How Long Does a Landlord Have to Collect Unpaid Rent?

It may seem obvious, but collecting rent is one of the most critical aspects of property management. Tenants who fail to pay rent can pose tremendous difficulties to themselves and the landlord.

For the landlord, non-payment of rent could mean missed mortgage payments, delayed maintenance or repairs, and reduced cash flow for your business and investment. On the tenant side, not paying rent could mean late fees, penalties, or even eviction.

In this guide, we’ll answer the important question: How long does a landlord have to collect unpaid rent? We’ll examine the statute of limitations, how to collect rent that’s been overdue for an extended period, and some strategies for minimizing the risk of filling your units with potentially delinquent tenants.

Understanding State Laws and the Statute of Limitations

So, how long does a landlord have to collect unpaid rent? The answer can depend on where you live, but past-due rent is generally handled just like any other debt.

What is a statute of limitations?

The statute of limitations sets an effective deadline for landlords to pursue unpaid rent payments through the court system. The specific timeframe varies by state but generally ranges from 3 to 6 years. Depending on the state, the period could last up to 10 years. Remember that this window doesn’t apply to other debt collection methods like collection agencies.

Instead, the statute of limitations applies to the timeframe for landlords to collect past-due rent via legal avenues.

How long do landlords have?

Since the statute of limitations window can last anywhere from 3-10 years and varies quite a bit from state to state, landlords should check with their local laws to see the rules for their jurisdiction.

When does the clock start?

The legal rent collection process timeline varies depending on specific state laws. It may begin on the original due date of the rent, the date the tenant vacates the property, or the date the eviction process finalizes. Be sure to factor in grace periods if your state has them.

It’s always wise to consult an attorney familiar with local and state landlord-tenant laws to understand your options and ensure you use your time wisely. Nobody wants to spend good money chasing down bad debts that’ll never be recouped.

Options for Collecting Unpaid Rent

While it may seem challenging to recover unpaid rent after a tenant leaves the property with a balance due, landlords have a fairly wide variety of options for collecting the debt.

The options covered in this section cover various timeframes and strategies for collecting what’s owed.

Keep the Security Deposit

The most common way landlords recover unpaid rent payments is to keep all or a portion of the tenant’s security deposit. While this practice is legal in nearly all parts of the country, each state has slightly different guidelines for how it works.

For example, some states require the landlord to notify the tenant and provide a detailed list of deductions, and every state has a deadline for returning the remainder of the funds. The most you’ll have to wait to keep the security deposit is 60 days.

While keeping the security deposit is the most straightforward way to collect unpaid debt, it may not cover the entire amount owed, which means landlords may need to complement this strategy with another approach.

Sell Abandoned Property

If a tenant has been evicted or left the unit in a hurry, they may have left behind some personal property in or around the unit. Some states allow landlords to sell abandoned property and put those funds towards the outstanding debt.

It is important to understand that most states have landlord-tenant laws governing how landlords handle a tenant’s abandoned property. These regulations dictate the previous tenant’s notice requirements regarding the property, whether the landlord must store the property temporarily, and how they must distribute property sale proceeds.

For instance, some states require the landlord to store the property in a secure facility. In contrast, others allow the landlord to immediately dispose of the materials once the tenant has left the property. So, it’s critical to brush up on your state or municipality’s requirements and understand that it may take 30 days or longer to sell the property and keep the funds.

Negotiate with the Tenant

Sometimes, the best and easiest solution is the most straightforward. While it may seem counter-intuitive, directly engaging with the tenant on a repayment plan that works for everyone may save time, money, and headaches compared to the other strategies on this list.

Landlords could offer the tenant a payment plan or a lump-sum settlement to handle the matter quickly and efficiently. You should understand that the timeframe for negotiating varies wildly based on how open the tenant is to talking with you.

Hiring a Collection Agency

After some time has passed and the unpaid rent debt remains outstanding, it might be time to take your collection efforts to the next level and hire outside help. Collection agencies specialize in tracking down debtors and recovering funds, but they will likely charge a fee plus a percentage of the debt recovered.

