Knowing the best way to deal with a partial rent payment is essential for running a successful rental business. For example, you may face a situation where a tenant only pays part of the rent. Maybe a trusted tenant needs a few more days to pay the monthly rent price. Or you might need to evict a tenant for nonpayment of rent, and you can’t accept a partial payment. And sometimes, roommates who split rent each make a partial payment for their share of the rental cost.
What is the best way to handle partial rent payments? Are there circumstances when accepting part of the rent money is a good idea? When should you always block a rental payment that’s not for the total balance of rent? This article looks at the pitfalls of accepting a partial rent payment.
What is a Partial Rent Payment?
Partial rent payment is when a tenant only pays part of the rental amount by the due date. For example, a partial payment isn’t when a tenant pays monthly rent in installments. So, a partial payment is when the grace period is over, and the tenant hasn’t paid the total amount.
Therefore, a partial rent payment is a late payment, and you can—and should—charge the appropriate fees. Typically, the lease agreement should specify that rent should be paid in full by the specified date each month.
How to Block a Partial Payment
Stopping a tenant from paying part of the rent depends on your rent collection method. For example, suppose a tenant sends a partial payment check. In that case, you should avoid cashing the rent check. Also, if you use a rental app for landlords, ensure there is a “block partial payment” option.
However, blocking a partial payment can be an issue when using a digital wallet to collect rent from tenants online.
When It’s a Good Idea to Accept a Partial Payment
There are a few scenarios when a landlord could accept a partial payment. However, these situations are usually relatively rare. You should always proceed carefully if a tenant can’t pay the entire month’s rent. Nevertheless, there are some cases when you could permit a partial payment.
Suppose you have a trusted, long-term tenant who is experiencing temporary cash flow difficulties. They have a history of paying rent on time, but an illness or job loss has caused a short-term setback. In that case, you may decide to accept a partial payment and work out a payment plan with them.
You could accept a partial payment when co-tenants are living in a flat. Each roommate makes a split rent payment to pay their portion of the month’s rent. However, it’s essential to receive the total amount by the due date.
You may allow tenants to pay rent based on their income schedule. For example, many renters in the gig economy or self-employed workers prefer making weekly or bi-monthly rent payments. In this case, you could accept a partial payment, ensuring that they pay rent in full each month.
When to Avoid Accepting a Partial Rent Payment
In general, it’s never a good idea to accept a partial payment from a tenant. First, accepting a partial payment of rent can mess up eviction proceedings. However, going easy on a tenant who makes a late rent payment sends the wrong message. Therefore, you should back it up with a late charge.
Never accept a partial rent payment during an eviction process
The primary reason to avoid accepting part of a rent payment is that it can derail an eviction process.
After serving an eviction notice for nonpayment of rent, a tenant usually has the chance to “quit or cure.” They either leave the rental property or pay rent in full, including late charges.
However, landlord-tenant laws in many states halt eviction proceedings if a tenant pays a portion of the rental amount. As a result, you would have to wait until another due date passes to take eviction action and restart the lengthy and costly process. Therefore, allowing tenants to make partial payments makes it almost impossible to evict a delinquent tenant.
Related reading: How to avoid evicting a tenant.
Accepting a partial payment could be discriminatory
Another reason to avoid the trap of allowing partial payments is that a tenant could accuse you of discrimination.
The Fair Housing Act makes it illegal for a landlord or rental property owner to act in a discriminatory way. For example, this could happen if you let one tenant make a partial payment but not another one. If the tenant learns about this, they could start a discrimination lawsuit because you didn’t act fairly and impartially.
So, if you let one tenant be flexible with their payment schedule, you must let all of them do the same. This situation could severely impact your cash flow if many tenants start paying rent late.
Partial payments are hard to track
One reason to avoid partial rent payments is that they are challenging to track. Accepting part payments from several tenants will cause havoc in your accounting system. Unless you use a trusted rental app for landlords, you will spend most of your time tracking split rent payments.
Can You Block a Partial Payment Using a Digital Wallet?
What about using a peer-to-peer payment service like PayPal, Venmo, or Zelle for rent collection? Unfortunately, money transfer apps make it impossible to stop tenants from paying part of the rent. This means that you should avoid digital wallets for rent payments.
