Partial Rent Acceptance

Posted by PRO Wed, 14 Apr 2010 16:57:00 GMT

Partial Rent Acceptance
by Harry A. Heist, Attorney at Law
In the current economic situation, landlords are beginning to get desperate for the rent. Any rent. Tenants are in financial hardships. and rather than choosing not to pay rent at all, many will tender a partial payment of rent with possibly a promise to pay the rest at a later date. Many landlords faced with this scenario will accept the partial payment and may or may not receive the rest of the rent at a later date. Other tenants will pay partial rent for reasons that have nothing to do with their ability to pay, but rather due to some complaint they have concerning the premises that has not been rectified by the landlord. This form of self-help on the part of the tenant manifests itself in the tenant sending the landlord a partial payment, possibly accompanied by a letter indicating why the payment is partial and demanding some sort of repair. In either case, the landlord is forced to make a choice to accept the partial rent or return the rent.
The Financial Hardship
Most commonly, the partial rent payment tender is due to a financial hardship the tenant is suffering. The tenant feels that by paying some rent to the landlord, the landlord will be appeased enough to hold off on filing an eviction action. This partial payment may or may not be accompanied by an explanation and a promise to pay the rest of the money at a future set date. Is it legal to accept a partial payment? Absolutely. Can you simply accept the partial payment and then give the tenant a Three Day Notice for nonpayment of the balance? Yes, in most counties. The more important question is whether you should accept a partial payment due to other ramifications with the potential to cause future legal problems.
The “lone” partial payment
There are usually two types of partial payments given in the financial hardship setting. One is the payment accompanied by a letter promising the rest of the money at a later fixed date, and the other is what we call the “lone” partial payment, which is simply the check or money order in the envelope for less than the full amount of rent. If you accept the lone partial payment, you can and should serve the tenant with a Three Day Notice for the balance of the rent in most counties. If the balance is not received by the expiration date, you can then file an eviction against the tenant.
The partial payment and “letter”
If the partial payment is tendered to you and is accompanied by a letter in which the tenant states when the next payment will be made to you on the balance, it is a bit more risky to accept the payment. While no real contract between you and the tenant is created by such a letter or promise to pay, an inference can be made that by accepting the partial payment, you are accepting it under the terms laid out by the tenant. In other words, by taking the money, you have agreed to the payment arrangements. Unless you are agreeing to the proposed payment arrangement, we do not recommend accepting the partial payment by the tenant in this situation.
The law and the partial payment
Florida law does not address the legal ramifications of accepting a partial payment and then giving a Three Day Notice to the tenant and filing an eviction. Most Florida judges have no problem whatsoever with you accepting a partial, serving the notice and proceeding as usual. Some, and fortunately very few, judges feel that by accepting a partial payment form the tenant, you waive your right to file an eviction in the month that the payment was made. Always check with your attorney to see if the judge or judges in your county have this view on partial payments. You would not want to be in a position where accepting a partial payment could result in tying your hands for the rest of the month.
The Waiver issue
One of the big issues in Florida law is the “waiver issue”. Simply put, this means that by engaging in a course of action contrary to the terms of your lease, you have created a new payment method, and that you have possibly waived your rights to enforce the lease as it is written. Your course of conduct in allowing partial payments may be used by the tenant to show that since partial payments were made a few times, this has now become a permissible way to make payment, and you as the landlord are “stuck” with is. The waiver argument can be compelling in court, and judges are often unsympathetic to the landlord who does not enforce the lease terms on multiple occasions and then suddenly decides that partial payments will not be accepted. The landlord may have “waived their rights” and are then “estopped” from enforcing the lease terms. Many leases have clauses which clearly provide that the landlord’s deviation from the lease terms will not create a waiver, but these clauses can become meaningless if the tenant can show that the landlord has a pattern of not enforcing the lease.
Should you accept partial payments at all?
In a financial hardship situation, this is purely a business decision. Refuse them, and possibly you will get nothing, the tenant will skip out on you, or you will have to evict. Accept them, and live with the consequences.
The “Non-financial Hardship” partial rent payment
While non-financial hardship partial rent payments are often financial hardship cases in disguise, there are many times when a tenant feels that for some reason he should not have to pay the full amount of rent. There may be completely legitimate reasons, and the reasons can be many. The tenant has a huge water bill and feels that there is a leak. The a/c has been out for days. The electric bill is excessive, possibly due to an a/c problem. A toilet is broken. A stove is broken. The list can be endless.
Can a tenant withhold rent?
The short answer is yes, under limited circumstances. This article will not address how, why and the mechanics of a proper tenant rent withholding, but rather what to do when the tenant simply takes it upon himself to deduct an amount from the rent.
The tenant has been making complaints
Although every situation is unique, you may deal with the tenant making complaints about an alleged problem that is not addressed for whatever reason, and when the rent check arrives, it is a partial payment of rent. In a situation such as this, your acceptance of a partial rent can be governed by the aforementioned information in this article, but the chance that the rest of the rent will be paid later in the month is diminished greatly, as the tenant feels that the value of the rental has been diminished and has taken matters into his own hands. We recommend that you do not accept this partial rent payment, and you address the tenant’s issues immediately, asking your attorney for an opinion as to whether the tenant has a right to withhold rent, or that allowing a reduced rent is the proper route to take. Remember that if you allow a tenant to pay you a partial rent payment just one time because she is not satisfied with something in the unit, you open yourself up to the tenant continuing to make partial rent payments in the months that follow under similar pretenses.
The tenant gives you complaint letter along with the partial payment
Along with the partial rent payment, the tenant provides you with a letter stating why the rent is only being partially paid and outlines the complaints the tenant may have, or even attaches bills for out of pocket expenses the tenant may have incurred in repairing something. This is probably the most dangerous time to ever accept a partial rent payment. By accepting the partial payment along with the tenant’s letter, a good argument can be made that you have agreed to accept the amount paid by the tenant as full settlement of the outstanding rent balance. By accepting the money, you are arguably accepting it in accordance with the tenant’s terms, and you have also potentially opened the door to the tenant doing future repairs. In such cases we recommend that you not accept the partial rent payment and return it immediately. Again, if there are items that need to be addressed, they certainly should be to avoid later problems or litigation.