As a rental property owner, it’s likely that at some point, a tenant will miss a rent payment or experience a delay, whether due to an oversight or a late-arriving check in the mail.
No matter the reason for the late payment, landlords must be prepared to take the proper steps to uphold the terms of the lease agreement. In this guide, we’ll walk you through the process of issuing late rent notices, including when to send them, what to include, and provide a free template to help ensure tenants remain prompt with their rent payments.
If you need help collecting rent payments, consider working with our Orange County Property Management company.
Key Takeaways
- Notify tenants of missed payments, document lease violations, and initiate recovery or eviction if necessary.
- Be sure to include tenant and landlord details, property address, overdue amount, grace period, late fees, payment methods, and consequences on the late rent notice.
- California law requires that late rent fees are reasonable. Your options are a flat fee or percentage.
- Give a grace period (typically 3-5 days) for bank delays.
- If the tenant still does not pay rent, consider legal action.
Table of Contents
What is the Purpose of a Late Rent Notice?
A late rent notice is used by landlords to let tenants know that their rent is past due. This is the first step landlords should take when a tenant is late on their rent to recover the rent as quickly as possible. A late rent notice ensures that tenants are aware that they’re behind on their rent and gives you official documentation that they’re behind on their payments.
A late rent notice should also let the tenant know the total amount due, if there is a grace period, how long the grace period is, and if there are late fees that will be incurred when the grace period ends.
Why Would a Landlord Use a Late Rent Notice?
It might seem clear why a landlord would need to send a late rent notice. If your tenant doesn’t pay their rent on time, you send a notice to ensure they’re aware of the issue. But there are other reasons why sending a late rent notice is an important step in the process when your tenants don’t pay their rent on time.
- A late rent notice serves the tenant with a formal, official notice that they have violated the lease agreement by not paying rent on time.
- A late rent notice gives tenants the exact date that the rent must be paid to rectify the lease agreement violation.
- A late rent notice documents that the tenant has paid the rent late. It can be used as evidence in the future to terminate the lease if late payments become a habitual occurrence.
- A late rent notice helps landlords recover their payments as soon as possible.
- Sending a late rent notice is the first step in the eviction process. While that may not be the original intention, the notice serves as proof that the landlord used a good faith effort to work with the tenant to remedy the situation.
The Ins and Outs of Writing a Late Rent Notice
A late rent notice should be sent out on the first business day following the rent due date. If the rent is due on the first of the month, the notice should be sent on the second. You might feel as if there is a grace period, you should wait to send the notice until after the grace period. But if your tenant has made an honest mistake, waiting until they will be penalized by a late fee isn’t in their best interest.
Notifying tenants immediately means that your tenants will have all the information they need to rectify the situation as quickly as possible.
Essential elements to include in a late rent notice
A late rent notice is an informal letter that is used to keep tenants informed. Because of this there are no requirements for what needs to be included but there are some best practices that landlords should follow.
A late rent notice should include all of the following information:
- Date
- Tenants name (include all tenants on the lease)
- Landlord or property manager name
- Property address
- Amount of rent past due
- Grace period (if any)
- Reminder of the late fee amount
- Acceptable form of payment for the total rent amount due
- Consequences if the rent is not paid in full and for recurring late rent payments
If you want to ensure that you notice if delivered, consider sending it via certified mail return receipt as proof of delivery. This can be helpful down the road if you need to go to court for eviction proceedings.
Your Free Late Rent Notice Template
If you find yourself needing a late rent notice, this free template can be customized to remind tenants that the rent is overdue. This notice should be delivered as soon as possible after the rent due date is missed.
Should You Charge a Late Fee?
It is up to your discretion as a landlord whether or not you charge a late fee in Orange County, California. Regulations state that landlords are allowed to charge a late fee as long as it is a reasonable estimate of the cost the landlord would incur because the rent is late. This could include the additional work you need to undertake to recoup the late payment as well as any lost interest or added expenses you may sustain.
If you’re charging a late fee, all information should be included in the lease agreement.
If you’re wondering why you should charge a late fee, there are three reasons some landlords choose to charge a late fee.
