The Situation
As we prepare for the upcoming year, we offer practical, straightforward guidance on handling (rejecting) partial or late payments in a way that doesn’t provide a tenant with grounds to argue that an insufficient payment was “accepted.”
Your Risk
If it appears you “accepted” any partial or late payment, the court can find your action constitutes a “waiver” of the notice, thereby invalidating it.
Actively Rejecting Partial or Late Payments after Serving Pay or Quit Notice
When you serve a pay or quit notice, a tenant may offer an unacceptable payment. This typically happens in one of two ways:
- The tenant offers a partial payment during the notice period that does not satisfy the full.
- The tenant offers payment after the notice period has already expired.
In both cases, you must actively reject the payment if you wish to enforce that notice.
If you accept the payment or fail to actively reject it, your acceptance may waive the breach of the rental agreement that initiated the notice to pay or quit. If a court finds this to be the case, you lose the right to proceed with the eviction based on that notice. The process must start over with a new notice, resulting in delays, additional costs, and more time the non-paying tenant remains on the property.
The guidance below is not based on any specific statute or code section. These are practical, defensive measures designed to build a clear record showing that you never accepted a partial or late payment. Providing documentation of the actions below can neutralize a tenant’s waiver defense if your case goes to trial.
Guidance to Reject a Payment
1. Reject the payment offered in person.
If the tenant comes to the management or rental office and attempts to offer a payment that should be rejected (partial or late), tell them the payment will not be accepted and that they need to take it back.
2. Contact them to pick it up or return it personally (if practical).
If the tenant leaves the payment through a drop slot or drop box at the property, call them and ask them to pick it up. If the management/rental office is on the same property as the tenant’s dwelling, you can try handing the payment back to them directly. Tell them they must come get it by a specific date. Otherwise, it will be mailed back. If they do not pick it up, proceed to the next step.
3. Mail it back via Certified or Registered mail.
Mail the payment back to the tenant. Include a brief cover letter explaining that the enclosed payment has been rejected. Use a mailing method that allows tracking and delivery confirmation. Or, use Registered Mail (includes insurance if needed), though it is slower. If the tenant refuses delivery, proceed to the next step.
4. Hold onto the returned envelope.
If the mailed payment is returned, keep the unopened envelope. Bring it to trial if the case proceeds that far. We can return the payment to the tenant at the courthouse. Or, if we settle and the tenant has sent certified payments (which can be deposited), then we can accept those tendered payments.
The Key Takeaway
There is no bright-line rule on how quickly you must reject and return a payment. But you can’t just hold it for weeks or months. Do not deposit the payment. Notify the tenant that the payment is being rejected. Then send it back if they will not pick it up. The sooner the payment is returned, the sooner the waiver issue is resolved.
If you have questions about a specific situation, please contact our office before taking action.
You can reach us at evictions@mehiganlaw.com or call us directly.
Mehigan Law is Here to Help
At Mehigan Law, we’re here to help you make informed decisions that protect your interests and improve your bottom line. Please don’t hesitate to contact us if you have questions or need assistance.
Sincerely,
The Mehigan Law Team
