Should Landlords Accept a Partial Rent Payment?

Have you ever found yourself in a situation wherein a tenant couldn't pay their rent in full? While the concept of accepting partial rent payments might seem straightforward, there's more to it than meets the eye.

Imagine being a landlord and having a tenant offer to pay only a portion of their rent due, promising the rest later. The implications of such a situation can range from financial hardship and delays to complex legal issues. In this article, we'll explore what partial rent payments entail, why tenants might opt for them, the legal intricacies involved, and tips on how landlords can handle partial rent payments.

Whether you're a landlord seeking guidance or a tenant researching your rights, this guide has you covered.

What are partial rent payments?

When a tenant makes a partial rent payment, they only pay a portion of their monthly rent. For example, if the monthly rent is $1,000, a partial rent payment may only total $500. That said, a partial payment could be any amount — it doesn’t necessarily have to be half. 

Imagine this scenario: Your tenant’s rent, which is $1,000 a month, is due on the first, but they can’t pay their rent in full between the 1st and the 10th — the grace period you had set for rent collection. Instead, they pay $300 on the 1st and the remaining $700 on the 20th. 

As a result, their partial rent payment crosses over into late payment territory. Because the second half of this partial payment comes outside of the grace period you had set for accepting rent, it’s considered late and may incur a late fee if the lease includes one. 

A partial rent payment doesn't necessarily indicate tardiness, though — a partial payment made within the payment timeframe won't be considered late. However, depending on local laws, accepting partial rental payments might affect some of the landlord's legal rights, such as the ability to evict.

Partial rent vs. late rent

Partial rent payments may differ from late payments.

Late rent pertains to any payment made after the designated due date and any grace period, whether full or partial. As the lease agreement defines, late rent payments often incur penalties.

According to Statista, as of October 2023, 15.6% of renters aged 40 to 54 were behind on their rent. Because of this, property managers must be proactive about handling late or partial rent payments. In light of these challenges, tenants and landlords must understand the implications of partial payments.

Consistently paying rent late can affect a tenant's rental history and relationship with the landlord. It's beneficial for tenants to communicate transparently with their landlords if they anticipate making a partial payment, and they should also be informed about the potential consequences of both future partial and late payments.

How to handle partial rent payments?

Effectively managing partial rent payments requires a combination of clear policies, communication, and financial tracking. Here are some steps for handling partial payments.

1. Understand your lease agreement: Review your lease agreement to see if it addresses how to handle partial rent payments. Most leases specify the total rent due but may not cover partial payments. If your lease doesn't address this, consider updating it to include specific guidelines for managing partial payments, including any conditions for acceptance and applicable late fees.

2. Set clear expectations: Communicate directly with your tenant about their need for a partial payment and set a firm deadline for the remaining balance. Make it clear that recurring partial payments may not be acceptable and could affect future rent collection. If you choose not to accept partial rent payments, inform tenants clearly and outline payment deadlines and consequences for non-compliance. This helps prevent misunderstandings and keeps the rental process transparent.

3. Decide on your policy for handling partial rent payments: Develop a clear policy for accepting partial payments. Determine whether these payments will apply to the current month’s rent, create credit toward future rent, or work in another way. Ensure that your policy is consistent and communicated to all tenants to avoid potential disputes. Including a clause in your lease about partial payments can help reinforce these policies.

4. Track payments accurately: Use a reliable system to track partial payments. Property management software tools can help you accurately manage and record payments, verify the balance and due date, and keep financial records up-to-date. Tools like Azibo’s monthly rent dashboard can centralize and simplify record-keeping to help you stay organized.

5. Incorporate late fees: Consider implementing a late fee if partial payment arrives after the standard grace period. This late fee can discourage tenants from making habitual partial payments and ensure the full rent arrives on time. Consistently applying late fees is important to avoid confusion and potential disputes.

6. Stay informed about local laws: Local regulations can affect how you handle partial payments and evictions. In some jurisdictions, accepting partial payments might affect your ability to pursue eviction or collect the full unpaid balance. Always align your actions with local legal guidelines and consult legal professionals to navigate these complexities.

7. Maintain documentation: Keep detailed records of all partial payments and related communications. Proper documentation will be valuable for resolving disputes and managing financial records. Store all records securely.

By integrating these strategies, landlords can manage partial rent payments while maintaining clear policies and financial stability. Balancing flexibility with the need for consistent rent collection helps protect landlords' interests and tenant relationships.

Should landlords accept partial rent payments?

Accepting partial rent payments offers several advantages but also presents notable risks. Here are some of the pros:

• Maintains cash flow: Partial payments ensure landlords receive some revenue, which can be essential for managing property expenses and maintaining financial stability.
• Demonstrates flexibility: Accommodating partial payments shows a willingness to support tenants during financial difficulties, which can strengthen the landlord-tenant relationship and enhance tenant satisfaction.
• Prevents immediate eviction: Accepting partial payments may avoid the need for immediate eviction, giving tenants additional time to catch up on payments and potentially reducing tenant turnover.

However, there are also some cons:

• Potential for habitual late payments: Regularly accepting partial payments might encourage tenants to develop a habit of paying late or only in part.
• Complicates financial tracking: Managing partial payments can complicate financial record-keeping, leading to confusion over remaining balances and late fee applications.
• Effect on eviction process: In some jurisdictions, accepting a partial payment might hinder the eviction process or restrict efforts to recover the full unpaid balance.

Legal considerations for partial payment of rent

Landlords and tenants need to understand the legal landscape to make informed decisions about partial rent payments. Here are some key aspects to consider:

Waiver of rights

One of the most significant concerns for landlords is the potential waiver of rights. In many jurisdictions, accepting partial payment of rent by a certain date might mean waiving the right to evict a tenant for non-payment of the rent owed that month, especially if the tenant doesn't cover the remaining balance later. This can complicate the enforcement of rental agreements and may affect the landlord's ability to take legal action if the tenant continues to underpay.