- A late fee can be used as an incentive to ensure tenants pay their rent on time each month to avoid financial penalties.
- A late fee can be used to compensate you for the additional work required to chase down a late payment.
- A late fee can be used to prevent tenants from falling into a pattern of late payments. Without a late fee, there are no repercussions for paying their rent late. With a late fee, there’s a tangible, financial impact on the tenant’s life.
Recurring late payments can hurt your rental business. It can negatively affect cash flow and can potentially put you in a situation where your own mortgage and operating expenses are paid late. Late fees are a great way to encourage on-time payments from your citizens.
Calculating late rent payment fee
Late rent fees are charged in two different ways—as a flat rate or a percentage. In California, landlords are only allowed to charge a late fee that reasonably penalizes the tenant for paying the rent late. You cannot charge any number under the sun, by law it must be reasonable.
Because of this, most California landlords choose to charge a flat fee because a percentage of the rent is hard to justify because you’re charging more for the same amount of work simply because the rent is higher.
So, regardless of the rent, determining a flat fee that takes into account how much work goes into cashing down a late payment is the safest route to go for Orange County landlords.
Should You Offer a Grace Period?
A grace period is the time between when a rent payment is due and when a landlord applies a late fee. In California, it is up to the landlord’s discretion whether or not to give their tenants a grace period. If a landlord chooses to offer a grace period, it should be clearly outlined in the lease agreement.
If there is a grace period stipulated in the lease, it must be honored. So, if the rent is due on the first of the month and your lease agreement outlines a 5-day grace period, a late fee for past due rent would start to be charged if the rent was not paid by the sixth of the month.
While it’s not a legal requirement to offer a grace period, there are several compelling reasons why landlords should consider offering a grace period of three to five days to their tenants.
We all make mistakes
Life can be busy, and sometimes things get away from us—it’s not unheard of for a great tenant to simply make a mistake and forget to make their payment. If you have a tenant with a great track record, give them the benefit of the doubt. By offering a grace period, you can give your tenants a gentle heads-up and maintain a great landlord-tenant relationship.
Banks can slow things down
Whether you’re using an online payment system or working with direct deposits, a tenant’s payment may not show up in your bank automatically. It can take until the following business day for the payment to be reflected in your bank statement. Offering a grace period ensures you are penalizing your tenants for something that is outside of their control.
Payment systems aren’t fool proof
Your payment system may actually be the reason your payments are delayed. If your tenants send checks in the mail, for example, giving a grace period can ensure that you aren’t penalizing good tenants for a mail delay that’s outside of their control.
Take the Stress Out of Collecting Late Rent Payments
It can be stressful when the first of the month rolls around and your tenants are late on rent. With professional property managers on your side, you have experts to help you navigate the situation. And with a property management company managing your rental, late payments may be a thing of the past thanks to excellent tenant screening and seamless payment processes.
At Good Life Property Management, we believe life should be enjoyed, not spent sweating the small stuff. That’s why we set out to make property management easy. We care about you, your property, and your tenant. And we do it all so you can Live the Good Life.
Schedule a call to speak with one of our Good Life experts.
Late Rent Notice FAQs
What do you say when a tenant is late on rent?
When your tenant is late on rent it’s essential to send a formal letter to the tenants informing them that they’re behind on rent. The letter should outline how much rent is due, when it was due, the grace period (if applicable), and the late fees they will incur.
How many days can a tenant be late on rent in Orange County?
Simply put, unless a landlord explicitly outlines a grace period in the lease, tenants must pay rent on time. Most landlords choose to include a grace period of three to five days to give tenants the benefit of the doubt before charging late fees.
Can a landlord evict you in 3 days in Orange County, California?
Using a 3-day Notice to Pay or Quit, landlords can start the eviction process if their tenant doesn’t pay their back rent within three days. This notice gives tenants three days to pay their back rent or be forced to move out (quit). The notice must be delivered in writing and is different from a late rent notice.
How long can a tenant go without paying rent in California?
If a tenant has not paid their rent three days after a landlord has issued a 3-Day Notice, the tenant has 30 days to vacate the property.
Steve Welty
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