charging tenant default fees

[dags]

Howdy

Does anyone charge their tenants default fees for paying the rent late?

I ask this in regards to having the loan account debited without the rent payment, which leads to default fees(if you forget to have the account topped up, above and beyond, the amount needed to pay the loan of course)
All replies are welcome

kind rgeards
dags

 

[kathryn d]

We do.
Our province (in Canada) allows us to charge 1 % of the monthly rent even if one day late.

Sometimes, using this technicality, it's enough to get rid of a bad tenant.

 

[sailor]

Howdy

Does anyone charge their tenants default fees for paying the rent late?

I ask this in regards to having the loan account debited without the rent payment, which leads to default fees(if you forget to have the account topped up, above and beyond, the amount needed to pay the loan of course)
All replies are welcome

kind rgeards
dags

I don't charge a "late fee" to tenants.
But I do get alerts on my internet banking site, that tell me what periodical payments are coming out within the next 7 days. That reminds me to transfer some money, in case the rent doesn't come through on time. Ergo... no default fees from the bank.

 

[buzzlightyear]

Howdy

Does anyone charge their tenants default fees for paying the rent late?

I ask this in regards to having the loan account debited without the rent payment, which leads to default fees(if you forget to have the account topped up, above and beyond, the amount needed to pay the loan of course)
All replies are welcome

kind rgeards
dags

Not sure if you can do this legally at least for residential rentals. As for commercial, it depends on what you agree with the lessee.

 

[Bazza]

Excerpt from the Qld RTA Form 17a

"Sometimes, lessors will offer you a rent discount if you pay the rent before the due date. This is OK. However, lessors can't have an agreement with you where you'll get a discount if you don't damage the place or don't break the tenancy agreement. Also, you cannot be charged a fee if your rent is late."

But I sure wish we could

Cheers,

Bazza

 

[skater]

"Sometimes, lessors will offer you a rent discount if you pay the rent before the due date. This is OK.

I have one IP that regularly attracts defaulters. I don't know why as it is a well maintained renovated property & I have a good PM. Anyway....the new tenants have just signed a lease for $240pw rent. At the end of each month they are entitled to a "performance bonus" of $5pw, credited towards the next months rent if their rent is kept in advance. So, if they keep their rent in advance (I don't care if it is just 1 day in advance), they effectively get to pay $235pw, so a win/win.

We shall see if it works.

 

[Dazz]

Dags,

Your question probably should of been two fold... "can you", and then "do you".

However, the answers to both are, to the best of my understanding in Oz ;

Residential - No...and therefore definitely not.

Commercial - Yes....and yes. Keeps them on their toes.

 

[Bazza]

I have one IP that regularly attracts defaulters. I don't know why as it is a well maintained renovated property & I have a good PM. Anyway....the new tenants have just signed a lease for $240pw rent. At the end of each month they are entitled to a "performance bonus" of $5pw, credited towards the next months rent if their rent is kept in advance. So, if they keep their rent in advance (I don't care if it is just 1 day in advance), they effectively get to pay $235pw, so a win/win.

We shall see if it works.

Hi Skater,

The problem with your "performance bonus" is that they can pay on time for a few months then late for a few months etc. I think my idea is better in that you give them one weeks free rent at Christmas if they pay rent on time all year. Which is approx the same discount as you are offering 52x5=$260 but if they default once then they lose the entire $260 - which is very likely to happen. So it is a win/win/win - you win

Cheers,

Bazza

 

[Dis]

I ask this in regards to having the loan account debited without the rent payment, which leads to default fees(if you forget to have the account topped up, above and beyond, the amount needed to pay the loan of course)

Regardless of the can you / do you question, I structure my affairs so "my money" is automatically available to make loan repayments. The "rent money" automatically goes into the account where I keep most of my cash.

So in parctice:

1) Money Automatically transferred to transacion account on 19th of the month
2) Loan payment automatically debited from transaction account on 20th of the month
3) Rent automatically credited to offset account when the tenant and agent cough up the cash (can be variable ven when the tenant pays on time)

 

[skater]

Hi Skater,

The problem with your "performance bonus" is that they can pay on time for a few months then late for a few months etc. I think my idea is better in that you give them one weeks free rent at Christmas if they pay rent on time all year. Which is approx the same discount as you are offering 52x5=$260 but if they default once then they lose the entire $260 - which is very likely to happen. So it is a win/win/win - you win

Cheers,

Bazza

I understand that, but firstly, the discounted rate is more like the market rate, so they have to pay me extra if they do the wrong thing. Secondly, I think that having to wait a whole year to get the reward is just too much for this kind of person.

 

[Bazza]

I understand that, but firstly, the discounted rate is more like the market rate, so they have to pay me extra if they do the wrong thing. Secondly, I think that having to wait a whole year to get the reward is just too much for this kind of person.

Well, I have been doing the Christmas thing for about 1.5 years now with a tenant who was always behind in the rent - she hasn't missed a payment since

Cheers,

Bazza

 

[kathryn d]

We tried offering a free month if they paid their rent on time. One couple qualified out of about 25 families.
I'm sure these tenants would have anyways. I'll tell you next year, as we no long offer it (and increased their rent $50 a month)

 

[Dis]

My tenant is ahead on his payments by 1 month now. He always pays me extra for some reason..........