Hello and welcome to Navigates Tuesday Tip. I'm Pam. Today we're going to be talking about addressing late rent. One thing to remember as we go through here
is unless specifically noted, the things I'm going to talk about in here are suggestions, not requirements. For
requirements, you're going to look to your HUD handbooks, your notices, and the lease, state requirements, and your
corporate policies and procedures. Rent collection is one of the most important things we do as a property manager. It's
also one of the key obligations of a tenant. Pay your rent. Pay your rent on time. Late rent quickly becomes
progressive and contagious, and we'll talk about that in a minute. And it's always easier to fix a problem earlier rather than letting balances accumulate.
If there's a legitimate reason for late rent or short payments, it's easy for us to work out a payment plan. It gets much
harder the longer things go on. When we're talking about progressive and contagious, what that means is that when
somebody is paying late, that quickly snowballs. So payment on the 12th becomes payment on the 15th next month
and the 18th and they skip a month. And if there is one household paying late and all the neighbors find out that they
paid late and didn't get in trouble, that becomes three, then 10, then half your community. Your residents are going to watch and learn from each other, and
they're going to watch and learn from you. If rent is late, there are a few basic steps you want to take. you're going to call or send reminder notices as per your corporate policy.
You can call sometimes if you're close to the end of any grace period. For instance, if the grace period is that
rent paid by the 10th is considered on time, then I as the property manager might be calling anybody who hasn't paid
by the 9th. This is especially common in elderly properties because in elderly properties oftentimes if somebody hasn't
paid they're either in the hospital or they've forgotten. So a quick call may
sometimes identify the issue or solve the problem. When you're talking to somebody who is paying late, always find out why. You could have a situation
where they lost income or got new expenses and an interim will help solve that issue. If you are getting to the
point where you think you're going to have to terminate somebody for failure to pay rent, make sure you're sending that new HUD notice of intent to
terminate. That has to go out with a 30-day time frame. So, they need 30 days notice of your intent to terminate.
Remember that is not the same as any termination notice required by your state. This notice goes out before you take action to evict.
And make sure you're taking any appropriate follow-up actions promptly.
Don't wait. Don't go 3 months before you do it. But it's going to vary by corporate policy and by state law in
terms of when you can evict. Remember, there are some legitimate reasons that somebody may have trouble paying their rent. You could have a loss of income or
an increase of expenses which should prompt you to do an interim. You could have a situation where for reasons of a
change or because it's new, social security benefits are delayed, in which case we'd probably be looking at a payment plan. Encourage your tenants to
discuss problems before they occur. Tell me before rent is due if you think you're going to have trouble because
then we can talk about what options there are. Show as much flexibility as is reasonable and as is possible
without violating HUD guidelines, state law, or your company policies.
Do not ever tell a tenant it is okay to pay their rent late. Remember, it's not okay. We're just not evicting you. So,
it's never okay. If you tell a tenant, "Oh, it's okay. Don't worry about it." That may become, "Oh, they said they're not worried about when you pay your
rent," when they're talking to somebody else. So, don't ever tell them that it's acceptable to pay rent.
There are also some not so legitimate wise that we see. Um, I had to buy a holiday gift for my grandkids. I was on vacation. I was helping my daughter.
We can have empathy for these situations, but the rules are the rules and the lease needs to be followed.
Generally, when somebody owes a balance and is willing to address it, we are going to be making payment plans, but
you want to look to your company policy in case there are any restrictions on when you will and won't make a payment
plan. Clearly make sure all tenants know their obligations. Post your rent collection policy on the office door or
the community bulletin board. Document everything that you do regarding a tenant who is paying late. Anytime you
called, anytime you sent a notice, anytime they told you what was going to be happening, make sure you document all of that dates, times, signatures,
witnesses, all the details you need to make it clear what happened and when.
Remember, when we're looking at our population, some of our tenants may be new to renting and new to having a lease
they have to follow. They may have had a landlord that wasn't insisted on timely payments. Some may have other challenges
that make following the rules difficult for them. Again, you're always going to be empathetic, but firm. The rules are the rules and they need to be enforced.
People have the right to make bad choices, but we have an obligation to enforce the rules. If the tenant
discloses a personal struggle that's impacting their ability to pay rent, you can refer them to the RSC if you have
one for assistance. You can give them info on any resources that exist in the community. Uh, keep an eye out for
anybody that's been the victim of a scam or identity theft.
You can offer to review their financial situation for an interim to see if they're entitled to one. And you could
reach out to their family, but only if you have specific consent to do so.
Remember your boundaries. Avoid getting too deep into personal details. Respect their desire not to talk. If you ask
them why the rent is late and they shrug and don't want to talk to you, that's their right. and do not involve others unless you're authorized to do that.
That involves uh people they designate on the 9206 form. If there's a conservatorship, you need to be talking
to their conservator. Most of the time, you're not going to talk to them. If there's a power of attorney or if there's other written consent for you to
talk to somebody else, make sure that you know who you can talk to and what you can talk to them about.
HUD strongly encourages repayment agreements. Uh remember, you're limited.
Your subsidized tenants can pay a maximum of 40% of their adjusted income for rent and any repayment. And there's
all sorts of things that HUD requires be in those repayment agreements. Those are things like the total amount due, what
it comes from, uh signatures, the deadline for payments, reference to a lease paragraph, a notice that if they
miss a payment, that's a default, and you want to let them know that you can negotiate the payment amount if their income changes.
Also, be aware of your corporate policies.
What happens if a payment bounces? Are they allowed to pay in check again or are they not allowed to pay by check?
When and how do they make payments? Is there a lock box? Is there a slot in the door? Do they mail it in? Uh when to
call, send notice, or contact the attorney is typically impacted by corporate policy. The fee for bounce
checks is going to be impacted by company policy and the bank fees.
These policies can verify not only by your company, but also by the bank or by the state. So, make sure you're aware of
what impacts your property specifically when you're talking about late rent, evictions, and payment agreements.
So, that's going to do it for late rent.
We would love to know what you would like to see on the next Tuesday tip. You can email Vicki or me to let us know.
Thanks, and join us for the next one.