If you go with this option, do yourself a favor and pick a reputable collection agency. According to the Fair Debt Collection Practices Act (FDCPA), agencies must follow strict rules when collecting debts. The timeframe for collection depends on the statute of limitations in your area.

File in Small Claims Court

Landlords may want to consider filing a claim in small claims court for debts that fall in the moderate range (usually between $3,000 – $10,000, depending on the state). Small claims court is designed for civil parties in financial conflict to receive a court judgment without taking the step to sue the tenant.

Landlords that receive a judgment in their favor could garnish the tenant’s wages, place liens on property, or use other collection methods that would otherwise not be available without going through this process. While the rules around small claims court vary quite a bit from state to state, this option could effectively recover unpaid rent.

Again, the statute of limitations to collect plays the most significant role in how long you have to collect unpaid rent.

Sue in Civil Court

But how long does a landlord have to collect unpaid rent when the amount due is higher than what’s allowable for small claims court? The next option would be to file a formal lawsuit in civil court and sue the tenant. Civil court lawsuits are a more formal and extensive process than filing a claim in small claims court but could be more effective depending on your situation or the state in which you live.

Understand that suing someone in civil court can be expensive and time-consuming. You could handle it with yourself if you read up on the process and learn good legal and court procedure basics. Or hire an attorney. Either way, you’ll need to commit. The process requires court hearings and filing the appropriate forms and paperwork.

A civil trial can also take many months or years to resolve before a satisfying conclusion is reached, but if the tenant owes a significant amount of money, all of this hassle could be absolutely worthwhile.

File a Lien Against Tenant Property

If a tenant owes back rent but you know they own property — a car, house, apartment, etc. — filing a lien against it could be another option to recover the funds. In effect, the tenant cannot sell or refinance the asset until they pay the debt off.

Filing a lien against tenant property involves:

• Obtaining a judgment from the court for the unpaid rent
• Filing a lien with the county office where the property is located
• Collecting payment or enforcing judgment when the tenant tries to sell the property

While some states do not allow landlords to file liens against tenant property, check your local landlord-tenant laws to see what options might be available to you.

Garnishing Tenant Wages

The last option on this list is another path requiring court intervention. If you win a court judgment (either through small claims court or an entire civil lawsuit) and the tenant cannot pay the amount owed to you in full, the court may order a portion of the tenant’s paycheck to be sent to you until the debt is paid.

This method can be effective if the tenant is gainfully employed and otherwise cannot pay off the debt promptly. Some states limit the amount that can be diverted, and not all states allow a landlord to garnish wages. Some states that do allow wage garnishment will not approve this course of action for low-income tenants or senior citizens. However, garnishing wages could be a powerful option for landlords owed back rent payments.

Preventing Unpaid Rent: Best Practices for Landlords

If you never want to ask, “How long does a landlord have to collect unpaid rent?” there are some real steps landlords can take. Finding the right tenants, communicating with them as clearly and often as necessary, clearly outlining a tenant’s responsibility, and making sure you do your part can reduce the risk of unpaid rent and make the entire rental experience more positive for everyone.

Here are some strategies landlords can consider to reduce the chance that tenants will default on their debts.

Thorough Tenant Screening

One of the best ways to reduce the risk of unpaid rent scenarios is to ensure you’re filling your units with the best candidates. Once you’ve sourced them through rental advertising, landlords should conduct thorough tenant screening to vet the candidate’s financial stability, rental history, and employment.

Applications and background checks help identify past evictions, criminal records, or other red flags that could indicate a higher chance of the tenant skipping out on the lease without paying rent for the entire term.

A credit check is part of the tenant screening process. It will give you a good overview of the tenant’s past on-time or late payments and whether they’ve had any major financial issues in the last few years.

While tenant screening can’t tell you everything about someone’s character, conducting a thorough tenant screening can grant you some peace of mind and generally reduce the chances that you’ll have to chase someone down after they’ve left your unit.

