Timely rent payments are an important factor in the success of your rental. There’s a lot that goes into what makes a good tenant, but at the end of the day late rent payments can hurt your bottom line. With all the ways to pay rent – checks, card, wire transfers, electronic payments – and all the ways they can be delivered, when is rent considered received?
Define Your Rent Due Date
Clearly defining your rent due date is the first step to avoiding confusion and ensuring timely rent payments. Lay out a specific and easy-to-understand clause in your lease that reiterates the amount of rent, when it’s due, and what methods of payment you accept. This is also where you should specify what will happen if the rental due date falls on a weekend or holiday, which we’ll cover in more detail later.
You’ll also need to explicitly state how you will handle late rent payments and any associated late fees. Here’s a sample lease clause:
“The Tenant will pay the Rent on or before the first (1st) day of each and every month of the term of this Lease to the Landlord at ___ or at such other place as the Landlord may later designate by cash, check, e-transfer, etc.”
How to Define Accepted Rent Depending on Payment Type
Today, there are many ways your tenants can pay rent. Through Apartments.com, they can pay rent online securely and conveniently. They can pay with a credit card, bank transfer, Apple Pay, or Google Pay. This flexibility makes it easy for your renters to pay on time. Additionally, your renters can set up automatic rent payments, simplifying the payment process even more.
Our expense tracking platform helps you summarize rental expenses by property and tax category. From there, you can easily export them to CSV or PDF formats to make doing your taxes a breeze. Unlike our competitors, there’s no need to go off-site to a third party for required forms. With Apartments.com, you can download the required tax filing forms directly from your account, and they are backed up for seven years.
Receiving rent in person
This one is pretty straightforward. If you ask that your tenants pay in person, rent is considered received when it’s in your hands, mailbox, or office, whether the tenant pays in cash or a check. Always provide your tenants with receipts for cash payments.
Receiving rent by mail
If your tenants mail you their rent payment, it’s up to you how you want to define “received.” If your lease stipulates that rent is due on the first, then most landlords would consider rent received when the mail gets to them on the first. Some landlords may accept a postmark on the first instead. Again, it’s up to you. Be aware that many states will not allow you to charge late fees if the first is on a holiday or a Sunday and the rent payment could not make it to you.
Receiving rent electronically
If your tenants pay online through a payment portal, automatic clearing house, or Apartments.com, an electronic receipt with the date of payment will serve as your “received” date. If it’s late and your tenants pay through Apartments.com, any applicable late fees that you’ve set will be automatically applied.
Receiving rent via bank transfer
Asking your tenants to pay rent via a bank transfer isn’t the best way to handle rent payments, but it’s not uncommon. If you decide to use a bank transfer, make sure your tenants are aware of bank hours and holidays. If they start a transfer on the first and it happens to be a Friday, there’s a chance it won’t go through until after the weekend, which would make that payment late. This doesn’t apply if you and your tenant happen to have the same bank, in which case the transfer should be almost immediate.
Should You Set a Rent Pay Grace Period?
It’s very common for landlords to set a rent payment grace period, which is a number of days (most often between three and seven) after the rent due date that the tenant can still pay rent with no penalty. A five-day grace period means that rent due on the first of the month wouldn’t get a late fee until the sixth. However, this does not mean that rent is actually due on the fifth day, so make sure your tenants are clear on that. Some states and cities have laws concerning rent grace periods, so be sure to check your local laws before creating your lease agreement.
Late Rent Fees
If your tenants failed to pay rent by your set received date, you will want to charge the applicable late fees as outlined in your lease. Make sure any late fees you charge are clearly defined in your lease in terms of how much you will charge per day after the expected payment date. You should also check that the late fees you charge adhere to state and local ordinances. Some areas restrict late fee amounts to a percentage of how much the tenant pays total in rent.
Rent payments are the cornerstone of your rental business and your tenant-landlord relationship, so it’s important that your tenant knows how to pay rent, when you consider the rent received, and what will happen when rent is late. As always, start with your lease and define the rent payment terms clearly. Set a grace period if you want (or if required by law) apply late fees accordingly to discourage any future late rent payments.
