Should you accept late rent?

|

Just had a client buy a building where we found out very late in the process that the owner had been allowing one of the tenants to pay on the 15th of each month. Nothing in the lease or estoppel indicated that this was the case, so we were able to get the seller to agree to prorate the final month’s rent as if the tenant had paid (making it the old owner’s job to try to collect rent for the month from the tenant – good luck!).

My client now faces a dilemma: Should he allow the tenant to continue paying on the 15th of the month, or should he insist that the tenant pay on the first and move for eviction if he does not?

To help answer, you need to understand one thing about LA rent control law: If you, as a landlord, accept that first late rent payment from a tenant, you will not be able to go back and force him to start paying on the 1st at a later date. This is because the tenant will rightly argue that you implicitly agreed to change the terms of tenancy. So, it’s now or never: Force him to pay on the 1st now (on threat of eviction) or accept rent on the 15th from now until you sell the building.

My client is a nice person. He feels bad about muscling the tenant into paying on the first. I told him to toughen up.

Here’s why: Allowing your tenant to pay late is effectively means giving your tenant a no-interest loan for half of each month. You have a lot of obligations as a landlord (particularly of a rent control building in LA), but being the lender of last resort every month is definitely not one of them.

Share