At the risk of being stereotypical, most mobile home park tenants aren’t rich and, as the old saying goes, you can’t get blood from a stone. As a landlord, though, you’ve got to walk a fine line between implementing enough of a late fee that timely rent payment is encouraged but not so punitive that you violate state law. Trust us, every state has a law regarding the maximum late fee that can be attached. Since these laws vary from jurisdiction to jurisdiction, make sure you know the law before you do anything.
Your goal should not be to penalize but to motivate. Try to get your tenants into the frame of mind that rent is NOT one of the bills that gets skipped during the regular too much month and too little cash juggling act. Here’s what you need to know about late fees.
According to contract, rent is due on a particular date, but it’s good policy to allow a few days before calling it officially late. If it’s supposed to be paid on the first, you might allow a grace period until the 4th or 5th. Any payment you get between the due date and prior to midnight of the grace period date is not penalized a late fee.
Increasing Late Fees
Some landlords have tried a system whereby they increase the late fee periodically throughout the month. Others have come to see that can be more trouble than it’s worth. The basic problem you’re dealing with is not that they forgot to pay – sure it happens but that’s rarely the issue – but rather that they don’t have the money when that time of the month rolls around. Many jobs have a bi-weekly pay schedule, so if you miss one, the chances are good that you’re not going to get any money for two more weeks no matter how much the late fee increases.
One thing to keep in mind is that assessing a late fee to tenants doesn’t make you a bad person. A fair, legally applied fee is simply good business and shows you’re serious about rent being paid on time (Top image: Flickr | manwithface).
The Commercial Investing Team