As a Pocatello rental property owner, the odds are that eventually, you’ll have a tenant inquire if they can make a partial rent payment. Even though you may be inclined to accept it, believing that something is better than nothing, the fact is that accepting even one partial rent payment can result in a number of issues sooner or later. While there are approaches to accept a partial rent payment and reducing the risks involved, for several landlords, the better course of action in most cases is to take a firm stand and insist that your tenant pay their rent in full. In this section, we’ll examine why accepting partial rent payments can be so problematic and how to deal successfully with this difficult scenario.
Late Fee Disputes
Tenants may assume that they can prevent being charged late fees or other penalties stated in their lease by paying a partial rent payment. Nonetheless, anything less than a full payment should still be subject to the same penalties that would occur if no payment were given. Few tenants like late fees and may protest or decline to pay. If your tenant should choose to challenge that late fee in court, there’s a decent possibility the judge will side with your tenant regardless of what your lease stated.
Fair Housing Laws
Accepting partial rent payments from one tenant but not another also raises the chances of a discrimination lawsuit. Federal Fair Housing laws are intended to protect tenants in certain protected classes from being regarded unfairly by landlords. If you deny a tenant’s request to make a partial rent payment, and they discover that you allowed a different tenant to do so, they could argue in court that you’ve discriminated against them. Regardless of whether you effectively defend yourself, you’ll turn out paying for it in both legal fees and a damaged reputation.
If you’ve ever heard the saying, “give them an inch, and they’ll take a mile,” you know how difficult it can be to re-establish clear boundaries with certain tenants after making an exception to the rule. If you permit your tenant to make a late or partial payment without penalty one time, there is a strong chance that they will do it again – and request for more time or more leeway the next time. They may also begin to think that since you didn’t enforce one provision of the lease that you’ll be inclined to ignore other violations, as well. You can avoid boundary-testing tenants by explicitly stating your expectations in your lease documents and then adhering to them.
If the circumstances become a worst-case scenario and you need to evict a tenant, accepting a partial rent payment can make the eviction process a nightmare. In several states, accepting even one dollar of rent payment from a tenant after you’ve started an eviction will void the process completely. Not only will you have to start the whole eviction process over again from the very beginning, but you will be trapped, unable to collect back rent payments while the eviction process takes its course. As relations with your tenant will unavoidably deteriorate, the whole circumstance will probably become increasingly difficult for everyone the longer it continues.
Navigating Partial Payments
Luckily, there are proactive things you can do to minimize some of the most typical risks related to partial rent payments. These contain:
- Setting Clear Expectations. Specify your rent payment policy in your lease documents, particularly your policy on partial rent payments. This can help you properly communicate your expectations to your tenant and lessen the likelihood that they will attempt to make a partial payment or anything.
- Get it in Writing. If you do choose to accept a one-time partial payment, put it in writing. Prepare and serve your tenant with a Notice of Nonpayment of Rent or other notice that particularly describes the terms of your accepting their partial payment, together with any relevant late charges. Don’t forget to mention the consequences of any additional requests or failure to pay the rest of the past-due rent as agreed.
- Accept Multiple Forms of Payment. If your tenant runs out of cash, one method that you could avoid partial payments is to allow them to pay their rent payment with a credit card or another method of payment. Numerous new payment methods propose instant transfers and can give your tenant some additional convenience if necessary. Simply remember not to accept a personal check, specifically a post-dated one. Other tenants will attempt to “float” a bad check to buy time, but if the check bounces, you will be the one penalized with bank charges.
Learning how to manage partial rent payments is just one little component of successfully managing rental properties. It’s a challenging task and not one for the faint-hearted. However, if you would like to reclaim your time and spend it doing other things, why not hire Real Property Management Pocatello to handle the day-to-day tasks your properties need? Our Pocatello property managers will work directly with your tenants to ensure that things are done professionally, legally, and efficiently, lending you time and total peace of mind. Contact us online today to learn more.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.