You want to be a nice and understanding landlord. When your tenant asks if they can make a partial rent payment, what should you do?
It’s easy to get sucked in by sympathy when your tenant tells you that they just had their hours cut on the job or that they fell ill and have medical bills.
There might be an occasion where accepting a partial rent payment on the due date could work out. If your tenant has been renting from you for several years and has never been late, you might want to give this excellent tenant a chance to catch up and let them make a partial rent payment on the due date for maybe one time. This tenant has proven to be trustworthy, after all.
If You Agree to Accept a Partial Rent Payment
If you agree to accept a partial rent payment on the due date, put in writing what the arrangement is. State the amount of rent the tenant pays you (the partial amount) and the date that the balance is due. If you charge a late fee per your lease, also specify whether you will be charging the late fee and the amount or whether you will be waiving the late fee. Sign this notice, and have your tenant sign it as well.
It’s acceptable to allow partial rent payments before the due date.
Fall Back on Your Lease
Your lease probably states when rent is due each month, such as on the first day of the month or on the 15th of each month. Having language about when rent is due each month means you don’t also need a clause that addresses partial rent payments.
But if you don’t want to accept partial rent payments and feel as if you want some backup (maybe because you’re a big softie who can never say “no”), go ahead and include language in your lease that prohibits tenants from making partial rent payments. It could be something along these lines:
In the event that any rent payment required to be paid by Tenant(s) is not paid IN FULL by the start of the… [INSERT CONSEQUENCE]
I usually outline all possible solutions including:
- Hefty one-time & daily late fee
- Lease termination
- Eviction / Judgment
- Damage to Credit
- Collections / Garnishments
When to Accept Partial Rent Payments
While it’s generally a best practice to not accept partial payments on the due date or during an eviction, it’s perfectly acceptable to allow partial payments before the due date — as long as your tenants pay in full by the due date.
In roommate situations, it’s okay to accept partial payments from each of the roommates, as long as the total rent due is paid by the due date.
All online property management softwares, like Cozy, allow tenants to make partial payments, so they roommates can pay in portions. But once the due date hits, you should still enforce your late fee policy if the total amount due is not paid. This happens sometimes in roommate situations where three roommates pay on time but the forth forgets. In that case, the whole group gets assigned a late fee, according to the lease. Personally, I just mandate that my tenants setup automatic payments in Cozy, so they can’t forget.
Note: Cozy allows for partial payments. Cozy also has a feature to let you stop payments and terminate the lease in the case of an eviction. This prevents tenants from paying a nominal sum, such as $1, just to delay eviction. It’s a nice feature.
Why It’s Bad to Accept a Partial Rent Payment
The reason it isn’t a good idea to accept a partial rent payment on the due date is that if your tenant can’t afford the rent this month, they’re likely to not be able to afford it next month. The longer you let this go on, the further behind they’ll get on paying you your rent.
Before you know it, your tenant can get seriously behind in rent payments.
Another reason not to allow a partial rent payment, even for a good tenant, is if you have multiple properties. It’s not good practice to have different rent policies. If you start letting one tenant make partial payments and not your others, and your other tenants somehow find out, you could be accused of discrimination.
This Is Your Business
When tenants have financial difficulties, they probably need to prioritize which payments they must make and which they can slide on a bit. If they don’t make their car payment, their car will be repossessed. If they don’t pay their credit card, they’ll hurt their credit score. So they might test the waters to see whether you’ll be the creditor they can put on the back burner.
If you let tenants slide on rent, then you’ll probably see partial payments and late payments pretty regularly.
You, as a landlord, likely depend on getting your full rent payment on time so that you can pay the mortgage. You can’t very well go to your bank and offer a partial mortgage payment. In fact, the mortgage company will send back the partial payment!
But if your tenant makes partial payments throughout the month, that’s okay, as long as you get your full rent by the due date.
Remember that you’re running a business, and doing so requires that you have rules and that your tenants abide by them or they will, unfortunately, need to leave.
A good motto to memorize is “If you can’t pay, you can’t stay.”
Check the 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 balance.
If you accepted an amount less than the full amount, you will waive your right to collect full payment for that month in some jurisdictions.
If you can’t pay, you can’t stay.
The phrases, nice guys finish last and no good deed goes unpunished are famous phrases for a reason. If you veer from your rental agreement and start letting tenants slide on rent payments by letting them make a partial payment on the due date, you might soon be out of the landlord business.
But it’s okay to accept partial payments with the caveat that if a tenant doesn’t pay the whole thing by the due date, they will get a late fee and possibly a “notice to pay or quit.” And during an eviction, you should refuse all payments (partial or full) until the court hearing.