Often one of the most frustrating aspects of self-managing a rental property is collecting on rent and other amounts due from tenants. Here are a few tips from our expert property managers to help you navigate one of the worst problems– late rent.
- Double check the lease
You may think you have all the dates and terms correct in your head, but mistakes can happen on either side. This is especially true if you are self-managing more than one unit. Double-check your records to review the rental due date and any grace period noted in the lease. Usually the lease will specify a late fee, but if it doesn’t, then you can’t retroactively add one.
- Know the law
Once you have determined the rent is indeed late, it is time to take action. The first step is to know the Hawaii law in this matter. Here is an excerpt from the Hawaii Landlord Tenant Code:
Failure to Pay Rent – Section 68(a). The landlord may demand payment of rent any time after it is due. The landlord may notify the tenant in writing that unless payment is made within five business days after tenant receives the notice, the rental agreement will be terminated. If the tenant does not pay the past-due rent in full after receiving the landlord’s notice, the landlord may sue to evict the tenant. (It is suggested that the landlord provide notice to the tenant by certified mail or by hand delivery. If this is not possible, the law allows the landlord to post a notice in a conspicuous place on the dwelling unit.)
Court Action for Rent Payment – Sections 68(b). The landlord may sue for rent alone anytime after demanding payment of past-due rent and notifying the tenant of the landlord’s intention to bring such action.
Hawaii does not legally require a grace period to pay rent, but the majority of leases contain a clause giving tenants a 3- or 5-day period to pay rent after the normal due date. If you’ve double-checked and found that yes, the tenant is indeed late, then you’re bound to the provisions agreed upon in the lease and by state statutes the late fee you can charge.
- Call the tenant
A phone call to the tenant to check in on what’s going on is optional, but may prompt a forgetful tenant to make payment. You can let them know a late notice is coming and ask when you can expect payment. However, only one call needs to be made to avoid accusations of harassment. If there continues to be an issue, matters should be handled in writing.
Your tenant may be going through a difficult period, and while it is important to treat everyone humanely and fairly, don’t let personal feelings keep you from following the basic steps. While it is not recommended to allow a tenant to fall behind, any payment plans you agree to should be in writing. Should this matter end up in court, documenting your communication is critical. Remember, a late payment is still a violation of the lease that was signed by all parties, and this effectively a breach of contract.
- Send a late rent notice
Send the tenant a late rent notice after the personal phone call. This is a written note that includes a list of all fees that are owed such as late fees and interest (not including during the grace period if applicable). Encourage your tenant to pay immediately to avoid legal action. The notice can be served to the tenant in person, emailed, or taped to the door of the unit after the rent was due.
Keep a copy of all notices and correspondence- it will help you later in court to show a pattern of delinquent payments.
- Send a Pay or Quit notice
If you get any indication the tenant will not be paying the rent, don’t wait to send a 5-day Pay or Quit notice. This is a more official document that is the first step in the eviction process. It shows the tenant you’re serious about pursuing action.
In Hawaii, you must give tenants 5 days to pay up or vacate the unit. A 5-day Pay or Quit notice can be delivered any time after the rent is due. So, if you have had troubles with late payments from a tenant before, you do not have to go through steps 3 and 4 above. Indications the tenant will not be making a timely rent payment include the tenant telling you they cannot pay (for whatever reason) or they don’t respond to some or all of your communication
The Pay or Quit notice needs to clearly state your intent to evict, the amount of money you are owed (including all late fees to date), and the deadline to pay in full. If you have an eviction attorney, this is something he or she can draft.
Generally, you can post an eviction notice on the door of the unit or deliver it to the tenant in person. You may also want to mail one to him or her as a back-up measure.
- Take Legal Action
If all else fails and the tenant still doesn’t pay, get an eviction lawyer or file a claim yourself. File a complaint in court as soon as the 5-day Pay or Quit notice ends. Residential Landlord Tenant claims are handled in District Court in Hawaii. You can download the necessary forms here.
You’ll need to pay a fee and thoroughly complete all paperwork before you get a date for a hearing. When the day comes for you to head into court, prepare what you’re going to say ahead of time and have all your evidence documented.
Keep in mind it is never acceptable or legal to threaten tenants, lock someone out, move personal belongings, or shut off utilities before the eviction process is complete.
- Hire a professional property manager
Evicting tenants can be a long, frustrating process that no one would choose to do willingly. By hiring a professional property manager such as Destination Maui Realty, your burden is lifted. Because of our tenant screening process, attentive communication with tenants and easy online rent payment system, issues like late rent payments are minimized.