It happens to every property manager eventually: rent collection day comes and goes, but you don’t receive the payment. Though virtually inevitable in the rental business, it’s never a situation a landlord looks forward to facing. Collecting past due rent can be a stressful and challenging business. Whether you’re dealing with a current tenant who didn’t pay on time or a previous renter who has long since moved out, it helps to know what to expect before you pursue the money you’re owed. Here are a few tips to guide you through the process of collecting unpaid rent past its collection date.
Be Aware of Pandemic Restrictions
It’s vital to keep legislative restrictions in mind before you start trying to collect missed rent. The COVID-19 pandemic has changed many elements of past due rent collection for Portland landlords. Especially in regards to tenants who are missing rent payments from April 2020 to June 2021.
There is no longer an eviction freeze for missed rent payments during the pandemic. However tenants may still obtain protection from eviction by applying for government aid in covering their rent. Once they send an application, tenants cannot be evicted the Oregon Emergency Rental Assistance Program (OERAP) processes their application or September 30, 2022 – whichever comes first. Landlords also cannot charge late fees for deferred rent in the protected time frame unless that rent remains unpaid after October 1, 2022.
If your tenant is missing rent from this period and has submitted an aid application, you cannot pursue rent collection or eviction until OERAP processes (or rejects) their application. However, if your tenant has missed rent outside of that window or has not applied for financial assistance, you can proceed with collecting that past rent.
Collecting Past Due Rent From Current Tenants
When a current tenant is late on their rent, there are a few options to consider. Firstly, a good leasing agreement should specify what will happen if your renter fails to pay on time. These documents should also include any fees or penalties they might incur. Under Oregon law, you must wait four days after your tenant’s rent is due before charging them any late fees. If you’re setting a flat fee, regulations require it to be “reasonable.” If you’re charging per day, it must not exceed six percent of a reasonable flat fee or add up to more than five percent of the monthly rent.
As frustrating as it is when your tenants don’t pay their rent on time, it’s often to your benefit to find a solution that benefits you both. Whether due to employment changes or illness, financial difficulty can strike anyone at any time. Most tenants aren’t looking to exploit the system, and want to remain in good standing with their property managers. By working with your tenants, you can often receive the rent you’re owed while they get back on their feet.
Offering a payment plan so your tenant can chip away at their missed rent can provide a valuable second chance. This approach can be particularly effective for renters whose ability to pay has been impacted by a temporary life event. You might consider allowing your tenants to add the cost of the missed rent to future bills through a lease agreement addendum. Landlords often arrange this by dividing the amount of rent owed and applying it equally between the number of payments remaining on the current lease.
Collecting Rent Owed From Previous Tenants
One of the worst-case scenarios for a landlord is when a tenant moves out without paying for missed rent. In these cases, a tenant will rarely leave a forwarding address. They may even actively avoid trying to be found. To start with, you can attempt to contact the tenant directly by letter. By addressing your notice as “Address Service Requested” along with the correct postage, the Postal Service will research your tenant’s new address and forward the letter accordingly. They will also send you a postcard with the new address. This can help you track down a tenant with outstanding rent payments and start the collection process.
If you cannot collect from the tenant directly, you can report the owed rent to credit agencies, which can impact their ability to qualify for a lease in the future. Your tenant must then repay the rent to get it removed from their credit report. You can also consider working with a debt collection agency, which will take over collection in exchange for a fee.
One of the last-ditch efforts a landlord can take to collect missed rent is filing a case in small claims court. While this route may allow you to collect money for additional damages and legal fees, it’s also one of the most time-consuming. Remember that time limits may apply to your ability to take legal action to pursue non-payment of rent. Property managers can file most disputes in court within one year of the initial incident. However, time limits can vary widely based on the circumstances and initial incident. That’s why it’s best to seek legal counsel on when and how to proceed.
Take The Stress Out of Missed Rent
The thought of chasing down tenants who owe you money is stressful enough to deter many would-be landlords from getting into the business in the first place. In reality, lost rent is almost a certainty in property management. The question isn’t if you’ll face it, but when (and most importantly, how). With the right tools and strategies, collecting late rent doesn’t have to be a horrible ordeal. But no matter your best intentions or your degree of confidence and experience, ensuring you get the rent payments you’re owed takes time and persistence.
If you’re worried about collecting rent from delinquent tenants, a property management company like Rent Portland Homes by Darla Andrew can save you a lot of hassle. We handle all tenant communications in a professional manner, including collecting rent. Working with us gives you the security in knowing you’ll never need to spend hours pouring over collection legislation or time limits for legal action. Collecting past due rent can be a messy business, and we’re here to handle all the details. If you’d like more information on our partnerships with Portland landlords, contact us at (503) 515-3170 or through our website.