Forgive the length, I've covered everything I can think of. I too made the mistake of giving someone a break once, allowed them to pay the Deposit in increments by middle of month 2. Dead of winter, needed to get the place occupied after prior tenant's employer transferred him out of state. One couple interested. Long story short new tenant got fired beginning of month 2, I did get part of month #2 rent by middle of month, but that's all. Never saw the Deposit, and they moved out end of Month #2 giving me 3 days notice and the place was filthy in that short time and had two holes in the wall from an argument I presume. Never again. No Deposit before move-in, no deal. It's much more costly in the long run.

You'll have to act fast and be firm. If they've gone this long without paying rents you're giving the impression of being a pushover. You don't have to be nasty, just firm. This is business, and carrying two mortgages does not put you in a position to be doling out favors, right? ;)

What does your lease language and State law say? (Google your state name and landlord-tenant law, such as "Texas Landlord Tenant Law".) Call your local courthouse today as well and explain. Mine was really helpful with instructions when I almost had to evict someone.

Without knowing your state, at this point you certainly have grounds to evict for non-payment of February rent. (If it were March alone that were late, the time varies by State for filing for eviction for nonpayment.) Your State might also offer a more expedited method over Eviction, called filing for Immediate Repossession or something similar. Here is a blog I recently found and bookmarked that gives a detailed account of the process in one state, if your state offers something similar hopefully it's a good guide.

I would also type a letter today and post at the house today. Being 5 weeks in arrears, they have no right to be there. I know threat of eviction sounds like a moot point since they are moving, but what it will accomplish is getting you the $ owed so they avoid court. Hopefully they will see you are taking this seriously. Do NOT accept any more installment payments. (My hunch is they are paying their cell bill, car payment, utilities, but because you were lenient they think they've got a free ride.) If they ignore your notice, do file so that they will be served a.s.a.p. If that doesn't get them to pay up, then follow through in court. The court can get the money owed. You will be allowed to collect back rents plus costs for any damages, any cleaning fees normally covered by Deposit, etc. as ordered by the court. If they do not pay what is owed, a property judgment will be attached to their credit report.

With regard to that letter.
I would print four copies: one for your records and three to them. The reason for so many copies to them is because if it goes to court, it's hard to come up with 3 excuses for not receiving any of those notices. My atty also told me anything mailed in a situation like this always post at the property as well.

So print at least one copy on bright paper (orange is hard to miss) to be posted on the door.
Send a copy Certified Mail (signature required) and mail it today. (If any mail is returned to you, don't open it, leave as is.)
Send a 2nd copy 1st Class w/Delivery Confirmation (P.O. shows it was delivered at the house.) Also mailed today.
The one on bright paper to be hand delivered, fold that (so the world can't read it) and tape it to the most visible entrance door, at eye level, inside the storm door if possible so it's protected from weather. I typically type "NOTICE - Immediate Action Required" in bold, 18-20 font, on the backside so when it's folded that's visible and they see it's not some flyer.

It seems like overkill, but it covers you. Sometimes tenants refuse to sign Certified when they're in arrears and see it's from landlord. Or if no one answers to sign P.O. will leave a notice and try to deliver another day (time you don't have to spare). Sometimes they'll not pick up the one at the P.O., or claim they didn't get the one posted on the door, but that's where using Deliv Confirm comes in, because P.O. confirms they delivered to destination. So if it goes to court they will run out of excuses for not getting any of the 3 notices.

This is one sample notice. If you use it, I would change it from ten days to pay to the absolute minimum you can legally use since they are already 5 weeks late. Again, depends on your state law and lease.

In the upper right corner of your letter type in your delivery methods: Via Certified Mail 3/10/08; Via First Class Mail w/Delivery Confirmation 3/10/08; Hand-Delivered 3/10/08.

