Setting Up Rent Collection the Right Way in Texas
Inconsistent rent collection is the #1 mistake new Austin landlords make. The most important principle: establish your process clearly from day one, communicate it in the lease, and enforce it consistently with every tenant.
Setting Your Due Date and Grace Period
Standard Texas Practice
- Rent due: 1st of the month
- Grace period: 2 days minimum required by Texas law (rent is "late" on the 3rd or after)
- Late fee begins: Morning of the 3rd (or whatever date your lease specifies)
Most Austin landlords use:
- Rent due: 1st
- Grace period through the 2nd
- Late fee begins: 3rd
What Texas Law Requires
Texas Property Code §92.019 sets specific late fee rules:
- Late fee must be specified in the written lease
- Cannot charge a late fee before a grace period of at least 2 days
- Late fee cannot exceed 12% of one month's rent for properties with 4+ units
- Late fee cannot exceed 10% for 3 or fewer units
- The late fee must be "reasonable" — courts have voided extreme late fees
For a $2,000/month rental (4+ units): maximum late fee = $240/month
Recommended Late Fee Structure
For a $2,000/month Austin rental:
- Initial late fee (applied on 3rd): $75–$100
- Daily late fee (optional, if lease allows): $10–$25/day after initial fee
- NSF (bounced check) fee: $25–$35
Moderate late fees are often more effective than maximum-allowable fees — they incentivize payment without creating a "might as well be late" attitude from tenants.
Rent Collection Methods
Online Payment Platforms (Recommended)
Modern property management platforms collect rent electronically with automatic late fee tracking:
- Buildium: Full PM software with online payments
- AppFolio: Professional property management with tenant portal
- Avail: Landlord-friendly platform for independent landlords (free tier available)
- Cozy (by CoStar): Free rent collection with direct deposit
- Zelle / Venmo: Workable for small landlords but lacks documentation features
Benefits of online collection: Automatic receipts, digital paper trail, no cash handling risk, automatic late fee calculation.
Check or Money Order
Some tenants prefer traditional payment. If accepting checks:
- Specify payable to (your name or LLC)
- Require money order after first NSF/returned check
- Keep a written receipt log
Never accept cash for rent — no documentation trail and security risk.
What to Do When Rent Is Late
Day 1–2 after grace period
Text or email reminder: Many late payments are genuine oversights. A simple "Hi [name], rent was due on the 1st — just a reminder, a late fee of $75 was added today" resolves 70% of late payments within 24–48 hours.
Do NOT call every hour or threaten immediately — this creates landlord-tenant conflict that makes the rest of the tenancy difficult.
Day 5–7
Written Notice: If no payment or response, send a formal written late rent notice. Not a Notice to Vacate yet — just documentation that rent is late and what's owed (rent + late fees).
Day 10–14
Evaluate the situation: Is this a one-time issue (tenant had emergency, usually pays on time)? Or a pattern? Talk to the tenant directly to understand what's happening.
If the tenant communicates and has a plan, consider a one-time payment arrangement in writing. If there's silence or vague promises, proceed to formal process.
Day 15+
Serve 3-Day Notice to Vacate: Texas law allows a 3-day Notice to Vacate for non-payment of rent. This starts the formal eviction clock. Include total amount owed (rent + all accrued late fees).
Note: Some leases specify longer notice periods — check your specific lease.
Partial Payments: A Critical Decision
If a tenant offers partial payment, you face a dilemma:
Accepting partial payment: In Texas, accepting partial payment does NOT automatically waive your right to evict for the remainder — as long as your lease includes a proper "partial payment acceptance clause." If your lease says "accepting partial payment does not waive landlord's right to proceed with eviction for the balance," you can safely accept partial payment while continuing the eviction process.
Rejecting partial payment: You can legally reject partial payment (in writing) and proceed with the full eviction. This is cleaner legally but sometimes less practical if a tenant is close to paying in full.
Building a Rent Collection Track Record
Document everything:
- Every payment date and method
- Every late fee applied
- Every communication about late rent
- Every written notice
This documentation is essential if you ever need to file for eviction or pursue damages in Justice of the Peace court.
Frequently Asked Questions
12% of monthly rent for 4+ unit properties; 10% for 3 or fewer units. Must be specified in the written lease. Cannot be charged before a 2-day grace period.
Yes. Texas law allows a 3-Day Notice to Vacate for any non-payment. Most experienced landlords issue a written reminder first and begin formal proceedings after 10–15 days of non-payment.
