February 2003 Owners Update

Tips to Help Landlords Collect Rent on Time

It is important to understand that when rights are mentioned, be they landlord rights or tenant rights, duties soon follow. Rights and responsibilities are flip sides of the landlord-tenant coin. When, for example, it is said that a landlord has a right to have reasonable tenants, it follows that tenants have a corresponding duty to behave reasonably.

When a tenant has a right to a habitable home, the landlord has a responsibility to make sure it is habitable. That is the very nature of landlord-tenant law. Rights and duties go hand in hand.

Ensuring that rent is paid
The first right a landlord has corresponds with a tenant's foremost duty-the duty to pay, and the right to receive, rent. Renting property is a business, and the purpose of business is to make money. The money a landlord makes comes from rent. No tenant would expect to be able to walk into a store and leave with a new pair of pants with only a promise to pay " real soon." That simply does not happen.

Landlords have every right to expect that rent will be paid in full and on time. If it is not, the tenant will not be living in the unit for long. It is good practice for a landlord to have a firm policy to ensure that rent is paid promptly. Rent should be due on the first of the month. It should be considered late no later than the fifth. Failure to pay by the fifth should result in a Notice to Pay Rent or Quit. While there is nothing wrong with working things out with a tenant you like, it is usually far better to have a firm policy to deviate from when need be instead of having deviation be the norm.

Here are three other ways to make sure rent is paid promptly:

Late fees: This is a simple and well-known policy that tenants do not like. The landlord sets the date for rent payments, sets the date when rent will be considered late, and sets the amount the tenant will pay if rent is late. If you decide to use this method, make sure it is made part of your rental agreement so that no one is surprised when the late fee is assessed. The model lease typically used in TMHA's rental assistance program allows for a $5/day late fee after the 5th of the month.

Discounts for timely payments: This is a more user-friendly approach. Here, the tenant gets a discount of, say, $10 if the rent is paid on time. This discount would have to be properly documented on the receipt if the tenant is on the Section 8 rental assistance program. In lieu of cash discounts, food gift certificates, gas cards or car wash tokens could be given as rewards for consistent timely rent payments.

Evictions: If word gets around the complex that you evict rent scofflaws, you soon won't have many. On the rental assistance program, you always retain the right of eviction.

A landlord also has a right to a reasonable rent increase to cover rising overhead costs. Again, as long as there are no rent control laws prohibiting rent increases as long as tenants are willing to pay the higher rent, and as long as proper notice has been given, there is nothing improper about a rent increase. Raising rent should not be taken lightly, though.

Many landlords dislike rent increases; tenants get mad and vacancies occur. If a rent increase is necessary, be sure to do the following:

Give ample warning: Let your tenants know informally that rent will have to be raised and when the increase will likely take effect.

Give proper written notification: All rent increases should be in writing, and should state the name of the tenant and the number of the unit, the amount of the old and new rent, and the date when the increase will be effective. Try to hand-deliver the notification if at all possible. As improper notification is cause to disregard the increase, at least for a month, be sure to give more than enough lead time. Sixty days is the required notice on the rental assistance 8 program.

The Important Legal Concept to Remember: Do not ever forget that it is the landlord who owns the property and that law was created to protect property rights. While tenants today have many rights, none trumps the rights of the property owner to receive timely rent for a habitable unit kept in good
repair.

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