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Late Fees, When and How Much

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  • Late Fees, When and How Much

    Hi Everyone,

    I was wondering what the you guys are charging for a late fee and when are you posting it. We just bought 3 facilities and the previous owner was posting late fees on the 7th and charging $25. I think the timing is a little fast and a amount is a little high. But I wanted to see what you guys are doing. Thanks!

    Brian

  • #2
    Your state law will give you guidance as to how much you can charge, but that does not sound unreasonable at all. And you want to charge all fees and process all auctions as promptly as possible to keep your receivables in check.

    If you do not keep on it things get out of hand quickly.

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    • #3
      We charge a late fee on day 5!! It's a 15% late fee of the rent that we automatically charge, state ok'd.
      I was born to be wild, but only until about 9:00 pm.

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      • #4
        Our late fees and lock out happen at midnight the morning of the 10th. I wish it was at 5 days instead. The state statutes dictate what we can charge. Get used to NOT CREDITING late fees. If you do you create an atmosphere of tenants not being motivated to pay on time. The tenant agreed to the rent payment schedule wen they initialed/signed the lease. Stick to it. $25 may seem high but my state allows 20% or $20, whichever is greater. If I have a late 10x40 then I could collect $60.20 if I choose to.
        "Never let the inmates run the asylum!"

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        • #5
          It's whatever your statutes say. I lock out on the 5th day past due. My statutes say $20 or 20%, whichever is larger (which means I could charge $20 late fee on a $35 unit). I don't do it that way, but am considering changing it.
          I have 2 late fee systems here...1 for older tenants because of how their lease is worded (lockout and late fee at 5 and 10 days) and one for newer tenants to match our other facility (lockout at 5 days and late fee at 10).
          Too many freaks, not enough circuses.

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          • #6
            We charge 15% at 5 days past due in NC 7 days in SC but like Steve says this varies from state to state.
            Chasing Perfection to catch Excellence

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            • #7
              Ok, since we're already talking about late fees, and I'm wanting to change mine to what my statutes say...how do I go about that? Do I need to send a notice to tenants that it's changing? Do I need to change my lease and have everyone sign the new one? Like I said in earlier post, I have 2 different fee systems here based on when the tenant started renting here. I want to get everyone on the same thing, and the new $20 or 20% will help weed out the always late tenants.
              Too many freaks, not enough circuses.

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              • #8
                We did change our lease when we changed our late fees but if you send a notice to all current tenants, mail and email, and display an addendum to the lease in the office and cover all that with any new tenants, then, IMO, you are good to go. I would get the lease changed asap to reflect the changes but till that happens an addendum displayed is ok by me. It would have to be something that takes place after a 30 day period as well, to be fair to all tenants.
                "Never let the inmates run the asylum!"

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                • #9
                  Yes and No. You'll need to notify but you will not need to update all leases. What I typically do in this case is have people sign a new lease as they come in but you're not required to do this for it to become binding.
                  Chasing Perfection to catch Excellence

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                  • #10
                    bcollett What state are you in. We can point you in a better direction with that info.
                    Chasing Perfection to catch Excellence

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                    • #11
                      I'm in Indiana. From your guys advice I'm sticking with the $25 on the 7th. Thanks!!!

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                      • #12
                        Originally posted by bcollett View Post
                        Hi Everyone,

                        I was wondering what the you guys are charging for a late fee and when are you posting it. We just bought 3 facilities and the previous owner was posting late fees on the 7th and charging $25. I think the timing is a little fast and a amount is a little high. But I wanted to see what you guys are doing. Thanks!

                        Brian
                        That's what we do (actually any payment received after close of business on the 6th gets a late fee)

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                        • #13
                          Originally posted by DairyGirl View Post
                          Ok, since we're already talking about late fees, and I'm wanting to change mine to what my statutes say...how do I go about that? Do I need to send a notice to tenants that it's changing? Do I need to change my lease and have everyone sign the new one? Like I said in earlier post, I have 2 different fee systems here based on when the tenant started renting here. I want to get everyone on the same thing, and the new $20 or 20% will help weed out the always late tenants.
                          We did this exact thing when we took over the facility. Since it's a month-to-month lease (assuming yours is) it should be no problem. We did have every single person sign a lease "addendum" just to cover our butts. Took a few months to get a hold of everyone, but we changed ownership anyways so we had to notify everyone anyways.

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                          • #14
                            $20 or 20% of rent whichever is greater. Charged on the 6th and again on the 16th

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                            • #15
                              Originally posted by badgorillawife View Post
                              $20 or 20% of rent whichever is greater. Charged on the 6th and again on the 16th
                              Wow, you get to charge 2 times a month. We can only charge once a month. Your set up is very motivating for them to pay all fees by end of month and especially before the 16th.
                              "Never let the inmates run the asylum!"

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