if rent is due on the first, lets say the tenants only pay $200. If they still owe $900, I can still evict based on the $900 still owed to me.
I just need to issue a 5-day notice for the $900.
If after the 5-day has been issued, I take say another $100, I can still issue a new 5-day for $800 and evict on that.
I don't like to do that because if I do, I'm likely to be into the next month by then. But in my previous post, the purpose was to collect the amount to cover the fees if I can first, then evict for the rent due.
Besides, unless the tenants hire a lawyer or are out to really get you, most are not up on the law so much that they argue that you violated it by giving them an eviction on partial rent if its not allowed in your state.
I find most people are afraid of court anyway, and will either agree to move out before it gets to court, or at least by the time they show up, and they are appologizing to the judge.
Hope that helps.
Melissa