Feature
by Clifford E. Fried
Occasionally, a tenant will have a somewhat legitimate reason for paying rent late. Illness, death or unexpected financial problems are the most common reasons for late rent. Most rental agreements provide that rent is due in advance, on a particular day of the month. Although rent commonly falls due on the first day of the month, some leases provide for the payment of rent later in the month and even at the end of the month.
Failure to pay rent when due constitutes a material breach of the rental agreement and may subject the tenant to an eviction. However, many landlords are lenient and permit their tenants to pay rent a few days late without a penalty.
Unless there are special circumstances, I believe the landlord should demand rent when it becomes due. If rent is due on the first of the month and is not received on that day, I generally recommend giving a Notice to Pay Rent or Quit the very next day. A Notice to Pay Rent or Quit is an official demand to cure the default in the payment of rent. Such notices require the tenant, within three days after service of the notice, to either pay all the rent due or vacate the premises.
I recommend immediate service of the notice after a default for several reasons. First, the law already provides the tenant with three days to pay rent by virtue of the eviction-notice process. Suppose a tenant fails to pay rent on the first day of the month when due. If that tenant is served with a Notice to Pay Rent or Quit on the second day of the month, he or she may wait the entire three days before complying with the notice. In the eyes of the tenant, there is no need to pay rent until the fifth day of the month. If the eviction notice was posted and mailed rather than personally served on the tenant, the tenant will have yet another five days to pay the rent.
By permitting the tenant to pay late, the landlord may be establishing a course of conduct of accepting rent late without objection. A judge may decide that you, as the landlord, waived your right to enforce the rental-agreement provision for the payment of rent on a particular day. The prompt service of an eviction notice is a statement by you, in no uncertain terms, that you are making an objection to the late payment of rent, and you are not waiving your right to an agreed-upon payment date.
Second, the court-eviction process is inherently time-consuming and provides the tenant with numerous avenues for delaying the eviction. Putting off service of the eviction notice merely prolongs the entire eviction process. You can avoid contributing to these delays by acting quickly at the earliest stage of the eviction process.
Look at the rental agreement to determine when rent is due. Most written rental agreements contain a provision that delineates when the rent must be paid. If the rental agreement is oral, local custom or past payment history could determine when rent is due. In most communities in California, rent is due in advance, on the first day of the month. If the tenant has always paid rent on the first day of the month, then rent is probably due on the first.
If local custom is unclear or if past payment history of the tenant is uneven with past rent paid on different days throughout the tenancy, the law provides a solution. When there is no usage or contract to the contrary, rent is payable at the termination of the holding. For example, rent on a month-to-month tenancy would be due at the end of the month.
Some rental agreements contain grace periods. A grace period may have the effect of permitting a tenant to pay rent late automatically or upon payment of a late fee. Most modern rental agreements now contain an express statement that there is no grace period for the payment of rent. Check your form.
If the landlord prefers a late charge in the rental agreement, then the agreement should clearly state that “the late charge shall not constitute a grace period and the owner is entitled to make written demand for any rent due on the second day of the rental period.”
Only after rent becomes due may you serve a Notice to Pay Rent or Quit. Premature service of a notice renders it invalid and could be the basis for a dismissal of a future eviction lawsuit. It is extremely important for the landlord and tenant to have a clear understanding in regard to what day rent is due. You would be wise to clarify and confirm this understanding in writing throughout the tenancy.
The rental due date is extended to the next business day if it falls on a Saturday, Sunday or other legal holiday; however, if rent is due in advance, as it usually is, there is no extension of time. Check with an attorney if you are unsure when rent is actually due and when you may serve an eviction notice.
The decision to enforce the rental agreement by insisting on prompt payment of rent is a business decision for you. In some situations, a good policy is to allow a few days to go by before you insist that rent must be paid. In other cases, you might need to insist on timely payment. For example, a tenant might get paid on the first day of the month. If the first day of the month falls on a Sunday, you might not be paid until the following day. If the tenant has been diligent in paying rent after receiving a paycheck, your demand for payment of rent on precisely the first day of the month is pointless.
You should also consider market conditions. If a tenant is consistently late in paying rent each month, but nevertheless pays rent within the first ten days of the month, you may want to show some leniency. If the rental market is soft and the rerental of the unit would be difficult, a wise business decision would be to allow the tenant to continue paying rent late. The alternative is to sit with a vacant unit and not have any rent coming in. On the other hand, if the tenant pays rent later and later each month and is driving around in a brand new BMW, the time has come for you to demand prompt payment.
Although I advocate the immediate demand for rent after a default in payment and the prompt service of eviction notices, I still believe landlords should attempt to resolve rent disputes informally. Eviction proceedings in court, especially in rent- controlled jurisdictions, are expensive. Sometimes court proceedings can be avoided through friendly discussion.
Still, informal settlement discussions should not be used as an excuse for delaying the eviction process. Be suspicious of tenants who fail either to return telephone calls or respond to written correspondence regarding late rent payments—these are signs of deliberate delay.
For each day you avoid taking action to recover possession from a defaulting tenant, another day’s rent is lost. My experience indicates that rents lost during this period of delay are never recovered. Even though you may recover a money judgment against the defaulting tenant, in most cases the tenant is financially insolvent. After all, the reason the rent was not originally paid when due was because the tenant had no money.
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of SFAA or the San Francisco Apartment Magazine. The information within this article is general in nature. Consult an attorney for any specific problem. Clifford E. Fried is with Wiegel & Fried, LLP, 415-552-8230. Copyright © 2005 by Wiegel & Fried, LLP. All rights reserved.