Landlord Options for Collecting Late-Payment Charges

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By Robert Griswold

Question: My tenants pay their rent late almost every month but do not include the late fees as required under their lease. I regularly contact them in writing asking for late fees and insisting that they pay on time. They respond and acknowledge that they owe the late fees but they always have some excuse and tell me they will have to pay them later.

I contacted a local governmental agency that I was referred to and they advised me that while the late charges I am seeking were very reasonable, I should be glad the tenants even pay the rent and not to pursue the late fees. This office seems to be biased towards the interest of renters and doesn't seem to provide reasonable advice. I have not taken legal action to collect the late fees but continue to keep a running balance of the accumulated late fees on a ledger that I send to the tenant. The tenants just informed me that they will be vacating in two months. I would like your advice if you think that I can deduct the late fees that were never paid to me from the tenants' security deposit when they move.

Property manager Griswold replies:

Yes, you should deduct the accumulated late fees from the security deposit, as the lease allows for a late charge and the tenant has acknowledged that they have paid the rent late. Unfortunately, your tenant has been using you as a source of short-term loans and I often see landlords that inadvertently find themselves in the lending business in addition to providing shelter.

Of course, you could pursue another strategy, which is to take the next rent payment and first apply it to all unpaid late charges and then any balance towards the rent. You will then have an unpaid rent balance and you should legally serve the tenant with the appropriate "Pay Rent or Quit" notice for the unpaid rent. Remember that "Pay Rent or Quit" notices can only seek rent, not late fees or other charges. Rent collection, including how to deal with chronic late payers, is covered in my book, "Property Management for Dummies."