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What is a reasonable fee for late rent?

When you are renting a residential property, your Lease Agreement will be stronger if you spell out the terms of the lease, the amount of rent owed, when and where rent should be paid, and what is considered a late payment. 

In most cases, you may charge a reasonable fee for late rent payments. However, you are usually required to state the amount of the fee and when it will be charged in your Lease Agreement.

Also, you will likely need to check your state's laws. Most states limit the amount of the late fee for renters. For example, if you have a tenant in Tennessee, the law says you may charge a late fee "not to exceed 10 percent (10%) of the amount of rent past due." In New York, the most landlords can charge for a late rent payment is "$50 or 5% of your monthly rent, whichever is less." In Texas, on the other hand, a "reasonable" fee is defined as "not more than 12% of the rent for properties with four or fewer units [or] not more than 10% of the rent for properties with more than four units."

It is best to follow your state's law for late fees because late fees, even if listed in a Lease Agreement, may not be enforceable otherwise. It is also helpful to contact a lawyer to make sure your lease includes a good policy for late fees.

What is the best way to screen tenants?

Before you and a tenant sign a lease, you can often prevent late payments and evictions ahead of time by choosing the best possible tenant. Screening tenants means looking at all the details of each potential tenant's application. This screening process helps you find the renters who are most likely to be stable by sorting out the ones who have the highest risk of late or non-payments, which can lead to eviction.

When screening potential renters, you can look at credit scores, proof of salary or employment, length of credit history, criminal background checks, and their ability to pay a security deposit along with the first month's rent.

On the other hand, if a possible tenant has been evicted before or has a criminal history, a bankruptcy, or trouble keeping a job, they may not be a good tenant for your property. Before rejecting them outright, you may want to have them explain why these things happened. Maybe it was because their identity was stolen or they lost their job during COVID. You might choose to be flexible as you make your final decision.

At the same time, it is wise to make sure you are not discriminating. For example, if the person lost their job because they became disabled, you may need further reasons to deny their application. If you do not have other reasons, they might say you denied them because of their disability. 

How can I work out a payment plan with a tenant?

Sometimes tenants end up making late payments even if you have chosen a good tenant and made sure your Lease Agreement is well written. Depending on your relationship with the tenant, you might decide to agree on a payment plan. This plan can help the tenant catch up on payments while helping you avoid a future eviction.

Here are some best practices to keep in mind when setting up a tenant's payment plan. 

First, just like when working out any kind of problem, good communication makes a big difference. As soon as a tenant's rent payment is late, it is a good idea to check with them to see why the payment was not on time.

Second, you might want to send a Late Rent Notice. This way, you have a written record showing that the payment was late. Depending on which state your rental property is in, you may need this type of documentation to get an eviction later.

Third, depending on the reason for the late payment, you might be able to write a Rent Payment Plan. A written plan is useful because it can let you adjust the amount of rent owed each month while the renter catches up on the total rent they owe. For example, you can ask the tenant how much they can pay toward the overdue or current rent payments, helping both of you avoid eviction.

Just like with late payment fees, it is a good idea to check your local law on partial payments, payment plans, and eviction. Also, you can check with a lawyer to see if there are any other requirements you should know about. 

How much should I offer for cash-for-keys?

Another way to protect yourself from eviction is to offer cash-for-keys. In some cases, landlords may prefer to give cash to renters who are struggling to pay their rent and ask them to move out. When they leave, they hand over their keys.

Typically, if you choose to offer cash-for-keys, you can give the tenant half of one month's rent plus any security deposit. Or you can offer the court costs you would have paid if you had evicted them.

Remember, you will likely need to check your state's fair housing laws to make sure you follow any steps the law requires to give cash-for-keys. 

If you have questions or need help with your lease, an eviction, or other legal documents, reach out to a Rocket Lawyer On Call® attorney.

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.


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