For those of you who have a provision in your lease that says tenant payments will first be applied to any charges due, then to rent, where do you include this in the lease and how do you word it?

Thanks

Allocation of Payments: Any monies paid will be applied first to any late fees or outstanding monies owed, then to the rents.

Randy,

My lease is clear: All monies received are applied to the outstanding balance. Any unpaid balance is considered unpaid rent and will trigger eviction.

I have it in the clause titled "RENT":

NOTE: MAILING THE RENT BY THE DUE DATE DOES NOT CONSTITUTE PAYMENT. RENTS MUST BE RECEIVED IN THE FORM AND AT THE LOCATION DESIGNATED BEFORE CLOSE OF BUSINESS ON THE DUE DATE OF EACH MONTH TO BE CONSIDERED PAID. ALL PAYMENTS RECEIVED ARE APPLIED FIRST TO OUTSTANDING BALANCES, IF ANY, AND THEN TO THE CURRENT RENT DUE. ANY PAYMENT DROPPED OFF AFTER BUSINESS HOURS ON THE DUE DATE WILL NOT BE PROCESSED THAT DAY AND WILL THEREFORE BE LATE.

When I've gone to court and the tenant questions those deductions, a judge will never allow the eviction if those fee's are apart of a shortage of rent. It can only be used to reduce a deposit....

Here is how it works best.

A tenant is late on their rent, I give them a notice to pay the rent or quit, not including any late fee's. Not allowed here for eviction.

After the rent if finally paid, I send out a "letter" that the rent was late and how much the late fee's comes too. I ask the tenant to pay the late fee's now or with the next rental payment.

Then when the next rent is paid, and the past late fee isn't included, I sent out my tenant a notice, with a copy of the rent check, saying they forgot to pay the last month's late fee and it's going to be deducted from the deposit.

Then I send out another letter stating they did not pay the late fee as requested and so much has been deducted from the deposit. Since the lease calls for a $1000 deposit and only $960 is left. The tenant my forward a $40 payment to bring the deposit back up to the correct amount.

I'd like to point out that you REALLY should know your local laws and judges...

But if it never goes to court, it's allowed.

I was reading my state's LL/tenant laws yesterday on the advice of my PITA tenant (forewarned is forearmed!) and found out that in WI, applying payment toward late fees, etc. first is not allowed. It's considered a form of double dipping. So do make sure it's allowed in your state.

Ohio law is silent on the subject of late rent fees. There are a few court cases, but they go different directions.