Folsom Property Management Blog

What Should You Do if Your Tenant Can't Pay Rent on Time?

What Should You Do if Your Tenant Can't Pay Rent on Time?

Around 44.1 million households in the US are renters.

Owning a rental property is a great way to increase your income, but it can be hard work. There are many tenant problems that you can end up facing, such as when they can't pay rent. If this happens, you want to handle things right to keep the issue minimalized.

For a rundown of the things you should do when having trouble with rent collection, keep reading.

Review the Lease Agreement

Sometimes, part of being a successful landlord means knowing that you can make mistakes. If you think the rent for your property is late, the first thing you should do is confirm it by checking the lease agreement. You may find that there's a grace period due to state laws or details in the lease, so the tenant may be allowed to pay some time after the due date.

Send a Notice

While a notice generally isn't legally required, it can help make collecting rent much easier. You can inform tenants of how much they owe (including any late fees) and when it must be paid. Such a document can also provide evidence of you trying to collect rent before taking further action.

Contact the Tenant

If there's no response to a written notice, verbal communication may be more effective. When doing this, consider how you talk. You don't want to say anything that could be seen as harassment.

It's best to do this over the phone or arrange a meeting in person. Don't enter the property without first providing proper notice.

Deliver a Pay-or-Quit Notice

At this point, a pay-or-quit notice is a more firm (but required) move. It's a written demand for payment to be made of the full rent plus late fees. The alternative is that the tenant must leave the property.

This is often considered the first step of the eviction process, as that is one of the possible outcomes. As such, you may want to speak to a real estate lawyer to make sure you handle things correctly.

Offer Cash for Keys

If rent isn't being paid on your property, you're losing money. It's vital to get non-paying tenants out so you can get new ones in. Offering a small sum of cash so that the old tenant leaves may not be ideal, but it can speed things up.

You can then take care of any repairs/maintenance and get your property back on the market. It's worth noting that a standard eviction can take months, and may cost a lot in legal fees. This option may not be something you want to do, but it could be the easiest solution.

Begin the Eviction Process

If it gets to the point where you have no other choice, you'll need to proceed with an eviction. This process can vary between states, and in California, it typically follows these steps:

  1. Give the tenant a written notice to pay or leave
  2. Start the eviction case in court and provide the occupant with a copy of the court papers
  3. The tenant can respond in a few days to request a trial date - if they don't the judge can make a decision without their input
  4. The case will go to trial
  5. The judge will make a decision

If you lose, the tenant can stay. If you win, they must move out immediately.

Dealing With a Tenant Who Can't Pay Rent

It can be a huge hassle when you've got a tenant who can't pay rent. There are plenty of other things that can also come up with your rental property which can be a lot of work to deal with. One of the best ways to make things easier is to work with a proper management company.

Residential Equity Management is a leading property management company based in Folsom, CA. If you need any assistance managing one (or multiple) rental properties, we can help. You can click here to find out more about our property management services and how it can help you.