Can you, as a landlord, refuse rent payments? The answer to this question is both nuanced and surprising.
Sometimes accepting a payment could disadvantage you. For example, it could lead to legal issues in eviction processes and make tenants feel like they have been treated unfairly during removal. Other times it could benefit you, especially when you require cash flow.
To complicate matters further, rules determining whether landlords can refuse rental payments vary by state. Therefore, understanding both state law and your lease agreements is critical when determining whether to accept a payment from a tenant.
If that sounds complicated, don't worry. This guide explains a tenant's rights and what happens when you refuse rent payments. Here's what you need to know:
TL;DR
The short answer is that yes, landlords can refuse rent payments in some legal situations. These include when tenants pay through unapproved methods, during active eviction procedures or paying partially. As we will discuss, accepting rent in some scenarios can lead to a reset of eviction timelines and make it more difficult to remove non-paying renters.
This guide explains some common scenarios where rent refusal may be required and how to protect yourself as a landlord. We also explore renters' rights in these situations.
Can a Landlord Refuse a Rent Payment?
Generally speaking, landlords must accept rent when paid in full and on time (as per the lease). However, there are occasions when you can refuse to accept rent.
The most common reasons include:
- Active eviction processes (you’re trying to evict a renter who hasn't paid before)
- Using unapproved methods to pay rent (for example, trying to use cash when you only accept online transfer)
- Partial payment attempt (only paying $2,500 when the full monthly amount is $3,000)
Refusal matters most when you want to proceed with an eviction. Accepting a partial payment from a renter can undermine the legal process to remove them. Courts may view this type of payment as an attempt by the renter to avoid eviction. In many states, this can result in you having to restart the eviction process.
If you receive a payment from a tenant, return it to their bank account as quickly as possible. Alternatively, store it in a third-party account or in an escrow (allowed in some states). Do not use the money directly in your rental business or person for personal use.
Partial Payment Issues: Should Landlords Accept?
While partial payments may improve the appearance of your rent roll, accepting them is not always advisable. As mentioned, doing so can weaken ongoing evictions or even reset the timeline from scratch.
The best way to deal with these is to outlaw them in your lease clauses. Clearly state you will not accept partial payments without written approval.
Occasionally, you can offer a partial rent payment as a rent concession. For example, you might offer the rental for US$900 for the first month, and then US$1,600 thereafter. This type of partial rent is allowed because it’s written directly into the rental documents.
However, you are within your rights to charge late fees if a tenant only pays partial rent mid-way through their term with you. Mark it down as a non-payment and follow the rules set out in your rental agreement with them.
This is typically why most landlords prefer to not accept partial rent and will issue notices to the renter instead. Remember though, if it is within your current written agreement, you may need to accept it for now.
When Landlords Must Accept Rent Payments
There are circumstances where you must accept rent payments. For example, you must usually accept payments that fulfill the following conditions:
- Made in accordance with the original lease documents
- Paid in full
- Paid on time
- Paid via an approved method
If you do not follow these rules, then you may be breaking the original lease agreement. The only exception is when you are currently in an eviction process or the tenant has broken the terms of the lease in some other way (such as causing extensive property damage).
Please note that you do not have to accept payments after the lease expires. If a renter wishes to continue living in your property, they must sign a new lease.
The Fair Housing Act provides a framework for best practices for consistently accepting rent payments and avoiding discrimination claims. Read your obligations to ensure you provide tenants with equal access to housing. Avoid refusing to rent, sell or finance housing based on protected characteristics, like race or religion.
Landlord’s Refusal During Eviction Proceedings
In most cases, you should accept a rent payment, especially when renters attempt to pay it in full. However, you can refuse it during eviction proceedings.
Once you decide to file an eviction notice, pause rental payments (even if offered). If you don't, it can invalidate the process in some jurisdictions.
Note that renters in locations like New York, Texas, and California have more rights. If they pay you late but in the full amount and you accept it, it may interrupt the legal process. Therefore, focus on removing non-paying tenants, and clearly communicating your refusal to accept their money in writing.
From the tenant's perspective, a refused payment (even if in full) confirms that eviction proceedings are underway.
If you require more information on removing tenants, read our article, What is Eviction? A Landlord's Guide to the Legal Process.
What Do State Laws Say About Refusing Rent? Depends.
State laws regarding refusing payments can vary. Therefore, check the rules that operate in your jurisdiction for best results.
- California Laws: You must serve a new 3-day notice if you accept partial rent after serving a pre-existing 3-day notice. Also, if you accept rent after filing for eviction, it can waive your right to evict the tenant during that period, requiring you to restart the process.
- Texas Laws: Landlords can refuse partial payments if the lease requires the full payment by a specific date. If you accept any rent (including partial rent), after filing notice to vacate the property, it also waives your right to proceed.
- New York Laws: Accepting a partial payment during a non-repayment case doesn't automatically stop the eviction. However, if tenants pay all of the previously owed rent before authorities can issue a warrant, it can vacate the eviction.
Unfortunately, accepting payments in most areas can lead to constructive eviction claims. This can also lead to tenants claiming a rights violation.
If you have a tenant behind on rent, consult a lawyer with expertise in your area. Ask them about local and state law, and how you should handle missed payments.
Tenant Rights: When Landlords Refuse Rent Payment
Tenants have various rights when landlords refuse rent payments. For example, they can request written explanations for why the rental payment has not been accepted. Tenants can also review the lease agreement to check to see whether refusing rental payments is permitted, given the circumstances.
Additionally, tenants have protection against bad faith refusals. Sometimes landlords can issue unjust eviction notices or use other methods, like harassment, to push a tenant out unethically. The law protects against these methods in most jurisdictions.
How to Prevent Rent Payment Refusals and Disputes
As a landlord, the best policy is to set clear lease terms. Tell your renters about your partial rent payment policy (i.e. you don’t allow it) and your acceptable payment methods (such as bank transfers). Be clear on due dates, especially if you accept flexible payment options.
- Always use rental property management software to ensure nothing falls through the cracks.
- Consistently enforce payment schedules and know what’s owed to you, regardless of any flexible arrangements you may have.
- Accept payments using consistent, approved methods for easier tracking.
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FAQ
Can landlords refuse payment in full?
Yes, landlords can refuse rental payments in specific circumstances, such as when tenants are withholding rent or when eviction processes are underway.
Can landlords refuse rent for no reason?
Landlords cannot refuse rent for no reason. Attempts to do so could fall under bad faith.
What happens if a landlord refuses rent payment that’s valid?
If a landlord refuses a rent payment, the tenant can seek legal help. Renters following the lease may be able to use legal procedures and state laws to remain in the property until the end of the lease period. Tenant rights require landlords to provide a valid reason in rent cases where the lease is being followed and the full amount has been paid.
