8 Acceptable Reasons for Late Rent Payments

As a property owner, you're most likely prepared for the occasional financial setback. At some point, you might find yourself faced with one of the most common rental issues--late rent. While no landlord wants to accept late rental payments, there are times when it is justified on the tenant's behalf. 

When a tenant is confronted with dire circumstances that inhibit their ability to pay their rent on time, approach the situation with empathy. However, you'll need to know when to be firm with tenants in order to prevent repeatedly missed rent payments. Not only do late rental fees disrupt your cash flow as an investor, but they could also cause excessive stress for your tenant, making it more difficult for them to keep up with future payments if they fall too far behind. 

By exhibiting leniency when a tenant stops paying rent, you can protect your interests as a rental owner and ensure your tenant is able to continue living in their rental as they get back on their feet, thus upholding a positive relationship between you and the tenant. Below, we’ll discuss 8 acceptable reasons for late rent payments and how to handle each scenario.

1. Death of a loved one

In the unfortunate circumstance of the death of a loved one, it is completely understandable that a tenant might pay rent late. The passing of a parent or other family member can have a profound emotional and financial impact on the life of a tenant. The average funeral in the U.S. costs between $7,000 and $12,000 -- this is a substantial monetary burden to most. 

In addition to the financial impact of a death, there’s the emotional aspect to consider. Grief can be overwhelming, making it difficult for tenants to keep up with their responsibilities. Property owners should extend compassion during this difficult time by allowing the tenant the chance to assimilate back into their daily life. Not only is holding off on a late rent notice the right thing to do, but it will likely cultivate a positive landlord-tenant relationship. 

2. Job loss

Another major reason why tenants might fall behind on rent is the loss of a job or other major source of income. Although it’s recommended to have 3-6 months of living expenses saved up in an emergency fund, 61% of Americans live paycheck to paycheck. This means that if the paychecks stop coming in, tenants may be unable to pay their rent on time. 

Depending on a tenant’s financial obligations, they may delay rent by a month or more. While it’s important to be understanding, not receiving rent for several months in a row can cause financial hardship for you as a property owner. A tenant should have some form of income within a month, whether that be through a new job, personal loan, or another source of funds. 

3. Unexpected medical bills

As of 2021, 300 million Americans have some form of medical coverage. Today, this means that there are 30 million Americans living without any kind of medical insurance, and even for those with insurance, they can still find themselves with thousands of dollars in medical bills once all's said and done.

If a tenant were to fall ill and require a considerable amount of care, they might have to redirect some of their monthly income towards medical bills. As a result, it’s likely that the tenant will have difficulties keeping up with their other financial obligations. 

4. Extreme natural disasters

Depending on what part of the country your property is located in, you may be exposed to wildfires, tornadoes, hurricanes, or earthquakes. When an extreme weather event occurs, tenants and rental owners alike may face immediate relocation, extensive property damage, and financial setbacks. Unexpected hardships brought on by natural disasters disrupt daily life, which can result in a tenant’s inability to pay their bills. In these situations, it's best to contact your insurance company and recuperate unpaid rent through your homeowner's insurance policy. 

5. Major car accident

In the event that a tenant experiences a serious car accident, not only will they have to pay for expensive car repairs or a new vehicle altogether, but they might also have to take on some medical expenses. Car and medical payments can pile up, causing a tenant to fall behind on their rental expenses.

Rent, transportation, and food are arguably the most important bills to pay for any tenant. If their car is totaled or in the shop for an extended period of time, this could affect their ability to maintain their job, given that reliable transportation is often needed to get to and from work. 

It’s important to be flexible with your tenant after the accident has taken place. However, it’s also important to ensure they can avoid late rent payments in the future. Ask them what their plan is moving forward, and check in with them from time to time to ensure that they're still able to receive some type of income.

6. Travel-related delays

Travel shouldn’t affect a tenant’s ability to pay rent as long as they’re able to make online payments through a rent collection platform. However, if your tenant pays rent in cash, payment can be delayed while you or your tenant are away. In this case, you’ll have to wait until you and your tenant are back in the same place to receive payment. 

Delays can also occur with wire transfers while a tenant is abroad or out of state. While a client is traveling, they're at a higher risk for fraud, which is why banks closely monitor and even prohibit certain economic activity. If there’s too big of a transfer occurring, such as a rent payment transfer of $1,500, the bank may freeze the account, or, at the very least, suspend the transaction until they can confirm that the transfer was made on behalf of their client. 

In situations like these, you could reach out to your tenant to let them know that their payment has not been deposited. However, given that they are traveling, they may not respond quickly. Exercise some leeway here to avoid greater misunderstandings. 

7. Bank errors and delays

As mentioned above, banks often block certain transactions to protect their clients’ interests. However, banks sometimes make mistakes. Transactions might get held up for no apparent reason, causing delays in transfers or deposits. Although mobile banking is a convenient way of managing funds, it’s subject to technical glitches that could interfere with the timely processing of a transaction.

8. Failure to fulfill landlord responsibilities

Lastly, it’s important to recognize when delayed rent payments are due to the failure to meet your expectations as a landlord. In some states, tenants have the right to withhold rent if the rental is considered to be uninhabitable.

A few circumstances in which a property can be considered uninhabitable are:

• Rats in the unit
• Broken locks on doors
• Leaking pipes or ceilings
• Loose electrical wiring
• No hot water

In these conditions, rental owners can’t force tenants to pay for repairs. Instead, rental owners must restore the property to a habitable condition as soon as possible. If your tenant is late on rent but one or more of the scenarios mentioned above are present on the property, the tenant may be justified in being late on rent or resisting a rent increase.

The bottom line on acceptable reasons for late rent payments

Accepting late rent payments can be frustrating for rental owners. However, it’s important to deal with late rent payments on a case-by-case basis to preserve a good tenant-landlord relationship. The loss of a loved one or loss of a job causes unfortunate and often unexpected negative consequences. Expensive medical bills and extreme natural disasters can't be controlled. Major car accidents, travel-related delays, bank errors, and failures by landlords to fulfill their responsibilities are also acceptable late rent payment excuses, as they are circumstances outside of the tenant's control. 

Life can be unpredictable, which is why property owners should show some leniency with their tenants when they are late on rent. That being said, property managers need to ensure that late rent payments do not become habitual.  Property owners should try to strike a balance when addressing late rent payments. Be lenient enough that your tenant feels respected and understood, but firm enough that they still feel the obligation to pay rent on time in the future. 

How much of a grace period you decide to give your tenant to pay rent in each of the scenarios mentioned above is also up to your discretion. It's also up to you whether to charge late fees. In some cases, it may make sense to give the tenant more time, or even accept partial rent payments. This is especially true when working with a reliable tenant who respects your lease agreement and normally pays rent on time. 

Successful rental ownership involves not only collecting rent but also fostering a sense of empathy and flexibility among your tenants when unexpected hardships come up. By being reasonable with your tenants when they are late on rent, you can create a more harmonious living environment while protecting your interests as a property owner.

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