Find a way to incorporate or send this as well,"Eviction and How it Affects You", so they are aware that if they opt to ignore the notice there will be ramifications in their future. Should they get vengeful and do damage, they will be held accountable for that as well (take photos and video). At this point you might be thinking 'what's the point, they're leaving, they will never pay'. The point is that a firm Notice and showing them ramifications is often the nudge needed. If not, when you pursue this in court, if they don't show up and pay what they owed according to the binding contract they signed, a Judgment for past due rents and/or damages will be attached to their credit report and remain there until satisfied. A Property Judgment is the kiss of death for someone seeking decent housing (whether renting or applying for a mortgage). I have encountered a few applicants with Property Judgments on their credit. No one would rent to them. I refused as well. Can't afford to take on that kind of rental risk - that judgment indicates they either didn't pay their rents, did some major damage, or both.

If you opt to use the 'Eviction and How it Affects You' notice alone (without the first sample letter above) I would suggest adding a deadline at the very end, such as: ...bring your account out of eviction status by remitting February and March rent to us not later than 5:00 PM on Wed 3/12/08. Otherwise, regretfully we are forced to proceed with Eviction." Again, check your state law and lease for how much notice you have to give for nonpayment! I say 3/12 because that gives time for delivery of Certified and 3rd day from being posted on door. If your state law requires ten days Notice to Vacate for nonpayment that's what you'll have to use! That's why you need to address this immediately. So the final due date before filing in court is before their move out date.

Also, how long was the lease term? If it was longer than six months you are entitled to rents until you can get the place re-rented because they broke the contract. So if it expires next August, they agreed to pay rents till then. You are entitled to collect rents from them till August, but you are also expected to actively pursue seeking a replacement tenant. If you secure a new tenant in May, prior tenant is no longer obliged to pay since you've got income again, because we can't collect double rents. In my state, if there are damages, I'm entitled to keep the Deposit for damages (but must provide an itemized accounting), plus apply toward unpaid rents owed me. If the Deposit falls far short then that's where filing in court recoups your lost $.

With regard to the Security Deposit, you don't owe them a Deposit. Not when they owe you back rents. With the above letters, include a paragraph and demand in writing they produce that receipt. If they produce one that looks like a fake, remind them that is considered forgery (in my state that's a felony). If they insist it's what they got and you know it's fake, do not pay it back, seek legal counsel. Also, if they do pay rents due without going to court, but produce a fake SD receipt and ask for a refund, seek legal counsel for that. You don't want to pay them money they never gave you to begin with.

In the future, if you choose to let your secretary accept funds, do not let her accept cash. For everyone's sake. She might be a real gem, but if she's officially not involved in your rental business then tenants could accuse her of just keeping the cash and you've got a 'he said/she said' situation on your hands and no way to track it. I insist on Deposits being paid in cash, after that, how the rent is paid doesn't matter (cash, check, etc.) But the cash is handed directly to me, I count it in front of tenant. I use a carbonless receipt book with triplicate pages. I write the receipt on the spot and give tenant the original, one carbon record remains in receipt book, the 3rd goes in that tenants file.

As an add-on to the notices above, I would put in something like this: "Your Lease commenced on September ___ 2007 and our Agreement was the Security Deposit would be paid in two installments, the first one due ____ and being paid in full by November __ 2007. We have yet to receive these funds. This is in violation of our Lease Agreement, which is a legally binding contract. Although we have no record of receiving the Security Deposit, you have verbally stated that you paid it in cash at my office and that my secretary gave you a receipt. However, despite multiple verbal requests on my part you have failed to produce that written receipt. The Security Deposit or valid receipt must be presented by Wed 3/12 to avoid further proceedings. (Even if you have to give them 10 days notice to pay the rent, only give them 3 days to produce the Deposit or the receipt.)

It seems a little silly to be attempting to collect a Deposit within two weeks of them moving out, but you need to do it anyway. Because even if they do pay the past due rent but leave damages, you'll need that SD money. Also, it documents in writing, that in addition to failing to pay rent they broke the contract by failing to pay SD (unless they can produce a valid receipt).

I'm done, hope that helps some!