Hi,
Just wanted to give you
an update. There is an issue with this months rent. Tenant has a receipt from
two money orders purchased totaling this months rent. Tenant claims to have
dropped it off per usual except office was closed at the time so they put it in
our outdoor drop box. No one in my office has it. Which means I do not have it.
Tenant has put a trace on it. It will take up to 30 days for that to happen
then up to 90 days to re issue them the new money order. They do not have the
money to pay rent a second time this month (per the tenant). I do have the
office manager still checking every nook and cranny. Will keep you
posted on this issue.
Before I get into my points below, I will say that 24 hours after this e-mail was sent the money was found.
So it's our first case of (potentially) lost rent. I have several points to make here.
-- It's always the responsibility of the tenant to ensure receipt of rent. Rent is not paid until the Property Manager or landlord has it. How and when the tenant wants to pay is completely up to them but until it's in our hands, it's not paid. So that means using a money order (which is like cash) can be dangerous and using a drop box is at the tenants own risk. Long ago, when I was a renter, every time I paid rent, I drove 15 minutes to the property management office and got a receipt. I understand sometimes hand delivery isn't possible but the tenant must understand that AND if not hand delivered it takes 30 seconds to call and verify the PM or landlord received it the next business day. No one can say they don't have time to do at least that. That's what I did anytime hand delivery wasn't possible. It's not the owner or PM's responsibility to reach out and confirm receipt of rent when not hand delivered.
Here is an excerpt from our standard lease that covers this point. Make sure it's in yours. It's in our late fees section:
If any amounts due under the Lease
are more than 5 days late, Tenant agrees to pay a late fee of $25 per day. Rent is deemed to be late if Landlord has not
received rent by 5pm on the 5th day.
A postmark date does constitute rent paid on that day. Any payments lost prior to being received are
the responsibility of the tenant. This
includes, but is not limited to, renter’s own negligence, payment put in a
drop box that was not received, rent lost in the mail, etc.
-- We were confused that we received this notification on the 12th of the month. We've informed our property management company that if rent is not received that we'd like to get a notification on the 6th of the month. We've also requested that they then send us a notification when it is received (if it was late). As owners we need to be aware of late payers. This can be a serious red flag. If a renter is constantly late, it almost never gets better. If anything, it slowly slips and before you know it they are a month behind. Knowing this can allow you to have your PM find another tenant at the end of the lease. Habitual late payers are very dangerous to a real estate business. Just because we have a PM, doesn't mean we aren't diligent in tracking our business. Our PM is very good, but insisting on these notifications is just part of the relationship.
-- A word about empathy. While it's true that the renter has a receipt for the money order, that doesn't mean anything to us. Sure, I believe you got a money order, but I have no idea what you did with it. It's important to treat your business as a business. With that being said, on the first offense, we'll definitely do things like waive a late fee, which I think our PM did in this case since it was found behind the drop box, but for all we know they put it there after getting called on late rent and made it look like it was there the whole time. I'm not saying this is what happened, but it's definitely possible. My thought is, everybody gets one (the Spiderman mantra if you will). If something like this happens again, there is no relief. Late fees will be assessed according to the lease. Again, our properties are a business. We need to treat them that way. We feel we don't have any other choice or we will be taken advantage of. If we decided to pay our mortgage on the property in the same way and the bank never received it, that would be on us. The bank wouldn't care. In this case, it's like we are the bank and we have to treat rent collection the same way a bank treats mortgage collection.
-- Let's assume the money order was not found. What would we have done? Fortunately, I have an answer to this question. We all met and decided what to tell the PM to do before she notified us she found it.
-- Asses a late fee according to the lease
-- Inform the tenant that they are still responsible for rent regardless of what happened
-- After 30 days begin the eviction process and let the PM handle getting back rent as appropriate.
This may seem harsh to some, but the comment about 30 days for a trace and 90 days for a re-issue didn't sit well with us. That may be the case on a money order, but we just don't care. As we said again, a renter's negligence is not our problem. There are many ways to get a hold of money. A temporary bank loan, short term family or friend loan (they will be empathic to your situation), etc. We don't care how the renter comes up with the money, only that they do. The dangerous part would be to set a precedent of allowing extremely late rent in that case.
With all that being said, our situation turned out fine (found rent), but I'm just hoping the tenant learned a valuable lesson. We sure did and I hope by reading this you did too. I'm curious to know how others would handle it. Please let me know your comments.
