Late paying corporate tenant….do I enforce late fee?
[deleted]
[{"id": "id66fu3", "text": "Well they've already paid this month. It's a long term tenant that you want to maintain a good relationship with. Next month, if late, send a cordial but firm reminder. If it happens again just send a late rent letter and the amount of interest due. I'd approach it slowly. 12 years is a long time .... You're not in any rush but you are just definitely entitled to timely rent payments", "replies": [{"id": "id6xs8r", "text": "Agreed. Similar to you, they may not know about the late fee terms. Remind and set expectations. Once they confirm they are aware\u2026 feel free to hold to terms of lease. Just make sure you are also holding up your end of the lease also.", "replies": [{"id": "id707de", "text": "Addenum of the contract and have them sign it, stipulate the terms for late fees etc. In business, you ve to set expectations or they will push you around, thinking its okay to be late", "replies": [{"id": "id71cau", "text": "Definitely. Just saying since it's the first thing and it's a long term lease, this is a relationship. They might have a new staff member that turned off auto pay or they moved banks, who knows. But after there is a reestablished set of expectations and everything is clear, then just strictly business and hit em with late notices and fees.", "replies": [], "depth": 4}, {"id": "id7fzdc", "text": "Sorry, no, the language is already in the lease. OP has no leverage to request an addendum be signed and it would be pointless if the lease already contains the required language. A firm letter pointing out the requirement per the lease, the deficiency and OP's desire to continue a professional and mutually respectful relationship is what is needed. Op also needs to point out that this past month was the waiver for the year and that continued late payments will result in the 5% late fee for each late payment (or whatever the lease terms are).", "replies": [], "depth": 4}], "depth": 3}, {"id": "id7qcpc", "text": "They trade on the Nasdaq so hopefully their attorneys know the terms of the lease. :-) My terms are 100% held up- it\u2019s a true NNN so I don\u2019t have to do anything.", "replies": [], "depth": 3}], "depth": 2}, {"id": "id82v89", "text": "Yes this is the way. Could be something simple as their accounting dept cuts checks on a particular date and needs to be corrected. Maybe OP talk to the bookkeeper and not the actual tenant. Have had this happen and bookkeeper corrected asap", "replies": [], "depth": 2}], "depth": 1}, {"id": "id69p9l", "text": "Enforce the lease as written, including any back charges (assuming there's a non-waiver of breach clause). In my experience, the local manager and the leasing rep are the most important relationships for lease renewals. The leasing rep wants reasonable negotiation and timely communication, but their job is done when the lease is signed and the fee is paid. The local manager/GM needs a responsive and communicative LL. If you want to get in good with them, mention the late payments and associated fees and give them the opportunity to bring it to corporate. That way they look like the hero who is saving the company money, and it will get you the desired result.\n\n\nEveryone will understand that the lease was enforced as written. No one will take it personally.", "replies": [{"id": "id6ixj4", "text": "Thank you!\n\nETA I did mention this to the regional manager a few weeks ago. He said he would look into it but never got back to me. I\u2019ll see what July brings.", "replies": [], "depth": 2}], "depth": 1}, {"id": "id6ejtb", "text": "If you want to cause issues with a tenant headed into a recession and potentially lose them, go ahead.", "replies": [{"id": "id6i7go", "text": "Why do you say this? The lease isn\u2019t up for 12 years. You think they may close this location early because they are upset that the lease was enforced? Or you think that in 12 years they won\u2019t renew?", "replies": [{"id": "id6kgsv", "text": "Even more reason to let it go, if they do it again, charge them.", "replies": [{"id": "id6kt2b", "text": "Okay- yes I hadn\u2019t planned on charging in arrears, it would be for July rent and further.", "replies": [], "depth": 4}], "depth": 3}, {"id": "id755ho", "text": "Daycare tends to be subsidized more heavily during a recession. These are good tenants to have when things get harder. Don\u2019t listen to people without experience. My longest term tenant (daycare supplier) did the best during the last economic downturn.", "replies": [{"id": "id7p5rc", "text": "Thank you!", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "id6g36l", "text": "Similarly we have rent due on the first and provide a 5-day grace period.  I always tell tenants up front to set up ACH payments so they are initiated on the 26th. This way, even with the month of February, holidays, and weekends, the funds transfer should always be completed days before the 5th.  This way, it is up to them to decide if holding on to their cash for a few more days is worth the risk of paying the late fee.", "replies": [{"id": "id6igp2", "text": "I get an auto email when they initiate payment. For June it was initiated after 5pm on Friday June 3, which didn\u2019t hit the bank system until Monday June 6 so I got the deposit on Tuesday June 7. They consistently initiate on the 3rd or 4th of the month.", "replies": [{"id": "id6mzon", "text": "Then I don\u2019t see the problem here.. it seems you want to pick up pennies in front of the steam roller. Forget the $50 and keep the good relationship", "replies": [{"id": "id7j6dq", "text": "5% of $14,000 rent is $700/month. Over a 12 year lease that is 6 figures in late fees.", "replies": [{"id": "id7xa47", "text": "They \u201cmissed\u201d once because of a holiday. Technically they initiated the payment days before. And you\u2019re calculating 12 years of missed payments lmao\n\nI mean go for it if you want.", "replies": [{"id": "id82edt", "text": "I guess my initial post wasn\u2019t clear when I said they paid on the 5th of every month. That means they pay rent consistently late. I mean, you said I should forget the $50 late fee, so I was just pointing out it\u2019s actually a $700 late fee. But thank you for the input.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "id6gufl", "text": "*Do I speak up about this and enforce it?*\n\n(Uh huh).\n\n*Downsides?*\n\n(It becomes acceptable and legally binding, and you lose money)\n\n*Thank you!*\n\n(YW).\n\nSend a copy of the lease to the tenant with that section highlighted.", "replies": [{"id": "id6ihwz", "text": "Thank you for the input!", "replies": [{"id": "id6tkhr", "text": "For a small tenant, you can soften the approach by asking if there\u2019s a fundamental reason why this due date is an issue \u2014 I recall a tenant who had a federal contract, whereby their firm was paid by the government agency on the 10th of the month, which made their disbursements fall on the following business day.  \n\nOne-time lease modification, adjusted their due date, and they never had a problem again.\n\nWith a large corporate tenant like a KC or one of its competitors, it\u2019s difficult to imagine why this would happen.", "replies": [{"id": "id6vz6b", "text": "This. You may just talk to that \u201cbranch\u201d as you may not be getting paid from that office directly but rather a headquarters somewhere. I would just have a friendly conversation &amp; maybe adjust accordingly. If this has been reoccurring I would likely assume something along the lines of which, is occurring &amp; it\u2019s not intentional.", "replies": [], "depth": 4}, {"id": "id7qgt5", "text": "They trade on the Nasdaq, so definitely not a small tenant.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "idbro8k", "text": "No\nAs long as you get it by the 20th lighten up.", "replies": [], "depth": 1}]