By Mark Zinman | Zona Law
A person would think that if they are becoming a landlord, one of the most important things they can do is make it easy for their residents to pay the rent. You don’t want to make a resident jump through a bunch of hoops, just to get the rent. Further, for a new landlord, it seems entirely logical to take whatever amount of rent that a tenant is able to offer; isn’t some money better than nothing? The logic sounds good on both of these strategies, but they can have a significant downfall if the landlord is not careful.
Let’s start with the basic rule: A landlord does not have to accept an offer of a partial payment from their tenant. However, many landlords want to work with their tenants to avoid not getting any money. They would rather take half, than nothing. Under A.R.S. § 33-1371, a landlord that accepts a partial payment is prohibited from proceeding with an eviction in that month unless they obtained a written payment plan signed by the tenant. This does not mean that a landlord has to accept a partial payment. A landlord always has the right to refuse money unless it is the full amount. This statute simply states that if a landlord chooses to accept a partial payment, they must get a written payment plan outlining the parties’ rights if they plan on proceeding with an eviction.
This is especially important because it is a well-known law among tenants. Many tenants try to give their landlord a small payment, maybe $100 and lie about paying the balance. If the landlord accepts that money, and no agreement is signed, the landlord cannot pursue an eviction that month, even if the full rental amount is $1,500.00. While a landlord can serve the tenant the next month and pursue an eviction, in such a scenario, the tenant effectively gets to live in the property for two months, for the cost of $100.
This law gets complicated when landlords permit their tenants to make direct deposits into the landlord’s bank account. While this sounds great because it saves time and confusion, it completely shifts all control over to the tenant. A tenant can deposit $1.00 into the landlord’s account, and the landlord has no control over accepting it. In such cases, we tell landlord’s to immediately send a certified letter saying that the funds are being rejected as a partial payment and will be returned once the funds clear. This, of course, requires that a landlord vigilantly track their bank account to ensure that there are no incorrect payments. In other words, while trying to make things easier for the tenant to pay rent, the landlord just gave themselves more work.
A better method would be to use an app that requires the landlord to approve the funds before the money is deposited. For example, certain banks have a feature in which a mobile app can be used to send funds. Before the funds are actually deposited into the landlord’s account, they have to be reviewed and accepted by the landlord. This ensures that landlords get the full rent and late fees to which they are entitled. Alternatively, there are third-party vendors that offer a similar feature. It doesn’t matter how a landlord sets up rent payments, a landlord just needs to make sure they retain control.
Remember, though, Arizona is a cure state so if a tenant offers the full amount before an eviction judgment in a non-payment of rent case, the landlord has no discretion and must accept the payment. This is the opposite of the partial payment statute, in which the landlord doesn’t have to accept the partial payment.