Whether you own a condo or multi-family units, when tenant stops paying rent, you will feel the difference with your bottom line. Your real estate is your business, therefore when business cash flow drops the domino effect will have an impact on you and your partners. In this article we will talk about, what to do if your tenant stops paying rent, tips on how to avoid it and how to course correct if it has already happened. We are going to review the typical process in Massachusetts, in many states it would be the same, but we recommend that you check your state’s local rules and regulations.
Typically rent is due on the first day of the month. Landlords usually allow 5 days grace period, to give tenant time to catch up due to holidays or work payment delays. To avoid any miscommunications down the line, clearly state in your lease when is the rent payment date. If no payment is made on the 5th, we follow CMS rule: Call, Mail, and Serve. First, we call tenant and try to find out why the payment is late, when can they make it and whether this is one time occurrence or the beginning of something permanent. Come to the agreement with your tenant about the date when they are going to make a payment and explain to them that it is very important that they stick to the agreed date in order to avoid any further issues. It is very enticing to charge your tenant late fee, however in Massachusetts landlords can only charge late fee after payment is late for 30 days or more, but by that time you will be one month behind if tenant doesn’t pay. You should have a section in your lease about late payment fees, but do not rely too much on it.
Your second action should be to put everything in writing, that you just discussed and agreed on, and mail the copy to the tenant. It is very important to keep the paper trail every time you discuss anything with your tenants. This will serve as a reminder and will show your tenant that it is a serious matter. Typically it should not take longer than a week or two for the tenant to catch up with the rent payment, unless there is a serious issue that requires separate discussion and action plan. Each landlord has his own level of comfort and cash reserves that dictates how much time he can afford to give. If nothing happened by the agreed upon date, you would have to move forward to the next step, and serve your tenant notice to quit. Up until now, we have discussed a way to work out the late payment issues and settle the matter between you and your tenant without involving any third parties. To be frank, if you can resolve your late payment issues this way, it will save you a lot of time and money down the line. Notice to quit will terminate the tenancy and start the eviction process.
Serving a tenant notice to quit for nonpayment of rent is the first step in terminating the lease and starting an eviction process. In Massachusetts for nonpayment, you don’t have to give 30 days, you can only give 14 day notice to the tenant. You can find this form on Mass.gov website (find the links at the end of this article). If you have never gone through an eviction before, we recommend that you search and work with your local eviction attorney. Because each situation is different, when time literally means money, an eviction attorney can help you to minimize losses and get best results based on the specifics of your case. We will discuss pros and cons of going through an eviction yourself vs. hiring an attorney in one of our next articles.
To avoid any interactions or delays that might arise if something was not done according to Massachusetts laws; it is very important that notice to quit is properly filled out and served by a constable. When constable delivers your notice, you will have a proof of service. It will help you with your case if you have to go to the court. Notice to quit will terminate a lease between you and your tenant and will give your tenant 14 days to vacate the premises. From this point on, your tenant will either pay you what they owe to avoid any further issues, or they will leave the premises, or will stay and fight you in the court. In situations when tenant decides to pay you and catch up with all owed rent, it will be up to you to decide if you want to give them another chance. If they do nothing, your next step will be to file for eviction in the court.
We think, that if possible, you should negotiate and try to resolve all the issues by mutual agreement with your tenant. In cases when it's not possible to come to the agreement, you will have to solve this problem with the help of the Housing Court. Eviction is the normal thing that every landlord may have to go through at one point in their landlord career. The way you screen and manage your tenants from the beginning can help you to minimize the risk. However, it will never completely eliminate the fact, that if someone doesn’t pay their rent, you have to follow your process and be ready to do what is right for your business. Going to the court and filing for eviction is entirely separate topic and you can read about it in our other article “Eviction Process in Massachusetts”. Again, we recommend that you hire and consult with a professional eviction attorney in your area to help you navigate the eviction course process in Massachusetts.
If you need help serving notices to your tenants, finding an eviction attorney or have any eviction related questions, you can call us at 617-588-0111 or through Contact Us page.