As a Portsmouth rental property owner, the chances are that in the future, you’ll have a tenant ask if they can make a partial rent payment. While you may be compelled to accept it, reasoning that something is better than nothing, in all actuality, accepting even one partial rent payment can trigger several problems afterward. Although there are alternatives to accept a partial rent payment and limit the risks that come with it, for most landlords, the ideal plan in most situations is to take a firm stand and insist that your tenant pay their rent in full. In what follows, we’ll go over why accepting partial rent payments can be so problematic and how to manage this difficult position successfully.
Late Fee Disputes
Tenants may believe that they can evade being charged late fees or other penalties contained in their lease by making a partial rent payment. However, anything less than a full payment should still be subject to the same penalties that would happen if no payment was made. Some tenants like late fees and may dispute or decline to pay. If your tenant should decide to challenge that late fee in court, there’s a strong possibility the judge will side with your tenant no matter what your lease says.
Fair Housing Laws
Accepting partial rent payments from one tenant but not another also puts you at risk of running headlong into a discrimination lawsuit. Federal Fair Housing laws are intended to protect tenants in some protected classes from being handled unfairly by landlords. If you deny a tenant’s request to make a partial rent payment, and they figure out that you allowed a different tenant to do so, they could argue in court that you’ve discriminated against them. Even though you effectively defend yourself, you’ll end up 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 see how frustrating it can be to re-establish clear boundaries with some tenants after you’ve made an exception to the rule. If you let your tenant make a late or partial payment without penalty one time, there is a strong possibility that they’ll do it again – and request for more time or more leeway after some time. They may also start anticipating that since you didn’t enforce one provision of the lease that you’ll be okay to disregard other violations, as well. You can avoid boundary-testing tenants by clearly expressing your expectations in your lease documents and then sticking to them.
If the issue becomes a worst-case scenario and you need to evict a tenant, accepting a partial rent payment can ruin the eviction process. In other 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 stranded, unable to collect back rent payments while the eviction process takes its course. As relations with your tenant will undoubtedly deteriorate, the whole situation probably becomes increasingly difficult for everyone the more it proceeds.
Navigating Partial Payments
Thankfully, there are proactive things you can do to mitigate some of the more prevalent risks involved with partial rent payments. These include the following:
- Setting Clear Expectations. Spell out your rent payment policy in your lease documents, together with your policy on partial rent payments. This can help you clearly communicate your expectations to your tenant and decrease the possibility that they will continue to make a partial payment at all.
- Get it in Writing. If you do decide 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 specifically describes the terms of your accepting their partial payment, including any applicable late charges. Don’t forget to explain the consequences of any further 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 option that you could avoid partial payments is to allow them to make their rent payment with a credit card or another means of payment. Several innovative payment methods allow instant transfers, which might provide your tenant a further convenience in a pinch. Just bear in mind not to accept a personal check, particularly a post-dated one. A few tenants will attempt to “float” a bad check to buy time, but if the check bounces, you will be the one who pays the bank charges.
Determining how to manage partial rent payments is just one small portion of successfully managing rental properties. It’s a challenging task and not one for the fearful. However, if you might want to reclaim your time and spend it doing different activities, why not hire Real Property Management Hampton Roads to handle the day-to-day tasks your properties need? Our Portsmouth property managers will communicate directly with your tenants to ensure that things are done professionally, legally, and efficiently, saving 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.