Partial Rent Payments - Tips for Property Owners
Partial rent payments may occur for various reasons, such as if the tenant is experiencing financial difficulties and can only afford to pay a portion of the rent or if there is a dispute between the tenant and landlord over the condition of the rental property.
This is what you, as a property owner, need to know about partial rent payments and how to handle them while adhering to landlord-tenant laws.
What Constitutes a Partial Rent Payment?
A partial rent payment is when a tenant pays only a portion of the full amount of rent that is due for a particular rental period. For example, if the monthly rent for a property is $1,000 and the tenant pays only $800, then the payment of $800 would be considered a partial rent payment.
Are partial rent payments considered late payments?
Partial rent payments are typically considered late payments if they do not meet the full amount of rent that is due on the specified due date. For example, if the tenant is required to pay $1,000 in rent on the first of the month, and they only pay $800 on the due date, then the remaining $200 is considered past due.
The exact terms regarding partial payments and late fees can vary depending on the lease agreement and your policies as landlord.
Should You Accept Partial Rent Payments?
Deciding whether or not you will accept partial rent payments is a personal decision without a definitive best-practice. However, there are some important things to consider when deciding whether or not you will accept less than the full amount.
Reasons you might accept partial rent payments:
- Accepting a portion well before the due date, and then the remainder later by the due date
- A tenant has a long history of making rent payments on time without issue. Although risky, you might make the decision to accept a partial rent payment one time
Reasons to not accept partial rent payments:
- Tenant will be less motivated to pay in full in coming months (“You already accepted less before”)
- Negative effect on cash flow, making mortgage payments, etc.
- Other tenants not wanting to pay in full
- Possible discrimination accusations
As a general rule, we recommend landlords do not accept partial rent payments.
*Note, partial rent payment as discussed on this page should not be confused with Prorated Rent, which involves less than the full rent amount actually being owed.*
Be Prepared with Lease Agreement
The lease agreement should specify the consequences of partial payments or late payments, and both tenant and landlord should be aware of their rights and obligations under the lease.
It’s best to include detailed policy in advance so there is no confusion or debate later on. Stick to the terms.
If You Accept Partial Payment
If you’re going to accept partial rent payments, document it!
An “Agreement for Delayed or Partial Rent Payments” is a legal document that outlines the terms and conditions under which a landlord agrees to accept delayed or partial rent payments from a tenant. This agreement is typically used when a tenant is experiencing financial difficulties and is unable to make the full rent payment on time. Signed by both parties, it should outline the specifics for how and when you expect the remainder of the rent payment, as well as the consequences for the tenant failing to uphold the agreement.
Make sure to clearly document the payment when it is received.
If You Do Not Accept Partial Payment
If you have decided to not accept partial rent payments (which should be outlined in your lease agreement), then don’t accept them. This sounds humorously obvious, but taking into your possession any amount of money less than the full rent amount is accepting the payment. You’ll get yourself into problems if your lease states that you do not accept partial payments but then you go ahead and accept them.
If you are not going to accept partial payments, then a tenant is simply required to pay the rent in full according to the lease terms or be subject to action (including eviction) according to the lease terms for non-payment of rent.
You should inform your tenant that you will not be accepting the partial payment, set a clear due date for payment to be made in full including any late fees.
Do Not Accept Partial Payment After Eviction Process Has Been Started
This is important for landlord’s to remember: do NOT accept any partial rent payments from a tenant you have begun to evict them.
In many U.S. states, accepting a partial rent payment during the eviction process indicates an active tenant-landlord relationship and would require the eviction process to be started over again. In essence, the tenant could claim, “Look, you accepted my payment. That means you have agreed to let me stay another month for paying you this amount.”
Tenant and Rent Payment Services in Utah
As always, we recommend maintaining professional legal counsel in all matters related to landlord-tenant law where you rent out property. Joseph Thomas does not offer legal advice.
But, when it comes to property management and helping landlords maximize their investment, we’re experienced pros! Let us show you how our services and expertise can help you minimize and resolve your property and tenant management challenges in Utah.