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Accounting, Tenant Management

Dealing With Partial Rent Payments From Your Tenant

Sometimes tenants will, as a sort of compromise, attempt to pay part of the rent instead of the full amount owed. There are no laws as to whether you have to accept or decline partial rent payments. If you do choose to accept a partial rent payment, you want to ensure the situation is handled correctly so that the end result benefits both parties.

In this article, we answer some of the common questions that landlords have about partial rent payments; should landlord accept partial rent payments? What are the dangers of doing so? And what’s the best way to handle them?

Read: How to Collect Rent from your Tenants

What Do We Mean By “Partial Rent Payments”?

Very simply, a partial rent payment, as the name suggests, is when a tenant only pays a portion of the month’s rent. This could be for numerous reasons, they might not have the money for a complete months rent, or maybe they just don’t want to pay. 

There could also be valid reasons, for example, they might believe that the property is no longer habitable and they are withholding rent until necessary maintenance work is completed. If this is the case they could be willing to go to court over this, and they may win. It’s best to resolve this issue quickly with your tenant and ensure the habitability of the property is compliant to regulation. 

Read: How to Make Low Income Housing Work as a Real Estate Investment

partial rent payment houses

Partial Rent vs. Late Rent

If a tenant only pays part of the rent it still means that months rent is late, and as they are late, you are within your rights to begin the eviction proceedings after the grace period.

It’s worth noting that in some states if you have already filed for eviction, then you should not accept partial payments as some states will make you restart the eviction process if you accept a partial payment after filing at court.

The Positives and Negatives

The majority of people don’t want to be in a position where there is a threat of eviction lingering over them. Circumstances though could put anyone in such a position. Even the best tenants might struggle with rent if they have large medical bills or family crises. By accepting a partial payment you will ease the stress and burden for the tenant. 

This being said, it also conveys another message, which is that partial payments are “okay”. This could lead to a tenant taking advantage of the situation and making partial payments repeatedly.

Keep in mind as well that if you have already filed for eviction you may have to restart the eviction process which will further drag out an already arduous process.

Check Local State Law!

Here’s some more food for thought: In some jurisdictions (you’ll need to check your state law on this), if you accept partial rent payment, you might not be able to evict your tenant if, despite what they told you, they never got around to paying the remaining balance.

If you accepted an amount less than the full amount, you may waive your right to collect full payment for that month in some jurisdictions.

What’s the Best Way to Handle a Partial Rent Payment?

If you do decide to accept partial payments the first thing you need to do is establish why they can’t make a full payment. You might be more lenient with someone who has just had a baby for example, than someone who has no reason or only flimsy excuses. 

You can combat the above drawbacks in a few ways:

  1. Make it very clear that you expect the remainder of the due rent by a certain date.
  2. Add your late fee to the amount owed to encourage prompt payments in future.
  3. You could even get the tenant to sign an “Agreement for Delayed or Partial Rent”
  4. Document everything clearly (you can use the notes section in Landlord Studio, and upload the signed Agreement for Partial Rent into the system). This will help in case the tenant never pays the rest of the rent.

If you decide NOT to accept partial rent payments:

  1. If you receive a check for a partial amount don’t deposit it.
  2. Communicate to the tenant beforehand that you don’t accept partial rent payments and if they attempt to pay a partial rent amount refuse to accept it explaining why.
  3. Communicate clearly that you expect the full amount of rent due by a certain date.
  4. If the tenant is waiting for a paycheck before paying you might consider changing the date of the rent due date to avoid future late rent payments.
  5. If they don’t pay by the agreed-upon date then you will want to begin eviction proceedings.

Visit Our Essential Landlord Documents Page

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Fall Back on the Lease

Your lease will state how much rent is due and when it’s due each month. Having language about when rent is due each month means you don’t also need a clause that addresses partial rent payments.

However, if you don’t want to accept partial rent payments and want to make that clear in writing you can include language in your lease that prohibits tenants from making partial rent payments. It could be something like this:

In the event that any rent payment required to be paid by Tenant(s) is not paid IN FULL by the [Rent Due Date] then a late fee of [amount] will be applied.

Other consequences you could outline in the lease for partial rent payments are: 

  • Lease termination
  • Eviction / Judgment
  • Damage to Credit
  • Collections / Garnishments

Encourage Prompt Rent Payments with Landlord Studio

At Landlord Studio we understand that late rent and partial rent payments are annoying. They make things harder for you as a landlord. Which is why we have made it easier.

Set up automated rent reminder emails in the app to automatically email tenants so you don’t have to. These emails can be set to go out a number of days before the rent is due and as well as remind them after the rent due date of any remaining rent due.

Set up your late fees in the app. These will automatically calculate how much your tenant owes in late fees if they don’t pay on time. They will also calculate and automatically add this to the reminder emails if they are late.

Store all your documents in one place and add notes to properties, tenants, income and expenses to keep everything organized.

Use Landlord Studio to easily keep track of your rental income and all property associated costs at an organization, property, and unit level. Plus, you can instantly generate professional reports with a tap of a button to send to your accountant.

Read: Should you use Quickbooks for rental properties?

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Summary

Every now and again you may receive a partial rent payment from your tenants. It’s important that you know what to do and how to handle this situation. You are relying on their timely rent payments to pay bills and the property mortgage. 

You need to understand the reason behind their late rent payments, however, you also need to be firm and quick to act to ensure prompt and full payments in future. What you don’t want to happen is to let a tenant think that it’s okay for them to be late repeatedly.

Using a tool like Landlord Studio can help you manage partial rent payments and ensure future on-time payments.

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Ben Luxon

"Ben is an author and real estate enthusiast. His interest in all things entrepreneurial has led him to work with real estate professionals all over the world, distilling their knowledge into articles and Ebooks. His love of travelling has taken him to over 10 countries in the last year, where he has sampled the craft beer of them all."

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