Clear Lease Agreements

The lease agreement is the defining document when renting property. It lays out the rights and responsibilities of the landlord and tenant, so it’s crucial for the lease to be as clear and straightforward as possible, with no room for misinterpretation.

The lease agreement should include the rent amount, due date, acceptable payment methods, and information about the grace period or late fees, if applicable. Explaining how to make the rent payment and what happens when rent is considered late helps reduce the risk of disputes about the payment. As a result, landlords lessen the chances of late rent and hopefully avoid lengthy evictions.

A clear lease agreement is generally a good idea, but ensuring that everyone clearly understands all expectations is a great way to avoid collecting unpaid rent long after the lease expires and ensure a positive rental engagement for everyone.

Online Rent Collection

One of the simplest ways to reduce the risk of a tenant missing multiple rent payments is to ensure they have easy access to make them. Online rent collection can be one of the most effective ways to streamline payments and ensure tenants pay on time.

Setting up an online rent collection process is easy (especially if you use TurboTenant). It allows landlords to set up payment reminders and notifications, track transactions across multiple units and tenants, and easily keep an eye on all of their accounting.

Additionally, online rent collection tools typically provide multiple payment options, including ACH transfers, credit cards, debit cards, or other digital methods, that leverage the payment methods tenants already use to make online payments.

Making life easier for the tenant by allowing them to make rent payments online can make a massive difference in overall rent collection and is a powerful strategy to consider for your rental units.

Wrap-Up: How long does a landlord have to collect unpaid rent?

“How long does a landlord have to collect unpaid rent?” is no longer a mystery. While the timeframe for how you decide to pursue collecting unpaid rent can vary due to the statute of limitations, local landlord-tenant laws, the amount of rent owed, and other factors, there are various options available to make sure you collect the debt owed to you.

So, what can you do to ensure the rent you expect to collect ends up in your pocket?

1. Understand your options. How long does a landlord have to collect unpaid rent? The answer to that question can vary quite a bit. While there is a standard period to pursue the unpaid debt through legal channels (small claims court, civil lawsuit), there are other options available to you, like:
   1. Negotiating with the tenant
   2. Hiring a collection agency
   3. Selling abandoned property
2. Pursue the path of least resistance. Because you have multiple tactics for collecting unpaid debt, finding the most timely and cost-effective should be a priority. Does the tenant have a steady job? If so, wage garnishment could be a good approach. Was a lot of personal property left behind, and could selling the items cover the debt? Does the tenant own property, making a lien an effective way to collect the unpaid rent?
3. Take proactive steps. Why even get into a situation where you’re hunting down back rent payments if you can avoid it? While it’s impossible to know for sure how every rental engagement will end, landlords can take steps to minimize the risk.
   • Tenant screening is a great way to ensure your units are filled with the highest-quality applicants. Conducting thorough eviction checks can also reduce the risk that a tenant will skip out on rent.
   • Clear lease agreements can limit miscommunications or misunderstandings by defining each party’s responsibility. Lease agreements should list the amount of rent due each month, how to pay it, and what happens if it’s late.
   • Online rent collection makes it painless for tenants to pay their rent each month. Landlords can also send automatic reminders to the tenant about when rent is due with a link to pay.

Final tip: It’s never a bad idea to consult with local legal professionals or experienced landlords to identify the best way to collect unpaid rent in your local area.

How TurboTenant Can Help

TurboTenant is free property management software that helps landlords of all sizes streamline the day-to-day operations of managing rental properties. It provides access to powerful tools that make renting property easy.

One of the most beloved tools in the TurboTenant suite of offerings is the ability to collect rent online directly from the platform. It enables landlords to:

• Send automatic payment reminders to tenants at their desired interval
• Automatically apply late fees to the payment process
• Allow tenants to set up their autopay
• Track all rent payments with TurboTenant Accounting and REI Hub

Collecting late rent payments can seem like an overwhelming task, especially when you’re still managing your property on a day-to-day basis. But by making sure of TurboTenant’s extensive suite of tools and benefits, you can put yourself in the best possible position to succeed, no matter the challenge.