Mistakes People Make When Accepting Late Rent Payments

If you own property that is rented out, you may have a dilemma when a tenant needs to make a late payment.

On the one hand, tenants are hard to find. So if your tenant needs to pay rent a bit late, you may be smart in not having a knee jerk reaction to kick them out. On the other hand, your business relies on timely payments and cash flow, so tenants that pay sporadically and late make it hard to do business.

Giving Extra Time

It often happens that there are generally good, timely paying tenants, who just need some extra time to pay rent every now and again. You may have long standing, good relationships with these tenants, and you may want to be accommodating, and a good human being, and look the other way and cut someone a break.

And you can do that—it’s just important that you do that the right way, to protect yourself.

Estoppel and Pattern and Practice

One thing to worry about is that your pattern and practice can become a modification of your rental agreement. That’s because the course and conduct of parties to an agreement can modify that agreement when that conduct contradicts the terms of the agreement.

This may not be an issue if accepting the late payment is a one time event. But if it starts to be routine, and you’re accepting rent a day late this month, 3 days late a few months later, a week late a month after that—you may now have waived your right in the future, to demand the rent on the day that your rental agreement says it’s due.

You may also be waiving your rights to collect any penalties for late rent that may be in your agreement, like interest or late payment penalties.

That’s because the tenant can argue in court that the tenant relied upon your past behavior, and that suddenly deciding to enforce the lease agreement, when you waived it before, has altered the tenant’s expectations. This reliance can be used by a tenant to fight against an eviction action, if it came to that. In legal terms, this is called estoppel.

How to Accept Late Rent

This doesn’t mean that you can never take late rent payments, it just means that you should do it the right way.

If you do accept late rent, make sure it’s clear in writing, that the acceptance of late rent doesn’t modify the agreement, or waive any of your rights under the lease agreement. This can be done in an email, and it doesn’t have to be expressly accepted by the tenant (you will want to send the message by whatever form of notice your lease agreement says the parties should use to notify each other).

You can include blanket language like this, in your lease agreement as well.

Although you are not trying to be difficult, if you do accept late rent, you do have the option of still collecting late fees or interest. This way, you are maintaining your right to collect these monies, and the tenant cannot claim waiver or estoppel later on.

Call our Fort Lauderdale business lawyers at Sweeney Law P.A. at 954-440-3993 today.

Sources:

investopedia.com/terms/e/estoppel.asp

courtlistener.com/opinion/1125805/vines-v-emerald-equipment-co/