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Unread 04-02-2011, 05:20 PM
 
1 posts, read 8,776 times
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Default Arizona--What is Maximum Late Fee and When Can it be Accessed?

I will be renting a SFH in Peoria, AZ. The rent will be $995.00 and due on the first. When is the rent considered late for late fee purposes? For 5 day notice purposes?

What is the maximum or is there a maximum late fee amount? I want to charge 10%. Can I then charge a per day late fee until paid, about $5.00 a day?

I have expenses that need to get paid and I don't want to encourage late payments.

Thanks.
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Unread 04-02-2011, 09:17 PM
 
Location: St Thomas, US Virgin Islands
19,232 posts, read 20,259,732 times
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Quote:
Originally Posted by fireman18 View Post
I will be renting a SFH in Peoria, AZ. The rent will be $995.00 and due on the first. When is the rent considered late for late fee purposes? For 5 day notice purposes?

What is the maximum or is there a maximum late fee amount? I want to charge 10%. Can I then charge a per day late fee until paid, about $5.00 a day?

I have expenses that need to get paid and I don't want to encourage late payments.

Thanks.
I'm assuming you're not a prospective lessee but a new lessor. Google "Arizona landlord tenant laws". Your lease needs to be written up in accordance with both Federal and state laws with late fees and penalties in accordance with both lest you be subjected to non compliance with usury laws which could land you in a whole bunch of legal trouble.

If you're a new LL who knows nothing about the vagaries of renting out a property then read up and then, if you're still confused or unsure, enlist the help of a professional real estate attorney to put together a lease and ensure that the lease is legally viable.

Better yet, hire a property management company who, for a percentage of the income from the rental, will take responsibility for pretty much everything and save you an abundance of headaches. Good luck!
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Unread 04-02-2011, 09:32 PM
 
Location: The Wild West
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I own rentals in AZ. 10% is reasonable. There is no specific law regarding what you can or can't charge or a daily rate.

However... the reality is what the judge(s) in your local court will allow. Generally late fees are to cover the LL for costs involved in processing and collecting late rent rather than as punishment for not paying on time. So the best way is to work around it to make your costs appear reasonable and proper compensation for additional work and costs incurred.

Rather than fighting it out in each court, here is my procedure.

My rents average $500 a month, receive a discount of about 5% ($25-30) if paid before the 1st. They pay full rent ON the 1st, and the rent is LATE if not received either in person or via bank deposit by 5 pm on the 1st. A late fee of $25-35 is assessed as of 5:01pm, along with a notice of late rent and a bill which I try to have delivered that evening.

On the morning of the 2nd, they receive either in person or taped to their door (when they get up a noon...) a formal 5 day pay or quit notice, along with a copy of the bill AND a posting "service charge" of $50 (to cover my costs of preparation and service of the notice).

If they haven't paid by the 5th, I am at the courthouse in line when it opens on the 6th and I file a Forcible Detainer and try to have it served the same day. Usually by camping outside their door until they make the morning beer run about 10 am. (Incurring another service fee, later usually deducted form the security or put on a judgment.)

Then you have to wait about 10 days or whatever and go to court.

Be aware that in AZ the tenant can pay the rent and all costs at any time prior to the court appearance and you have to reinstate the lease.

This is where a m2m can be handy as along with a 5 day notice you can simply serve a 30 day notice of termination, then even if they pay they have to be out and you can re-file a forcible detainer on the 1st of the next month instead of waiting because then it's not a non-payment but a stay over situation. In that case then you can ask for pro-rated rent as damages. Good luck getting it...

My personal reality is that my tenants all know that I don't screw around when it comes to "my" money. They know that I will bend over backwards to help them, but that if they are going to be late on their rent they had better tell me in advance and sell their wedding ring or first born child (joke) or something before 5 pm on the first or if they don't pay in full by the 5th, they are going to be moving regardless.

I have a policy of allowing one 5 day late rent, once per lease without penalty if they let me know ahead of time. If someone is running into difficulty I will work with them as much as I can, if they are honest and come to me, but if they run away and ignore the problem I will take immediate action.

I am a stickler for policy. I believe it is important for everyone know where they stand. My iron clad rule is that once I start an eviction it is followed through to the end. I feel this gives my tenants an incentive to pay their rent ahead of dope or food. They know I am a really nice person and that I have lived in my car before myself, and I have no qualms about sending them to live in theirs if they don't pay their rent.

In reality, I haven't had to do a full eviction in a long, long time. Because once every so often someone requires a "reminder" to pay on time. And everyone else in the complex learns about it in very short order so they all know what happens. As a result things go along quite smoothly.

It is called communication. I sound like a mean ogre, but actually my tenants are all nice to me, not because they are afraid fo me, but because everyone knows where they stand with me, and we have very few issues. Actually none that haven't been solved with a little discussion and understanding.

A really solid lease helps.

Last edited by jamies; 04-02-2011 at 09:42 PM..
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Unread 04-03-2011, 08:44 AM
 
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I charge $ 100 late fee and so far no judge has told me that it was wrong....we also charge a fee per day late.

In our property management company we charge $ 50.- late fee after the 2nd day of the month, and $ 5.00 for every day late thereafter and we don't take any excuses other than from a person who is never late and called us prior to the end of the month stating they made an mistake with their hourly schedule and therefore they would receive their pay check a day later. This was explained upfront and we appreciate honesty even if it was their own mistake.

We don't buy "We had to go out of town. A family member got sick and I forgot. My car broke down. etc."
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