Should Landlords Accept Partial Rent Payments?

 Post by Azibo Team on June 23, 2022

Wondering if partial rent payments make sense for your rental business? Learn the pros and cons of accepting partial rent — and how Azibo can help you navigate the process to better support tenants and protect your investments.

For landlords and tenants alike, life doesn’t always go according to plan. Maybe you’re still finishing maintenance work to your rental property on your tenant’s move-in day, or perhaps your renter isn’t able to pay their full month’s rent because of a sudden medical crisis. 

In an effort to accommodate life’s unexpected moments, some landlords accept partial rent payments from their tenants. In this post, we’ll explore partial rent payments in detail, outlining their potential benefits and drawbacks — and how to best protect your investment if you do choose to accept them. 

What are partial rent payments?

When a tenant makes a partial rent payment, they’re only paying 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 is due on the first day of every month, but they can’t pay $1,000 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. 

Suddenly, 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 come with a late fee, if one is outlined in the lease. 

Why might tenants opt for partial rent payments?

Tenants have many different reasons for asking their landlord to consider a partial rent payment. These include:

  • Lack of funds: Sometimes, tenants don’t have sufficient funds in their bank account when rent is due. In order to buy some time, they may ask their landlord if they can pay a little up front, and the rest later. 
  • 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 price of rent or simply doesn’t want to pay in full, they might propose a partial rent payment.
  • A major 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 cost of rent until the property is compliant with regulations. 

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

Should landlords accept partial rent payments?

There are benefits and drawbacks to accepting partial rent payments from tenants. Some of the most compelling reasons why landlords consider this method of rent collection are:

  • You’re still receiving a payment: By accommodating a partial payment, you guarantee that at least some revenue is coming into your rental property business. It’s undeniable that a partial payment is better than no payment. 
  • You’re accommodating your tenants’ needs: Tenants value flexibility. Maybe they need a little extra time to come up with rent money one month. By listening to their concerns and granting them an extension to complete the payment, you demonstrate that you care about their needs. 

That said, there are certainly risks associated with partial rent payments, some of which include:

  • You may set a bad precedent: By opening the door to this method of rent collection, you risk creating a bad habit among tenants. The last thing you want is them consistently not paying on time, or missing payments. 
  • You risk elongating the eviction process: While this can depend on local laws, it’s not a good idea to accept a partial payment if you have already filed for an eviction. In that case, you may have to restart the eviction process — wasting valuable time and resources. 

Tips for landlords navigating partial rent payments 

As a landlord, it’s always important to weigh the pros and cons of a potential decision and do what’s right for you. If you do choose to accept partial rent payments, consider following these five tips: 

  1. Set clear expectations 

Communication is key. Have a conversation with your tenant about why they want to make a partial payment this month, and reinforce that this cannot become a recurring theme. Be clear about your deadline for the second payment as well.

  1. Consider a late fee 

If tenants are making partial payments outside of your typical grace period for rent collection, you may consider introducing a late fee. That way, tenants will be discouraged from resorting to partial payments too often. With Azibo’s streamlined rent collection platform, keeping track of late fees is simple. If your tenant has a balance after the due date and grace period, they will automatically be charged the full late fee.

  1. Keep accurate records

As a rental property owner, you already have a lot on your plate. Keeping track of partial payments, late fees, and more across multiple properties — and possibly states — can quickly become unmanageable. With Azibo’s monthly rent dashboard, however, everything you need to stay organized is in one central hub. All your records remain accurate and up to date — saving you the hassle of manual recordkeeping. 

  1. Check local laws 

Be mindful of local laws and how they affect partial rent payments and eviction. For example, in some jurisdictions, you may not be able to evict your tenant if they never paid the remaining balance of their rent. That’s why keeping accurate records is especially important; if you accepted a rent payment less than the full amount, you might have waived your right to collect full payment for that month depending on where you are. 

  1. Include a partial rent payments clause in your lease. Emphasize that partial rent payments cannot happen on a monthly basis — and take the opportunity to outline your late fee policy, as well. By clearly communicating with tenants in writing, you leave no room for confusion down the line.

Simplify partial payments with Azibo

Whether you decide to accept partial rent payments or not, a simple and streamlined rent collection platform is a must. With Azibo, landlords now have the option to enable partial payments and allow tenants to submit up to four payments toward an invoice. 

The process only requires a few simple steps: 

  1. Sign into your Azibo account
  2. Go to the Properties tab
  3. Locate the correct property and tenant unit 
  4. Click the unit and find the renter’s payment terms
  5. Turn partial payments ON using the toggle and set a minimum payment amount (Azibo has a $100 minimum)

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

  1. Click on the invoice in the Payment Center or Total Monthly Rent dashboard
  2. Click on the invoice arrow to expand 
  3. Turn partial payments ON using the toggle for this invoice 

Built for landlords, Azibo’s intuitive platform helps you streamline rent collection, mitigate risks associated with partial payments, and ensure your investments stay protected. 

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