Late Rental Fees Lease Clause

For a landlord, the most important element of a residential or commercial lease is the late fee clause. In order to encourage timely rental payments, every landlord is advised to have a stringent charge for late rental payments. This clause as part of your rental agreement is only a part of protecting yourself against late rental payments.

From the very beginning, explain and warn the tenant about late rent fee charges at the time of the lease signing. In fact, advise them not to to put their signature on the lease, if they think late rental payment could be a part of their future. Advise the tenants that you may report late payments and that this may adversely affect their credit rating.

If they plan on buying their own home someday and value their credit, a warning should be sufficient to ensure they always pay rent on time. Remind them about the importance of prioritising rental payments in order to keep their credit record clean.

As to the late fee amount, the charges should be high enough to hurt but they not so high as to cause a struggling tenant to fall even further behind in his payments. They should be painful enough to make tenants avoid having to pay them ever again. Note that your state may have specfic guidelines regarding late fees.

As a rule, tenants incurring late fees do not really mind paying the late fee in their own time, which is why it is important to slap on an additional Daily Late Charge Fee to the initial late fee. The additional penalty add-on is the incentive that causes tenants to pay the initial late fee before it gets even more painful.

Another item to be included in the Late Fee clause is the Bounced Checke penalty. It is a good idea to charge the same amount as the initial late fee. Remind tenants, if the rental check bounces, it means they will be late in paying rent and, in addition, will be responsible for a late charge, as well. With luck, a warning upfront will ensure timely rent payments and no bounced checks. Note that your state may have specific guidelines regarding bounced check fees.

Although, there are clauses in leases to protect you, it is also up to the landlord himself to empower his lease. Don’t be afraid of destroying a friendly relationship with tenants when it comes to enforcing the rental lease. They are occupying your property and tenants should live up to his / her agreement with you. Send out late fee notices and make the tenants pay penalty charges without worrying about their opinion of you. Remember, the reason you rented out your place is because like everyone else, you also have bills to pay!