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8 Things To Know About Rental Collection And Management
The main focus of any landlord concerning rental is how much to charge.
It’s as if your job is done as soon as you determine a rental amount to ask for and secures a tenant willing to pay it.
Here are some things to consider and keep in mind concerning issues with rental collection and management.
1) Rent control
To prevent landlord and real estate investors from holding tenants hostage, a few states or cities have strict restrictions concerning the maximum amount of rent a landlord can charge without running afoul of the law.
If your property is indeed situated in an area with rent control laws, do make it a point to understand them.
Other than that, there be rent control measures that stipulate rules regarding raising rental and eviction procedures.
Being in a location with no rent control limits does not mean that you should go for the sky.
Be mindful of market forces before quoting a price.
2) Payment receipt
Some for of bank-to-bank transfer of funds is the best way to keep a paper trail of payments.
Bank accounts don’t lie. And monthly statements will serve as legitimate proof of payment or non-payment.
However, it is not always the case where tenants agree to make payments via bank transfer.
Many still prefer the good old-fashioned payment by hand. And in some cases, checks and money orders.
Whenever you receive a rental payment in this manner, it is best to document the payment by issuing a receipt.
This can be critical when there is a dispute between landlord and tenant concerning whether rental was paid.
This also means that it is important to be consistent in issuing receipts. If you are inconsistent in issuing receipts, it can be easier for a tenant to argue that you did not issue one for the rental payment in question.
3) Notice of non-payment
Whenever a tenant fails to meet the deadline for payment, issue a notice of non-payment.
While this might negatively affect the tenants’ impression of you, you’d be happy that you did this if you have to pursue legal proceedings against the tenant.
In practice, rental is usually collected on the first day of the month unless specified otherwise in the lease agreement.
Such a notice must clearly state the:
- tenant’s name
- rental due
- and any penalty fees charged.
Should you really have to go down this road, note that the only legally accepted form of deliver is by hand or certified mail.
4) Late payment fees
There’s nothing preventing you from inserting such a condition in the tenancy contract unless there are specific local laws that make it illegal.
In practice, most landlords basically use one of 2 methods of calculating late fees.
- flat fee
- percentage of rent on a daily basis
A landlord has the right to charge late fees on tenants. However, the penalty fees must be reasonable or it could be judged to be unconscionable.
5) State expenses that is the tenants’ responsibility
There are various costs and expenses that are reasonable for tenants to bare.
These include fixed and variable expense items like:
- utility bills
- cable TV
- parking fees
- wireless internet connection
However, fees that are judged to be unreasonable might work against you should you have to take a tenant to court.
6) Partial payments
This is one of those things that you don’t want to happen.
Sometimes tenants are short of cash or are facing cash flow problems. So they propose to pay a portion of rent to appease you.
You then have the dilemma of accepting the partial payment and make a mess of you accounts or make the painful decision of delaying collections.
When accepting partial rental payments, it is essential that a partial payment agreement is used as documentation… or face the risk of waiving your landlording rights.
Such a document must contain material information like:
- the amount received
- the dates when the balance will be paid
- the dates when other fees will be settled
Failing to properly document this process can create complications should you decide to commence eviction proceedings later.
7) Bounced checks
To tell you the truth, I still cannot understand how banks can justify charging fees for checks that bounce due to insufficient funds in the current account.
Yet even when I cannot totally wrap my brain around this, I accept that this practice exist.
Landlords can charge tenants a fee for bounced checks too.
If a rental payment is made by check, and it bounces, it is within your right to charge a fee for this returned check.
The key here is that this condition is specified clearly in the lease.
8) Raising rents
Even though it is your property, you do not have the freedom to raise rental as and when you like.
Even if under some odd circumstances that provides you the legal right to raise rental, there is a need to present a valid notice.
You can however, raise rental upon the expiry of the current lease. Whether the tenant accepts the new rental is another matter altogether.