There are times when a tenant would only offer to pay partial rent as a sort of compromise for not being able to pay the full amount due. The landlord has the option to reject or accept partial rent. Either way, a landlord must be fully aware of the benefits and consequences of their decision.
There are no rental housing laws that state that acceptance or denial of partial rent is illegal, but this doesn’t mean that landlords could take this matter lightly.
As the term suggests, a partial rent payment is the amount of money that a tenant pays the landlord on or past the due date, but is less than the total rental payment owed. It often comes with a promise to still pay the remaining balance when it’s possible for them to do so.
The Pros and Cons for Accepting Partial Rent
One of the advantages of receiving partial rent is you can secure rental income (though incomplete) rather than getting nothing at all. This is especially tempting for landlords who greatly rely on monthly rent to continue operating their business.
Accepting the offer may also be a kind favor you can give a tenant who has never failed to pay the full rent on time, but is simply struggling financially due to a personal crisis like unsettled medical bills. By giving them such privilege, you can somehow ease their burden.
However, if you accept partial rent, you are also setting a precedent for the tenant and other tenants to only pay partial rent just in the future just because you allowed it once. They might take advantage of your leniency and never pay their rent in full.
You should also check your state laws because in some jurisdictions, accepting partial rent could mean that you are waiving your right to collect the remaining balance.
Another way accepting partial rent can be problematic is if you have already filed an eviction case against a tenant because by doing so, you may have to start the eviction process anew, which delays the stressful process.
How to accept partial rent
If you decide to accept partial rent payments, make sure that their excuse is reasonable and true. You should also apply measures that would protect you from abuse or loss of income, such as:
- Setting a due date for the remaining balance.
- Charging a late fee on top of the remaining amount due to discourage late payments in the future.
- Making the tenant sign an “Agreement for Delayed or Partial Rent”
Specify your policy for late rent on the lease agreement
Having a clearly stated and well-detailed late rent policy on your lease agreement is one of the best ways you can encourage tenants to pay rent on time. It will also be easier for you to impose penalties for payment violations.
Make sure you specify a due date, a late fee, a grace period (the period when late payments will be accepted without late fees), and consequences for unpaid rent such as eviction, early termination of lease, or reporting of non-payment to credit bureaus. If you want to completely disallow partial rent payments, make sure that you state it clearly on the lease as well.
Even before a lease agreement is signed, you may already communicate your non-tolerance for partial and late payments to interested applicants. When you publish your listing on Padleads and home hunters contact you to apply, you can already make them aware that you expect your tenants to pay rent on time. This will discourage professional tenants, who intentionally don’t pay rent on time, from applying.