Owning rental property is a business, so you’ll have to make tough decisions when dealing with your tenants. Landlords want tenants who can pay rent on time and take good care of the property. However, what should you do if a tenant asks to make a partial rent payment before or on the due date for rent? There are some things you should consider before making that decision.
When to Accept Partial Rent Payments
It is acceptable to allow partial payments before the due date as long as the tenant pays the full balance by the deadline. For example, it’s common for landlords to accept partial payments when renting to roommates if the total amount is paid by the due date. If the balance isn’t paid by the deadline, enforce your late fee policy. If the tenant is several months behind in rent, send them a notice to pay or a quit letter. When you use Apartments.com Rental Tools, your tenants can set up recurring rent payments online, which will help ensure rent is paid on time each month, and if they miss rent you can set up an automatic late fee. . Our expense tracking platform helps you summarize rental expenses by property and tax category. From there, you can easily export them to CSV or PDF formats to make doing your taxes a breeze. Unlike our competitors, there’s no need to go off-site to a third party for required forms. With Apartments.com, you can download the required tax filing forms directly from your account, and they are backed up for seven years.
Unfortunately, many people will face financial problems in their lives. Perhaps you have a long-term tenant who always pays on time but is currently experiencing some financial hardships due to job loss or illness. Although it might not be considered best practice, agreeing to accept a partial payment on or before the due date might be worth it. Working out a reasonable agreement could help you retain a trustworthy tenant, so use your discretion.
But before you accept partial rent payments, check your local and state laws. In some jurisdictions, if a landlord accepts a partial payment, they might not be able to evict the tenant. If a landlord accepts an amount less than the full balance, they waive their right to collect the entire payment for that month in some states.
Why Landlords Should Avoid Accepting Partial Rent Payments
It’s typically considered best practice to not accept partial rent payments on or after the due date or during an eviction. But if you do accept a partial rent payment, it’s wise to avoid having different rent policies in place. If you allow one tenant to make partial rent payments and not others, you could get accused of discrimination if other tenants find out.
If your tenant can’t afford the rent for the current month, they might not be able to pay for the following month(s) either, going even further behind on rent. Although you can help a tenant at your discretion, remember that you want to prevent partial and late payments from becoming a habit. The longer you accept partial rent payments after the deadline, the longer they will be behind on rent.
How to Handle a Partial Rent Payment
If you decide to accept a partial rent payment, you could be creating less stress for the tenant, but they might not have enough money to pay the rest of the rent. To combat this issue, inform your tenant what date the rest of the rent is due.
Your lease should include the date rent is due each month, along with any grace periods you might have. For example, it’s common for landlords to accept rent payments up to three days after the deadline before it’s considered late, often referred to as a “grace period.”
Since the lease states when rent payments are expected to be paid, you don’t necessarily need a clause that directly addresses partial rent payments. However, you can include a clause explaining the details of any consequences or solutions, which will help during future conversations if a tenant asks for partial rent payment.
For example, the clause might read something like this:
“In the event that any rent payment required to be paid by Tenant(s) is not paid in full by the due date, then… [insert consequence.]”
The clause can include the following consequences:
- A large one-time and daily late fee
- Lease termination and eviction
- Damage to credit
- Collections/garnishment
Although you might be eager to make sure rent is paid on time, remember to evaluate the situation honestly. The eviction process is time-consuming and costly, so accepting a partial rent payment might be a better option, but remember it could delay the eviction process depending on what state you are in.
Finally, if you accept a partial payment, be sure to document all communication with the tenant, including the amount of rent the tenant will pay and a due date for when the rest of the balance must be paid. If you’re charging a late fee per your lease, include that amount, too.
Although having sympathy and understanding for your tenants are important qualities, remember that your rental property is your business, so being firm will be necessary sometimes. Use your lease to help ensure partial and late rent payments don’t become a habit for tenants. If your tenant typically pays on time, writing an agreement for a one-time partial rent payment is a reasonable option. Maintaining a profitable business should be a goal, but having a good landlord-tenant relationship is important as well.
