Tip of the Month - April 2007
The Risks of Partial Payments
Source: Steven J. Gordon
(Attorney Neil Neumark)
Lease Issues-Journal of Property Management
What should you do if a Tenant sends you a rent check that covers
only part of the amount due? If you simply return the check and
demand to be paid in full, you may be giving up the chance to collect
anything from an unreliable Tenant. But cashing or depositing a partial
payment check can be risky. You could lose your right to collect the
rest of the payment. You could even give the Tenant a permanent rent
cut.
The risk of accepting a partial payment is much lower, however, if your
Lease has a clause that protects your rights if you accept a partial
payment.
Look for a clause saying something to the effect that your acceptance
of a partial payment does not mean you have agreed to a lower rent and
does not amount to an “accord and satisfaction”.
(Accord and satisfaction, in legal terms, is an agreement to release
the other party from the full amount of what is legally owed by
accepting something less.)
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