REFUSING RENT

 

Why would you ever want to refuse rent? The resident may be currently under eviction, in continuing noncompliance with some other term or condition of the lease, holding over, or making a partial payment. In these cases you would not want to accept rent, but rather you will want to refuse the rent payment, as it could interfere with the resident removal process. The problem is that the resident came to your office, paid your front desk person and received a receipt showing that payment has been made! Have you accepted rent? Has a waiver been created such that the resident now cannot be removed? This article will deal specifically with the “acceptance of rent” and the “receipt” given to the resident, rather than how to return the “accepted” rent to the resident.

 

Rent Acceptance and Evictions

 

Accepting any rent during an eviction without the parties properly entering into a stipulation is a sure way to kill an eviction action. Most managers are aware of this and know that when a resident attempts to pay, the consequences can be severe. If a resident attempts to pay the rent, the manager will usually refuse the rent and call the attorney for guidance. Possibly a stipulation will be entered into, or the resident will simply be told that rent cannot be accepted. Accepting or even holding any rent payment from a resident under eviction can have dire consequences to the eviction action.

 

Rent acceptance During Noncompliances

 

Less obvious are the situations in which a resident may be in some kind of lease noncompliance and tries to tender the rent during this lease noncompliance. Examples of continuing noncompliances include unauthorized pets, code violations, unauthorized occupants, or some other uninterrupted, ongoing violation of the lease. Accepting the rent from the resident during a continuing noncompliance creates a serious, potential waiver and estoppel problem, in that the manager is basically giving the resident the permission to continue living on the premises for another month, even though there is a noncompliance. Many managers think that they can accept the rent and then quickly turn around and evict the resident for some violation of the lease not involving rent. This is a classic case of “trying to have your cake and eat it too”, and it is not good practice. Following is a typical situation: a resident is given a Seven Day Notice of Noncompliance with Opportunity to Cure on May 26 for an unauthorized pet, then comes in on June 1 and pays the rent. Can the manager turn around and terminate the tenancy? Probably not, if the rent is accepted.

 

The Accidental Rent Acceptance

 

In a very small company or when a manager is in complete control of rent acceptance, the manager can easily refuse the rent, explaining to the resident that rent cannot be accepted, possibly because an eviction action has been filed or the resident is in noncompliance. The resident comes in to the office, is recognized by the manager, and the manager is fully aware of the situation. This is the easy case. The problem starts when a resident waltzes into a rental office, hands a check or money order to the person at the desk that has no idea about the current eviction or noncompliance, and the resident is given a receipt and leaves. The manager may discover this immediately or even a couple days later. Possibly the rent has even been deposited! Now we have a big problem. The resident has tendered the rent to an employee or agent of the manager, the rent has been “accepted”, and potentially the manager’s ability to remove the resident has been compromised. Will a judge consider this “rent acceptance”?

 

The Not So Perfect Solution

 

In a perfect world, your front desk person or employee would know exactly who was under eviction, who was in noncompliance, and most importantly know not to accept the rent from that resident. The reality is that companies are dealing with sometimes hundreds or thousands of residents, and to investigate each resident at the time he or she comes in to pay the rent, normally on the 1st through 5th of the month, is simply impractical. One solution is to add some wording to the receipt that is given to the resident. While this wording is not perfect, it makes the person, be it the resident or a third party tendering the rent, aware that the rent may be returned and the tender and the receipt by the front desk person does not constitute legal “acceptance”, which we now know could kill that eviction or hurt the prospects of filing an eviction.

 

Possible wording for your receipts”

 

This receipt is provided for your convenience to show that you have given a form of payment to our office. In the event you are in default of the lease agreement, you are under a pending or actual eviction process, and/or you are attempting to make a partial payment, your tender of any payment to us and our giving you this rent receipt does not constitute our legal acceptance of the tender, and the payment may be returned to you at our option.

 

What is being accomplished?

 

By placing this wording on the receipt that is given to the resident, you possibly can protect yourself from being considered to have accepted the rent from the resident. This wording makes the acceptance of the rent from the resident conditional upon other possible circumstances. Could it be challenged in court? Sure, but it is probably better than what you have on your receipts today.