As a landlord, it’s essential to establish rules and regulations for your tenants. Some of these rules are vital for protecting your property and business. One obvious rule is that tenants must pay their rent on time. Now, what happens if tenants fail to pay rent before the deadline? Should landlords charge late fees?
Some landlords may shy away from late fees, fearing that such fees may be too strict or harsh. However, charging late fees can benefit landlords and tenants alike. This post will cover why landlords should charge late fees.
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Should Landlords Charge Late Fees? 2 Reasons Late Fees are Necessary
1. Deterrent to Late Payments
Late fees are helpful for landlords and property managers to ensure tenants pay their rent on time. Some may argue it’s just another way landlords can make money. However, late fees are a way to encourage tenants to be responsible and timely with their payments. It’s a common practice to charge fees for late payments. That means you wouldn’t be doing anything outside industry norms.
2. Protect Landlords from Losses
Late fees can help tenants avoid getting themselves into financial trouble. By charging a late fee, landlords can cover any expenses due to the delay. These expenses could include additional administrative work or bank fees for bounced checks. Additionally, it helps landlords keep track of tenants who are consistently late with payments. If it is a consistent problem, you might need to take action. For example, you might choose to evict the tenant or not renew their lease when it expires. While late fees may not be the most pleasant thing to deal with, they serve a purpose. It can help landlords run a more functional business and maintain a better living environment for everyone.
TIP: In Florida, landlords must provide a reasonable late fee charge. The rental agreement must contain the conditions for late fee charges. Remember to charge no more than $20 or 20% of monthly rent, whichever is greater.
As a landlord, dealing with late rent payments might be frustrating. Late fees are a legitimate measure to prevent late payments. However, always communicate with tenants in a friendly and respectful manner. You can build a positive relationship with tenants by being understanding and empathetic. Some might be late for unavoidable reasons.