Here’s an example of what could happen if you allow tenants to Venmo to pay rent. Suppose you file for eviction due to a delinquent rent payment. In that case, the tenant must pay all unpaid rent or vacate the rental unit. However, you can’t decline a rent payment with Venmo. Therefore, they could send you a few dollars, and you are back at the start.
How to Deal With a Partial Rent Payment
Handling partial rent payments depends on individual renters, your late rent policy, and whether you are evicting the tenant.
Here are five ways to handle a tenant who makes a partial payment.
1. Understand their situation
The first step is to communicate with your tenant. Try to learn about their personal circumstances and why they can’t pay rent in full. In some cases, it may just be a one-off case, and they can make up the outstanding rent the next month. In other cases, the cash flow difficulties may be long-term.
2. Check landlord-tenant laws on partial payments
Check your local and state laws before allowing a tenant to make a partial payment. In many places, accepting any amount for a rent payment could constitute an effort to “cure” the situation.
3. Enforce a consistent policy
Ensure you have a partial payments policy that applies to all tenants equally. This should include a grace period and a late fee policy for overdue rent payments. It is vital to enforce this policy every time a tenant misses a rent payment. Remember—a partial rent payment is a missed payment.
4. Put everything in writing
If you decide to let a tenant pay a portion of the rent, ensure you have everything in writing. This includes a lease addendum to the rental agreement for delayed or partial rent payments. The agreement should clearly state the payment terms and consequences.
5. Use Rentdrop to block incomplete rent payments
The best way to handle partial payments of rent is to use Rentdrop. This online rent payment system gives you payment controls to block partial payments if necessary. Therefore, if you have taken eviction action against a delinquent tenant, you can switch on the “block all partial payments” option.
However, suppose you decide to let a tenant make partial payments. In that case, Rentdrop’s handy rent receipts and payment tracking features make it straightforward to keep tabs on rent payments.
Other Reasons to Use Rentdrop For Online Rent Payments
Making it easy to block a partial payment is just one way how Rentdrop simplifies online payments from tenants. However, several additional features benefit landlords and tenants. Here are some ways Rentdrop simplifies the rental process.
Collect rent from tenants for free: It costs nothing to use Rentdrop for rent payments. If you’re a landlord, you never pay any transaction fees for accepting direct deposits, debit card, or credit card rent payments. Additionally, tenants don’t get charged for paying rent by debit card or ACH bank transfer.
Block a partial payment: The best feature regarding late rent payments is that Rentdrop lets landlords stop partial payments. This feature is invaluable if you must evict a tenant.
Automatically calculate late fees: Another helpful feature for landlords is that Rentdrop automatically calculates late fees. This can save you a lot of administration time and avoids mistakes. A late fee policy also gives tenants an incentive to pay rent on time every month.
Send payment reminders to tenants: Rentdrop lets landlords set up automatic rent payment reminders. This feature is a simple way to minimize late payments and improve your cash flow situation.
Fast access to rent receipts: With Rentdrop, you always have access to your tenants’ rent payments. You can use this to track payments and instantly see each tenant’s payment status.
Rent reporting to credit bureaus: A handy feature coming soon to Rentdrop is reporting rent payments to the major credit bureaus. Offering tenants this service lets them build a healthy credit history. However, it also creates a strong incentive to pay rent on time every month.
Automatic rent payments: Tenants can use Rentdrop to set up recurring payments, ensuring they never miss paying rent. They only need to set the monthly rental price and their payment schedule. Then you can expect regular rent payments month after month.
Rent splitting for roommates: A handy feature for tenants is that roommates can use Rentdrop to split rent. Rentdrop makes each co-tenant responsible for their share of the rent. This feature also benefits landlords because you can block a partial rent payment from an individual tenant.
In Conclusion — Partial Rent Payments
It’s vital to have a policy to deal with partial rent payments. This could mean allowing roommates to make partial payments monthly to make up the entire rent amount. However, it’s crucial to block all partial payments from tenants facing eviction.
Rentdrop is a convenient solution for rent payments. It gives you several payment controls to protect your rental units and property investment as a landlord. However, handy payment features also make it easy for tenants to pay monthly rent on time every month.
Why not sign up with Rentdrop today to discover how easy it is to collect rent online from tenants.