The importance of comprehensive payment records

Maintaining and storing accurate and comprehensive records is necessary. All partial payments require meticulous documentation that notes each payment's amount, due date, and terms. Detailed records are important in legal proceedings and disputes — they provide a clear account of payment history and any agreements made with tenants.

Local regulations and lease agreements

Local regulations affect the handling of partial payments. Landlords need to know their jurisdiction's specific rules regarding partial rent payments. The lease agreement should also clearly outline a policy on partial payments, including any associated penalties or late fees.

Navigating eviction proceedings

Depending on local laws, accepting a partial rent payment from a tenant during an eviction process could disrupt, delay, or even halt the eviction proceedings. This can be problematic if the landlord intends to proceed with eviction for non-payment.

Imposing late fees and non-waiver agreements

Late fees need careful management. Before imposing fees on partial payments, landlords should ensure their lease terms comply with local regulations. Landlords should consider implementing non-waiver agreements in regions where accepting partial payments might diminish legal rights. With a signed agreement and written receipt signed by the tenant, these agreements indicate that the landlord's acceptance of a partial payment plan does not forfeit the landlord’s legal rights, including the right to pursue eviction.

Seeking professional advice

Given the complexity of handling partial payments and their legal implications, landlords should consult legal professionals knowledgeable about local rental laws.

Why might tenants make partial rent payments?

Tenants have many reasons for asking their landlord to consider a partial payment plan. These could include the following:

• Lack of funds: Sometimes, tenants don’t have sufficient funds in their bank account when rent is due. They may ask their landlord to pay a little up front and the rest later to buy some time. 

• Unexpected financial troubles or uncertainty: Even the best tenants may run into financial trouble from time to time. Medical bills, car repairs, or other unexpected expenses can set tenants back financially, making it challenging to pay rent in full. 

• Unwillingness to pay: Rent can be expensive. If a tenant becomes frustrated with the rent price or doesn’t want to pay in full, they might propose a partial rent payment.

• A significant property repair/renovation is underway: In some cases, tenants arrive on the property, and it’s not yet up to par. Maintenance or renovations may still be underway, and they don’t want to pay their full rent until it’s all completed.

• The property is no longer habitable: In the same vein, if a tenant considers a property uninhabitable, they may withhold the full rent cost until the property complies with regulations. 

Despite all these reasons, there is no rule about whether landlords must accept tenants’ propositions for partial payments. Instead, landlords decide whether or not they are willing to accommodate their tenants’ needs and accept partial rent payments. 

Simplify partial payments with Azibo

Whether you accept partial rent payments or not, you'll need a simple and streamlined rent collection platform. With Azibo, landlords now have the option to enable partial payments for rent invoices, allowing tenants to submit multiple payments toward a single invoice.

To enable partial payments for all invoices:

1. Sign in to your Azibo account.
2. Go to the Properties tab.
3. Locate and click on the correct property and tenant unit.
4. Find the renter's payment terms.
5. Toggle on partial payments and set a minimum payment amount.

If you only want to enable partial payments for a single invoice:

1. Go to the rent tab.
2. Click on the specific invoice.
3. Click on the invoice arrow to expand the details.
4. Toggle on partial payments for this invoice.

Important notes:

• Partial payments are only available for rent invoices, not for security deposits or one-time invoice requests.
• The first partial payment is free for tenants. Subsequent payments incur a $4.99 fee.
• If there's a balance after the due date and grace period, the full late fee is charged.

Built for landlords, Azibo's intuitive platform streamlines rent collection, mitigates risks associated with partial payments, and protects investments.

Ready to try Azibo's free rent collection platform? Sign up today.

Partial rent payments: Are they right for you?

Whether or not to accept partial rent payments involves financial, legal, and interpersonal considerations. The primary advantage of accepting partial payments is receiving some revenue, even if it’s reduced, and showing an understanding of tenants' circumstances. This approach can build goodwill, enhance landlord-tenant relationships, and ensure some rental income.

On the other hand, consistently allowing partial payments might set an undesirable precedent, leading tenants to expect this as the norm rather than an exception. Accepting partial payments can complicate eviction procedures and potentially waive certain landlord rights.

Managing and tracking multiple payments, ensuring clear communication, and maintaining detailed records can be complex. Platforms like Azibo can help streamline these tasks, offering a seamless experience for landlords and tenants alike.

Ultimately, whether or not to accept partial payments should be a carefully weighed decision, balancing immediate benefits against long-term effects on rental management and legal rights.

Partial rent payment FAQs

Can you pay rent in split payments?

Tenants might sometimes inquire about making partial rent payments, especially during financial difficulties like unexpected expenses or job loss. Whether or not a landlord allows tenants to make partial or even missing payments to avoid partial rent payments depends on the lease agreement. To avoid misunderstandings later, the landlord and tenant must have a signed or written agreement, specifying the conditions for such arrangements.

What is it called when you only pay part of the rent?

When a tenant pays only a portion of the rent on the due date, it's commonly called a partial rent payment. Handling partial payments can be complicated, and landlords typically prefer to receive the full payment to maintain consistent rental income. However, situations may arise when accepting a partial payment becomes necessary, especially if a tenant faces financial problems.

What is the greatest risk in accepting a partial rent payment?

Accepting partial or late rent payments can pose a significant risk to landlords. Once a partial payment is accepted, it might complicate the eviction process should the tenant fail to settle the remaining balance. The landlord might inadvertently extend the grace period by accepting a partial payment, delaying potential eviction proceedings. Landlords must be cautious and clear about terms to accept rent payments, including due dates and late fees, to manage these risks effectively.