As a landlord, a tenant not paying rent is perhaps one of your worst nightmares. But what should you do in this scenario? While you may be tempted to start the eviction process, there are actually a number of other steps you can take first to collect your unpaid rent.
Step 1: Send a late rent notice
Sometimes, a tenant may withhold rent accidentally. If it's the first time this tenant has been late paying rent -- or even if it's not the first time -- your initial step should be to send a formal late rent notice. That notice should include the date your tenant's rent was due as per your lease agreement, and, if applicable, the late fee your tenant owes. However, if it's the first time your tenant hasn't paid rent on time, you may want to offer to waive that late fee as a courtesy.
Step 2: Call your tenant to follow up
If your tenant simply forgot to pay rent, he or she will likely pay you immediately following your notice. But if your tenant goes silent, follow up with a phone call. Confirm your tenant received your notice of unpaid rent and ask if he or she intends to pay. Your tenant might give a reason for withholding rent -- say, a repair issue that's yet to be addressed -- and at that point, you'll need to review the terms of your lease agreement to see if your tenant has that right.
But your tenant might come back with a different answer: He or she doesn't have the money. And that's a very different story.
Step 3: Offer to work with your tenant if there's a financial hardship
Let's assume your tenant hasn't made a rent payment because he or she has lost a job or encountered another financial hardship. You may technically be within your rights to pursue an eviction based on a lease violation. But before you do that, there may be a better route to pursue -- compassion.
If your tenant has historically paid rent on time and never given you any problems, it's in your best interest to work with that tenant rather than threaten to go to court. Not only might a compromise get you some money sooner, but it could be a lifeline for a tenant who's experiencing a true financial crisis.
Imagine your tenant is out of work unexpectedly and can't swing the $1,000 a month your lease agreement calls for. In that case, see what your tenant can afford. Maybe your tenant can pay you half that amount now based on severance or unemployment income. Or maybe your tenant really needs a couple of months' reprieve from paying rent but intends to try to catch up afterward. Rather than go after your tenant for nonpayment, see if you can work out an arrangement where neither of you takes too hard a financial beating.
As a landlord, you may not be in a financial position to just let your tenant off the hook for a few months' rent completely. After all, you have your own mortgage payment and maintenance expenses. But if you have the flexibility to work with your tenant, it's not only the right thing to do but potentially the more cost-effective. That way, you'll avoid the legal fee that comes with retaining a lawyer for an eviction and the associated court costs.
That said, you may need to be careful when accepting a partial rent payment. In some cases, that could negate any previous action you've taken, like sending a late rent notice. Before you agree to an arrangement with your tenant, it could pay to consult an attorney.
Step 4: When all else fails, pursue eviction
Not paying rent is a clear violation of your tenant's lease agreement. If, after several attempts to contact your tenant and work with him or her, there's no movement on the rent front, you may have no choice but to move forward with an eviction. Before you do, though, check to make sure there's no eviction moratorium in effect in your state. If so, you won't have the option to pursue an eviction.
Assuming you're free to move forward with an eviction, your first step is to provide your tenant with a formal eviction notice. If your tenant doesn't agree to vacate your property, you'll need to file an eviction action in court. Once you get a hearing date, you'll present your eviction case. If a judge agrees that your tenant has violated his or her rental agreement, you'll get a judgment or court order entered in your favor. At that point, your tenant will be legally obligated to vacate your rental property. If that doesn't happen, you'll need to enlist the help of law enforcement to have your tenant, as well as your tenant's property, removed.
Clearly, an eviction isn't a picnic. It can be time-consuming, costly, and stressful for you as a landlord. So you're generally better off trying to work things out with a tenant who isn't paying rent before taking legal action. Also, if your tenant is experiencing financial difficulties, it's actually the right thing to do from a moral standpoint.
A balance of empathy and action
As a landlord, you can't just sit back and do nothing when a tenant is not paying rent. But you don't have to rush to pursue every legal remedy available to you, either.
If your tenant is responsive and communicative and presents a valid reason for not paying rent, it pays to see if you can work something out before seeking an eviction. Not only might that be a more efficient way to handle the problem, but it could actually end up saving you money in the long run.
Also, don't forget that your reputation as a landlord could spell the difference between attracting and retaining tenants versus grappling with vacancies. If you're kind to your tenants, they're more likely to want to renew their leases or suggest their friends rent from you. If you're a heartless stickler for the rules, you may end up recouping your unpaid rent at some point -- but at a serious cost.