How to Handle Partial Rent Payments

If you’ve been a landlord for a long time, chances are you’ve had tenants ask to make partial rent payments. While the situation is never ideal for landlords, there may be some circumstances where you let it slide. Today, we’ll review what constitutes a partial rent payment, whether or not landlords should consider them, and how to handle them when they happen. 

Contents of This Article: 

• What Is a Partial Rent Payment?
• Should Landlords Accept Partial Rent Payments?
• Pros and Cons of Accepting Partial Rent Payments
• How to Handle Partial Rent Payments
• Simplify Rent Collection With BMG

What Is a Partial Rent Payment?

A partial rent payment is exactly what it sounds like–a portion of the monthly rent amount. For instance, if you charge $1,500 monthly for rent and your tenant only pays $900, they gave you a partial rent payment. Now, does this mean the rent is late? Ultimately, it’s up to your discretion. 

Some landlords consider partial payments late because they have not received the full amount on the due date. On the other hand, some landlords don’t label partial payments as “late” as long as they are fully paid within the accepted payment timeframe. 

Why Would a Tenant Pay a Partial Amount?

There are plenty of reasons why a tenant may only pay a portion of the rent when it’s due. Here are a few that you may come across as a landlord. 

• Lack of Funds- One of the most common reasons for partial rent payments is a lack of funds on the tenant’s end. If they don’t have enough for a full rent payment, they may pay as much as they can at the time and ask to pay the rest later.
• Reluctance to Pay- Rent is expensive, especially these days. So, if your tenant is frustrated with the price or simply does not want to pay in full, they may try to negotiate a partial payment.
• Ongoing Property Issues- If the property is experiencing ongoing maintenance or renovations, tenants may ask to pay a partial rent amount until it is in livable condition again.
• Unliveable Conditions- If the property does not meet living standards, tenants may withhold full rent payments until improvements are made or the property complies with local regulations.

If you’re wondering whether you or your Philadelphia property managers should accept partial rent payments, let’s review why you may or may not. 

Should Landlords Accept Partial Rent Payments?

Ultimately, it’s up to you as the landlord to decide if you want to accept partial rent payments. That said, if you do accept them, it’s important to handle them correctly. For instance, you’ll want to create an agreement with your tenant stating that they’ll pay the remainder of the rent by a certain date. 

That said, if you’ve already filed for eviction, it’s in your best interest not to accept partial payments. Some states, like California, require you to restart the eviction process if you accept a partial payment after filing in court. 

Additionally, to avoid discrimination claims, treating all tenants equally when deciding whether to accept partial payments is essential. If you need more help deciding whether or not to accept partial rent payments, let’s review some of the pros and cons for landlords. 

Pros and Cons of Accepting Partial Rent Payments

Accepting partial rent payments can have both advantages and disadvantages for landlords. Here are a few points to consider if you’re unsure whether or not to accept a partial payment. 

Pros of Partial Rent Payments

• Increased Tenant Retention- Flexibility with tenants during tough times can help maintain a positive landlord-tenant relationship, leading to longer lease terms and reduced tenant turnover.
• Maintaining Cash Flow- Accepting partial payments helps maintain at least some cash flow, as opposed to none. So, even when tenants are struggling and can’t pay the full amount, you’re at least getting some income as you wait for the remainder of the payment.
• Avoiding Vacancy or Eviction Costs- If a tenant can’t pay and you decide to evict them, you may face legal and court costs. So, accepting a partial payment can help avoid those costs and costs associated with a vacant rental unit.

Cons of Partial Rent Payments

• Increased Financial Strain- Accepting partial payments can lead to financial strain, especially if you rely heavily on rental income to cover mortgage payments, taxes, and maintenance expenses.
• May Cause Others to Pay Late- If you accept a partial payment for one tenant, you might have more tenants coming to you with partial payments, too. Continuously accepting partial payments can make it harder to enforce full, on-time payments in the future.
• Delays in the Eviction Process- As stated earlier in this article, accepting partial payments may reset the eviction process, leading to delays in regaining possession of the property if eviction is necessary.

How to Handle Partial Rent Payments

If you decide to accept partial rent payments, there are a few things you can do to safeguard yourself and ensure you get the remainder of the rent. Here are a few tips for landlords on handling partial rent payments. 

1. Find Out Why Your Tenant Needs It
2. Set a Due Date
3. Consider Implementing a Late Fee
4. Document the Partial Payment
5. Sign an Agreement With Your Tenant

Find Out Why Your Tenant Needs It

It’s important to understand why your tenant can’t pay the full rent amount. Open communication can give you some insight into their financial situation and allow you to determine if the issue is temporary or likely to repeat itself. Additionally, understanding their circumstances can help you decide whether to accept partial payments and if any alternative arrangements, like a temporary rent reduction or payment plan, are feasible. 

Set a Due Date

If you decide to accept some rent now and some later, set a firm due date. That said, the deadline should be reasonable and aligned with your lease agreement and local laws. When you come up with a date, communicate with your tenant to ensure you’re both on the same page.

Consider Implementing a Late Fee

If your tenant pays only a portion of the rent on time, consider implementing a late fee for the remaining balance. Collecting a late fee will remind your tenant you’re serious about paying rent on time and in full. 

Document the Partial Payment

As a landlord, keeping detailed records of all rent payments, including partial payments, is crucial. Additionally, provide a written receipt to the tenant specifying the amount paid, the date, and any outstanding balance. Documentation helps prevent misunderstandings and disputes over rent payments. Additionally, a receipt serves as evidence in case of legal proceedings. 

Sign an Agreement With Your Tenant

Create a written agreement with your tenant outlining the terms and conditions of accepting partial rent payments. Your agreement should include details like the amount of the partial payment, the remaining balance, the due date for the remainder, any applicable fees, and consequences for failure to pay the balance on time. Sign the agreement along with your tenant to signify both parties’ commitment to the terms. 

Simplify Rent Collection With BMG

Collecting partial rent payments can impact your rental income. However, each circumstance is different, and it’s up to you to decide whether or not to accept them. Open communication is key to ensuring you know why your tenant is late with the rent and that they know your expectations for the remaining payment. 

If you want to simplify your rent collection process, contact Bay Property Management Group. Our team of experienced property managers can help find qualified tenants who pay rent on time to ensure you receive your rental income on time and in full each month. Additionally, we can assist with any maintenance concerns or inspections you may need. 

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