As a New York rental property owner, the prospects are that eventually, you’ll have a tenant ask if they can make a partial rent payment. While you may be tempted to accept it, thinking that something is better than nothing, the truth is that accepting even one partial rent payment can lead to a host of problems later on. While there are ways to accept a partial rent payment and mitigate the risks that come with it, for most landlords, the better course of action in most situations is to take a firm stand and insist that your tenant pay their rent in full. In what follows, we’ll discuss why accepting partial rent payments can be so problematic and how to navigate this tricky situation successfully.
Late Fee Disputes
Tenants may think they can avoid being charged late fees or other penalties outlined 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 occur if no payment was made. Few tenants like late fees and may object or refuse to pay. If your tenant should decide to challenge that late fee in court, there’s a good chance 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 poses the risk of running headlong into a discrimination lawsuit. Federal Fair Housing laws are designed to protect tenants in certain protected classes from being treated unfairly by landlords. If you deny a tenant’s request to make a partial rent payment, and they find out that you allowed a different tenant to do so, they could argue in court that you’ve discriminated against them. Even if you successfully 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 understand how hard it can be to re-establishclear boundaries with some tenants once you’ve made an exception to the rule. If you allow your tenant to make a late or partial payment without penalty one time, the chances are high that they will try it again – and push for more time or more leeway the next time. They may also start to believe that since you didn’t enforce one provision of the lease that you’ll be willing to overlook other violations, as well. You can avoid boundary-testing tenants by clearly defining your expectations in your lease documents and then sticking to them.
Should the situation become a worst-case scenario and you find you must evict a tenant, accepting a partial rent payment can make a real mess of the eviction process. In most states, accepting even one dollar of rent payment from a tenant after you’ve started an eviction will void the process entirely. Not only will you have to start the entire eviction process over again from the very beginning, but you will be stuck, unable to collect back rent payments while the eviction process takes its course. As relations with your tenant will inevitably deteriorate, the entire situation is likely to become increasingly difficult for everyone the longer it goes on.
Navigating Partial Payments
Fortunately, there are proactive things you can do to avoid some of the more common risks associated with partial rent payments. These include:
- Setting Clear Expectations. Detail your rent payment policy in your lease documents, including your policy on partial rent payments. This can help you clearly communicate your expectations to your tenant and reduce the chances that they will try 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. Be sure to outline the consequences of any additional requests or failure to pay the rest of the past-due rent as agreed.
- Accept Multiple Forms of Payment. If your tenant comes up short on cash, one way that you could avoid partial payments is to let them make their rent payment with a credit card or another form of payment. Many new payment methods offer instant transfers and can offer your tenant a little extra convenience in a pinch. Just be sure not to accept a personal check, especially a post-dated one. Some tenants will try to “float” a bad check to buy time, but if the check bounces, you’ll end up being the one who gets hit with bank charges.
Knowing how to handle partial rent payments is just one small part of successfully managing rental properties. It’s a big job and not one for the faint-hearted. But if you would like to reclaim your time and spend it doing other things, why not hire Real Property Management New York Gold to handle the day-to-day tasks your properties need? Our New York property managers will work directly with your tenants to ensure that things are done professionally, legally, and efficiently, lending 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.