Two questions. Late fees and collecting - Landlord Forum thread 351755

Two questions. Late fees and collecting by Brad (PA) on April 21, 2017 @10:34

Hi,
Two questions. First, in a recent late rent payment event, I stopped adding late fees when the renter paid up on the past rent, tho the penalty/late fees had not yet been paid. In retrospect I think I made a mistake because the lease is written that the late fees are "added rent," -- made me think that the "rent" isn't actually totally paid up until the late fees have also been paid, so that the late fees should have continued until ALL rent and penalties were paid. Is that the right way to look at it?
Secondly, I manage a property for someone. Getting the tenant to pay up on the rent was pretty easy because she just made a mistake. However, collecting the late fees took a lot of my time, lots of texting to the tenant, emails to the bookkeeper and more. All in all, it took several weeks to collect. The 6% mgmt fee I get didn't come close to covering my extra time/resources in collecting the late/penalty fees. Is there a case to be made for the PM to keep late fees, provided the owner got his rent? Thanks,

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Re: Two questions. Late fees and collecting by John (NY) on April 21, 2017 @10:35	[ Reply ]

Brad , 1. I believe you did the right thing concerning adding late fees the rent in question and stopping adding late fees to the rent that was paid. Yes, the owed late fees are classified as Added Rent for collection purposes, but I doubt any judge would allow us to collect compounded late fees for the owed late fess now considered added rent. Here’s my article about how I have collected late fees on tenants sometimes stretching back as far as many months: What do I do when the tenant won't pay the late fees? https://www.thelpa.com/lpa/what/whattodo-late_fees.html 2. I think that your Property Management Agreement with the owner must provide that you are authorized to keep the late fees, bounced check charges, etc. I’m not aware of any state laws preventing a manager to do this, but it certainly will have to authorized by the owner. I would explain that it is an addition incentive for the Property Manager to get the rent paid on schedule and into the owners account promptly. I’d also recommend in the future setting the lease rent $50. Or $100. Higher and include an Early Payment discount for $50. Or $100.. We’ve been doing that quite successfully. Any halfway decent tenant will not want to risk missing the discount. I also recommend making your new tenants sign our Credit Reporting Disclosure before signing the lease. That also has been extremely effective against any late payers who have decent to good credit. I hope I helped! Good luck! John