Why Waiving Late Fees for Rent is a Bad Idea

Being a landlord is full of difficult decisions. What if Sally from unit C is coming to you five days after her rent payment is due and is begging to have her late fee waived? Maybe Sally is a star tenant and has a great excuse as to why she couldn’t pay you on time this month. Why shouldn’t you let it slide this one time?

Waiving late fees can cause a lot of issues down the line. Here are a few of the reasons why waiving late fees for rent is a bad idea.

Waiving Fees is a Slippery Slope

You may think that letting Sally turn in rent late this one time is pretty harmless. And maybe it is! However, there’s a chance that tenants who are late with rent payment will now feel empowered to continue to pay after the due date. For example, Sally may have said she only needed her fee waived for March, but now it’s April and she asks for the same favor.

Similarly, they may now think it’s okay to ask for other fees to be overlooked. Tenants who were asked to pay a pet fee or cleaning fee may now attempt to bypass them since you didn’t make them pay their rental late fees.

Taking a hard stance on fees is a reliable way to ensure that your tenants don’t see you as someone they can manipulate. Although it may be hard to say “no” at first, doing so is the best way to keep your property profitable.

If You Give a Mouse a Cookie…

…it will spread word that you let one person pay their rent late and then you’ll have a whole hoard of angry mice on your hands. Tenants may tell one another that you let them pay rent late without a fee. If you neglected to do the same for the other person, it may seem like you’re playing favorites. In real estate, any kind of discrimination is explicitly illegal under the United States’ strict housing discrimination laws. The Fair Housing Act protects against discrimination based on familial status religion, race, disability, skin color, nationality, and sex. If you aren’t consistent when it comes to who you are waiving fees for, you could get yourself in hot water with these statutes.

Breach of a Legally Binding Contract

A lease is a legal agreement between you and your tenant outlining the promises you both will uphold for the duration of their stay. When you or your tenant does something that doesn’t align with what was outlined in the lease, you are breaking that legally binding contract. Charging fees for overdue rentis a justified consequence of turning rent in late. Don’t feel bad for enforcing what you outlined in the lease. Your tenant read and signed that document—they are fully aware of what is expected of them and should expect you to uphold the consequence you wrote out in the lease.

That being said, make sure you have a very explicit rent collection and late fee policy in your lease. To avoid any potential issues, maybe send out a reminder to new tenants a couple of weeks before their first rent payment is due, reminding them of the due date and of your late fee policy. That way you can rule out any potential late payments due to simple miscommunication, and you can be sure you gave your tenant all the proper warnings and information about your policy.

Occasional Compromise is Okay

If you want to offer a fee waiver to certain tenants, it is okay to do so as long as you are consistent. Maybe you give a one-time waiver to tenants who have been consistent and timely on their payments for over a year. You should include this policy in your lease and fully explain how tenants qualify for it.

It is fine to want to help out good tenants with an occasional fee waiver. Just make sure you give that same favor to every tenant who fulfills the criteria you outlined in the lease, as not doing so can get you into legal trouble.

As always, conduct rigorous tenant screening procedures to ensure you don’t have a large number of tenants paying rent late in the first place. That way, you don’t need to spend your time worrying about whether you will enforce your late fees or not. But in the inevitability that you do, keep these tips in mind and maintain consistency above all else.