You may be asking, what’s the big deal if I let a couple tenants go without paying a fee on their late rent payment? In reality, letting late rent fees slide can be a slippery slope into a tricky landlord-tenant relationship that makes your job ten times harder. Below are the three main risks of waiving late rent fees, and a couple ideas on how to solve the conflict if you find yourself in it.
You Could Get in Legal Trouble
The biggest risk of allowing tenants to pay rent late without penalty is that, in the worst scenario, you could find yourself in legal trouble. There are very strict rules regarding how landlords should treat their tenants to ensure that everyone has equal access to housing. If you extend a fee waiver to one tenant and not another, you could seem to be showing favoritism. Ensure that you provide the same opportunities for a fee waiver to each of your tenants. For example, you could create a rule in which a tenant can get one fee waiver after a certain number of full and timely rent payments.
Make sure you are up to date on all relevant laws but pay especially close attention to the federal Fair Housing Act, which protects tenants from discrimination on the basis of race, color, religion, sex, national origin, familial status, or disability.
You Could Start to Allow Other Waivers
Let’s say Phil from Apartment A is late with rent payment. Phil has been a fantastic tenant to you over the years and even waves when he sees you around the complex. Since Phil is such a nice guy, you let him have the late rent fee waiver he’s requesting.
Flash forward to the next month, and Phil is yet again asking you to waive his rental late fees. Now you’re in a sticky situation: yes, it’s true that you let it slide that one time. But now Phil is asking you to waive a second late fee, and even asks if you’ll overlook his dog Fido’s pet rent.
This is a real risk to waiving late rent fees. Once your tenants see that you are willing to accommodate them one time, they may ask for more and more. It’s important to remember that although you should be friendly with the people living in your properties, they are not your friends. The landlord-tenant relationship is a legal one, and you both are obligated to uphold certain responsibilities.
The next time someone like Phil comes along asking for you to waive their late fee, remember that he may come back next month asking the same thing. Gather the courage to turn him (and Fido) down.
You Could Lose Your Tenants’ Respect
Similarly, if word gets out that you’re regularly accommodating tenants who find themselves with overdue rent, your tenants may be less inclined to respect you or your property.
It’s important to remember that, when your tenant signs the lease, they are entering into a legally binding contract in which both parties agree to certain stipulations. Your tenant is expected to, at the very least, keep the unit clean and pay rent and other fees on time and in full. Although it may not seem like a big deal, letting late rent fees slide could convey that you are not 100% committed to upholding the expectations outlined in your lease. That could lead to the tenant thinking they could get away with other violations, like being a rowdy neighbor or letting the property fall into disarray.
It can be tough to constantly be the bad guy. You should try to remember that, in enforcing the rules you set out in your lease, you’re not being the bad guy: you’re doing the best thing for you and your business.
However, you don’t need to heartlessly turn down every tenant asking for a little assistance with their late rent fee. As mentioned above, it’s helpful to have a plan in place for this very scenario. For example, if your tenant has had a year of consistent and timely rent payments, they can have one late fee waived as a reward for being a good renter. This way, you don’t have to feel like you’re punishing good tenants, and the tenants feel grateful and respected.