There will come a time when a current tenant may fall seriously behind or owe you for something due under the lease, such as an accumulated water bill, a bounced security deposit check or some damages they did to the premises. A promissory note is simply an agreement when one party agrees to pay another party a particular past due sum or currently due sum on a particular date or dates.
Some recommend that a promissory note should be used only with a past or departing tenant owes you money and desires to pay you on a certain date or dates according to the payment arrangement spelled out on the promissory note. These people also recommend never using such an arrangement with a current tenant. The tenant may vacate owing you past due rent, late charges, unpaid utility bills or anything owed under the terms of the lease This Note will memorialize the debt in writing and can be used later if the past tenant defaults, and you wish to pursue the debt.
These same people recommend that a promissory note should not be used with a current tenant who owes you money. They point out that unless the promissory note clearly states that the amount is rent due under the terms of the lease, the landlord may have unwittingly converted past due rent into simply a monetary obligation for which he will not be able to evict the tenant using a Statutory Notice Period. Also suppose the tenant fails to make a payment, what is owed: the full balance all at once; or only that missed payment? This matter may be clarified by an acceleration clause in both the lease and the Note.
Late fee for rent refers to the additional charge imposed on tenants who fail to pay their rent by the agreed-upon due date. This fee is commonly included in the lease agreement to incentivize tenants to make timely payments and compensate landlords for any inconvenience caused by late payments. Late fees act as a financial enforcement mechanism that encourages tenants to prioritize their rent obligations and maintain a good rental payment history. Different landlords and property management companies may have varying policies regarding late fees for rent. The specific terms and conditions can be found within the lease agreement, clearly outlining the amount of the fee, the grace period (if any), and the consequences of repeated late payment. Understanding these details is crucial for tenants to avoid any misunderstandings or potential disputes in the future. Various types of late fees for rent may be enforced, depending on the landlord's preferences and local regulations. Some common types include: 1. Fixed Late Fee: A predetermined, fixed amount established by the landlord, imposed on the tenant for each day or week that rent payment is overdue. 2. Percentage-based Late Fee: Instead of a fixed amount, a late fee based on a percentage of the monthly rent is applied. For example, a 5% late fee may be charged for every day or week the rent is late. 3. Tiered Late Fee: This type of late fee increases as the delay in rent payment continues. For instance, a landlord may charge a flat rate for the first week, a higher rate for the second week, and an even higher rate for subsequent weeks. 4. Minimum Late Fee: Landlords may establish a minimum late fee regardless of the percentage or flat rate involved. This ensures that even small late payments are penalized appropriately. 5. Grace Period: Some landlords may offer a grace period, which is a defined number of days after the due date during which no late fees will be charged. However, tenants should be aware that late fees will still be applicable after this period expires. It is important for tenants to be aware of the specific late fee policies and terms outlined in their lease agreement to avoid any surprises or confusion. Paying rent on time not only saves tenants from incurring extra costs but also helps maintain a positive landlord-tenant relationship.
