Tip of the Month - October 2007

The Brass Tacks of Managing Rentals

Source: Property Management for Dummies
             Wiley Publishing - Robert Griswold

Providing a Grace Period

Many rent collection policies allow for a grace period that provides the Tenants with a few extra days to make the monthly rent payment in full before incurring late charges.  And most Tenants incorrectly believe that if they pay rent within the grace period, their payment is legally on time.  However, the rent is due on or before the rent due date and is delinquent from a legal perspective regardless of the terms of the grace period.

Make sure that the Lease or Rental Agreement and the Tenant Information Letter are very clear and unambiguous about the fact that the rent is due on or before the first of the month and is technically late even if paid during the grace period.

Grace periods are optional and can be any number of days in length.  A few states have mandatory grace periods, so be sure to check you local and state laws.  I recommend that your grace period expire on the third of the month regardless of whether the third falls on a weekend, but some states have laws that require you to give the Tenant an additional day if the third of the month falls on a weekend or holiday.

You do not have to wait until the grace period expires to begin your collection efforts.  Contact Tenants who show a pattern of being late.  You can even serve legal notices demanding the rent payment.  Your Lease or Rental Agreement should contain a specific provision that you have the right to refuse payment after the expiration of your legal demand notice, so that you are not obligated to accept an offer of rent from the Tenant and can move forward with the eviction.

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This web page was updated on 10/01/2007.