Don’t Pay, Don’t Stay : Advice for Dealing with Bad Paying Tenants

Posted on 19. Oct, 2011 by in General

That dreaded call, the one all Landlords await with anxiety. “Hi, it’s John. Sorry to let you know that my rent payment is going to be late. I’m having a few problems with (fill in the gap). I’ll get it to you by (again, fill in the gap).  Or maybe it’s “Hi, it’s Kate, sorry my cheque bounced, ít wasn’t my fault. I’ll get a replacement cheque to you as soon as possible”.  Or even worse, the no call tenant. Rent was due on the 1st and it’s now the 10th and you still haven’t heard from them.

If you’ve been in this business for any length of time, I can almost guarantee that you’ve heard one if not all of the excuses above. The excuses take different forms but the end result is still the same.  The big question is what do you do?

This situation has a relatively easy solution. But first, let’s look at it from the bank’s point of view. What happens if you can’t pay your mortgage because tenants haven’t paid their rent.  You call the mortgage company and explain the reason for the non-payment.  Are they sympathetic? (maybe), do they say “that’s okay, just get it to me as soon as possible” (unlikely) or do they let you off the hook? (no). They have a process to follow and it will be followed diligently regardless of what excuse you give them.

The same should apply to your tenants. Each province has its own rules and regulations that specifies what to do if your tenant pays late. In Nova Scotia, rent is considered late after 30 days.  The Landlord can deliver a 15 day notice to vacate only after this time. It’s really very important to have a set process in place for when a tenant pays late or worse, they don’t pay at all. Become familiar with the Residential Tenancy Act  pertinent to your province.

We do care about our tenants but we care even more about our cash flow. We cannot financially maintain our property without tenants paying rent on time,  that’s a fact.

What other measures can you take?

1. Charge late payment fees – but be consistent. A bounced cheque has a late payment fee plus the bank fee. If a tenant bounces a cheque once, then we request cash payments in future. No excuses.  No debate.

2. Have all your paperwork in order. Keep a communication log of all tenant communication – when notice was served, personal visits, letters and email as well as voicemail. If you don’t already, issue rent receipts – it’s just another way of protecting yourself if you end up down the eviction route.

3. Even if you have the most sincere tenant, you still should be consistent with your dealings and issue the appropriate late payment notice. Serve notices promptly as each day you delay is another day YOU are losing money.

Evictions are costly, if you can avoid them, do.  But more costly to you is the loss of rent. Don’t wait to take action and don’t succumb to excuses (no matter how genuine they seem).

Have a great week,

Jane

 

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