You’ve almost certainly heard this expression before, and you’ve probably experienced it first-hand. Maybe you’ve even put it into practice a time or two. Not surprisingly, this little gem of advice can apply to a landlord/tenant relationship many times over. In fact, not only do actions speak louder than words, they can alter a contract in ways you don’t expect. Take, for example, the following scenario based on a true experience (names have been changed to protect the innocent):
Mrs. Smith took the necessary precautions to initiate a lease that provided all the important and necessary clauses when renting to her tenant, John. John moved in and paid rent on time for about three months. Without explanation one month, he did not pay the rent on the first. Mrs. Smith waited a few days and then contacted John, who informed her that he would be paying the rent, but not until the 15th of the month. Although Mrs. Smith was not satisfied with this answer or arrangement, she agreed, and in the interest of keeping a good relationship, accepted his explanation that he had some unusually high bills that month. She waited for the rent without issuing a “Notice to Pay Rent or Quit,” and John eventually paid the rent on the 17th of the month.
From this point on, this became the pattern: John did not pay the rent on time, Mrs. Smith would contact John, he would give a variety of excuses, and although annoyed, Mrs. Smith would agree. He would then pay the rent between the 15th and the end of each month. This went on for about eighteen months.
Finally, Mrs. Smith decided this rent situation was unacceptable and she issued a Notice to Pay Rent or Quit on the second day of the next month the rent wasn’t paid. After the three-day period ended and the rent remained unpaid, Mrs. Smith contacted John and he stated he would not have the rent until the fifteenth of the month. Incensed, Mrs. Smith contacted her attorney and started immediate legal action to evict her tenant, but she didn’t disclose all the facts not realizing they were important.
John engaged a free Legal Aid service and answered the eviction. In court, Mrs. Smith’s attorney argued that John had not paid his rent according to his contract. John’s attorney produced every paid rent receipt arguing that Mrs. Smith had altered the contract with “implied consent” by allowing him to pay on or after the fifteenth every month. Under oath, Mrs. Smith admitted she had agreed to accept the rent after the 15th and had not previously served a notice.
The judge ruled that John could remain in the property as long as he brought the rent current and Mrs. Smith was responsible for her legal fees. After her court experience, Mrs. Smith was reluctant to initiate any other legal action until John was over two months behind in his rent. John did not protest the eviction and abandoned the property with four months of rent in arrears and damage.
Normally, tenants do not challenge an eviction, most eviction attorneys prevail, and the judge rules in favor of the owner on a Pay Rent or Quit Notice. However, Mrs. Smith’s acceptance of the rent after the 15th for so many months created a verbal contract by implied consent, which provided a loophole for the Tenant.
The moral of the story is that, as a landlord, you should always make sure you are following the law and your lease, and if you wish to make modifications to a specific situation, make sure to get them in writing. Serving a Pay Rent or Quit Notice is important when the unpaid rent is due, and it sets the tone for future expectations. If you decide to accept late rent, be sure to clarify that it does not modify the original lease.
As your Property Manager, we know that, although a serving a notice can seem unpleasant, it is always necessary to protect our owner’s investment first and foremost. If this is something that is difficult for you as a landlord, or you are unwilling, a property manager might be a good partner with you to help turn your active investment into a passive one.