Late Paying Buyer!! - Posted by Jason T.

Posted by Jason on November 02, 2000 at 09:24:14:

Thanks for the advice. I should have only given him 5 days instead of 15. Next time I will. THanks

Late Paying Buyer!! - Posted by Jason T.

Posted by Jason T. on November 01, 2000 at 23:04:16:

I recently bought a mobile home back in Sept. I sold it 2 days later to a buyer on a 2 year note. In the note I stated that the payments would not be due Until November 1st. I still have not received payment. My question is How long do you usually wait before you contact the buyer about the payment? In the note I also stated that they would have until the 15th before the payment would be considered late.



Re: Late Paying Buyer!! - Posted by B.L.Renfrow

Posted by B.L.Renfrow on November 02, 2000 at 08:16:40:

I have found that many buyers/tenants will try to “push the envelope” early-on, to see how far you will let them go. This seems to be especially true with the mobile home crowd. It’s important to establish the limits, not only by words and clauses, but also by your actions.

The majority of my payors will push it right to the deadline on the grace period. So, discovering that, I simply shortened the grace period. No more 15 days, 10, or even 5, on my most recent contracts. Now they all get 3 days. Then they get a substantial late charge, like $20 PLUS so much per day.

I have also stopped contacting payors when they are late. I realize others may take a different approach, but this seems to work best for me. When I would phone them – IF they would even pick up the phone – there was inevitably some heart-wrenching excuse why their payment was late. Then the next thing out of their mouth would be a promise that they would have it tomorrow, or whatever, if I could stop by and pick it up.

No more. I’ve got too much to do without chasing payments all over town. Now, if I don’t have the payment on the due date, a reminder letter goes in the mail the next day, which I keep on my computer and print with the touch of a button. It simply reminds the payor of their due date, and the fact that the late charge will apply if the payment is not in my hands within 48 hours.

Then, I enforce it…regardless of excuses. It’s up to them how to get the money to me. Some will mail it to my PO box. Most will simply drop it off at my house (I live in a small town, and most – though not all – of my payors know where I live). It usually doesn’t take more than one or two late charges before they take it seriously.

Finally, if they still haven’t paid, I will immediately serve them with either a notice of default or a 3 day pay or quit notice if they haven’t paid by the default deadline in their agreement.

I have sort of stumbled onto this by trial and error…mostly error. Like most new investors/landlords, I started out believing people to be honest until they proved otherwise. I gave people the benefit of the doubt, and I wanted to be seen as a flexible, friendly sort of guy. But I have learned that flexibility will often be seen as a weakness. Nevertheless, I still remain friendly; in fact, I always smile as I hand them the pay or quit notice :slight_smile:

Brian (NY)

Re: Late Paying Buyer!! - Posted by JohnBoy

Posted by JohnBoy on November 02, 2000 at 24:01:14:

If you allowed for the payment to be made up till the 15th before being late, then the payment isn’t late until the 16th. Chances are the buyer will end up always paying on the 15th rather than the 1st since that is what you gave them to.

In the future make your payments due on the 25th of the month prior to the month the payment is for. Then allow 5 days grace period before being considered as late. This way the payment will be late after the 1st day of the month. Also include a late charge plus an additional charge of $5 per day after that that the payment hasn’t been received. Then STICK TO IT, by enforcing the late payments as well!

A Slight Deviation! - Posted by BR

Posted by BR on November 03, 2000 at 04:40:44:


Good advice! Most of your comments are right on. I do not however, like my tenants to know where I live. It just feels better that way. I also don’t like the old ‘it’s in the mail’ story. I have a ‘mail drop’ in my office door that is available 24-7-365, and I check it every morning. I DO NOT collect rent, period. There are NO EXCUSES! In my 20+ years this one addition to my system has been the best thing I’ve ever done for my rental biz.

The ole ‘toothy grin’ … - Posted by SusanL.–FL

Posted by SusanL.–FL on November 02, 2000 at 13:17:10:

…gets’em every time!! :slight_smile:

Re: Late Paying Buyer!! - Posted by Jason

Posted by Jason on November 02, 2000 at 09:27:03:

Thanks Brian for the Advice…

Re: Late Paying Buyer!! - Posted by Eduardo (OR)

Posted by Eduardo (OR) on November 02, 2000 at 24:25:27:


I think you have given some good answers to Jason’s question. But, I want to quibble on one point: In keeping with the regulations concerning lending in this country, e.g. Reg Z, Truth in Lending Act, payments are always made in arrears (as opposed to rent, for example, which is paid in advance). This being the case, it could be unwise to make the payment due on the 25th of the month if it is for that month. That is, if the payment is for the month of October, the payment shouldn’t come due until November 1st. Otherwise, if one were to go to court over non-payment (or whatever), someone may catch this and conceivably wreak legal havoc. If the note were written, however, for the payments to cover the month between September 24th and October 24th, then you could do as you suggest. I think what I’ve said is correct. --Eduardo

Re: Late Paying Buyer!! - Posted by JohnBoy

Posted by JohnBoy on November 02, 2000 at 01:26:12:

You may very well be correct on that. I had L/O and contract for deed terms going through my head when I responded. If he created a note to carry then he would need to make the payment due 30 days later from the due date. He should keep the grace period down to 5 days before considered being late though, instead of the 15 days he gave them.

Thanks Eduardo.