Collecting Rent
Now that you know how much rent to charge, you have to spell it out in your lease or rental agreement. (If you don't know what to charge, see Chapter 9.) Your tenant has to know how much rent is due each month, when it has to be paid, and what the penalties are for paying late.
When Is It Due?
Most people expect to pay a full month's rent on the first of the month, and that's the date stipulated by at least nineteen states. Tenants in other states, including California, Indiana, New York, North Dakota, and South Dakota, pay rent on the last day of the preceding month. The due date is determined by the landlord in the rest of the states, so you can start your month any time you choose. Thus if a new tenant wants to occupy the apartment a week or two after the start of the month, you have two options. You can collect partial (prorated) rent for each day that's left and a full rent payment when the new month begins or you can start the month on move-in day, say the fifteenth. Then the next rent payment will be due thirty days later. Most landlords, however, find it easier for them and their tenants to always make rent due on the first of each month.
Make sure your lease or rental agreement covers all the bases when it comes to rent payment. Rent sometimes falls due on a weekend or holiday. Let your tenant know whether you still want to be paid on that day or prefer to get the money on the next business day. When will rent be considered late and when will you assess late-payment fees? Decide ahead of time what your policy will be and put it in writing.
Don't Take Cash
Ask your tenant to write a check or pay you with a money order instead of cash. There's less likelihood of error when you don't have to count money. Bookkeeping is easier, and on the way to the bank you'll be less of a target for thieves. Plan to collect the rent in person or ask your tenant to deliver it to you. And don't give your tenant a discount for paying rent early. On the receipt write “Payment in full for _____________ (month/year).”
If your tenant owes you money for a previous month's rent, the payment should be applied to that outstanding balance first. Use whatever is left over as a partial payment on the current month's rent. And to keep your bookkeeping clear, follow the guidelines for “Partial Payments” later in this chapter.
When Tenants May Withhold Rent
If there is a written agreement stating that the tenant can pay for some repairs, then he can legally reduce the next month's rent by that amount.
A tenant can also legally withhold the monthly rent payment when there is a substantial flaw in the apartment that hasn't been fixed by the landlord. To do so, however, the tenant must set up an escrow account in a bank and deposit the full amount of the rent there each month until the landlord has repaired the apartment. In other words, the monthly rent must be paid by the tenant, but it will not be turned over to the landlord until she fulfills the obligation to keep the unit in good repair.
