The pros and cons of accepting partial rent
In Baltimore COUNTY–as of writing this in December 2015–a landlord can accept partial rent from their tenant and still continue the eviction process until it is paid in full. Several months ago, Baltimore CITY changed their law so that if landlords accept partial rent, they can not continue the eviction process.
I personally find this new law in the City to be ridiculous. How does it make any sense to not be able to at least try to recoup some money before eviction?
When I have renters behind in the County, many times they pay partial payments up until the eviction day and are able to stop eviction. I like the insurance of being able to receive some money but still evict if they don’t pay 100%. However, now I’m torn. I’ve come to find that partial payments means more accounting on my part. It’s more work. It can get confusing especially if there are several partial payments made. So I looked into Baltimore County law regarding refusing partial payments. I could find nothing, so I spoke with a paralegal, who also stated, “there is no law saying that you can’t refuse partial payments.”
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So what are the pros and cons?
Pros of accepting partial rent:
- Ability to receive money and still continue the eviction process (Baltimore County only)
- Many tenants like the flexibility to make partial payments as they receive paychecks because they lack money-saving skills.
Cons of accepting partial rent:
- More accounting, work, time spent for the landlord.
- Possibility for potential confusion, and therefore, dispute from the tenant.
- Possibly receiving no money and following through to eviction.
After having a couple of tenants who have fallen behind and can’t seem to catch back up, I’ve become fatigued with doing the extra accounting due to their multiple partial payments. It takes up my time. It can become confusing. I have a great spreadsheet that does the math for me, but it still requires extra work for me due to their lack of financial responsibility. So I’m considering moving to this no-partial-rent policy. 99% of the time, the tenant really wants to stay and finds a way to come through and make payment. Sometimes, they’ve even made no payments until the night before eviction, where they suddenly pay in full.
What are your thoughts on accepting or rejecting partial rent?
Comments (4)
Nicole, yes that would get confusing... not just for your but also for your tenant: depending on how your payment processes are set up, I think it can open you up to a "I-gave-you-money-for-that"/"no-you-didn't" debate that I just wouldn't want! I really like the all or nothing approach to rental payment but, as you point out, there are benefits and drawbacks to both options.
Kent Clothier, over 8 years ago
@Nicole W.
We've had a tenant who couldn't manage her money, but was aware of the fact. Once we had her caught-up, we gave her a deposit-only bank card and she would make weekly or bi-weekly deposits towards the next month's rent. Using this approach she was able to have her rent paid by the first of the month.
Here we can continue with a Notice to Vacate or eviction while receiving partial payments, so we typically do try to collect as much as we can. Even when the tenant does catch-up, if they display a repeated pattern of falling behind, we will serve notice to terminate prior to the end of their lease term, rather than renew.
Roy N., over 8 years ago
Have you thought about offering your tenants a bi-weekly payment schedule. In this system, they pay half the rent every two weeks.
As you point out, tenants often have problems budgeting their money. If they are paid every two weeks, they can pay each time they get a paycheck which keeps them from spending the money before the beginning of the next month.
Besides the fact that you are more likely to get paid, you will actually collect 13 months of payment since there are 26 pay periods in a year.
In addition, you can also add on an accounting fee of $5-10 per payment to cover the additional time needed to track the payments.
Finally, you may be able to have the tenant's employer use a direct deposit system to automatically deduct your rent payments before the tenant gets the money. The tenant will, of course, have to agree to this.
I have rentals in Baltimore City and wonder why the city doesn't understand the connection between its pro-tenant laws and regulations and the lack of decent, affordable housing.
Alan C., over 8 years ago
I utilize Quickbooks for my accounting, so it automatically generates an invoice for rent and statement charges for late fees, etc. It's no trouble at all to accept partial payments, and I have no laws like Baltimore City that would stop eviction. If I stopped accepting partial payments I would probably double my eviction rate.
Michael Bagnall, over 8 years ago