Phil Querin Q&A: Partial Rent Payment & Allocation to Utilities, Fees etc.

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October 11, 2012

Question: Increasingly some of our residents are bringing only partial rent payments. So how does a partial payment get allocated when some of the payment includes utilities? For example, if the rent is $650 including a certain amount allocated to utilities, how does the landlord handle this? Pay the rent portion and then go after the utility payments via a 30 day notice?

Answer: Be aware that utility charges, late fees, etc. are not “rent.” Rent is the charge for the resident’s right to remain at the space. As you know from the MHCO 72-hour Notice, the right to evict only arises when the rent remains unpaid for seven days following the date of payment, which is usually the first of the month. The extra charges for late fees, utilities, and other expenses the landlord has a right to collect under the rental or lease agreement do not provide the basis for eviction under the 72-hour Notice. A landlord’s right to terminate a tenancy for payment of non-rent charges can be handled in two ways: (a) By issuance of a 30-day notice of termination; or (b) Small Claims Court. If the resident’s payment does not include 100% of the rent that is due, that is a different story. In that case, the landlord does not have to accept partial rent. However, if a landlord is willing to do so, he/she must secure a written agreement. Here’s what ORS 90.417 says: • A landlord may accept a partial payment of rent. • If the acceptance of a partial payment of rent is in accordance with the following protocol, it does not constitute a waiver of the landlord’s right to terminate the tenancy for nonpayment of the balance of the rent owed. • Here is the required protocol: Acceptance of a partial payment of rent waives the right of the landlord to terminate the tenant’s rental agreement for nonpayment of rent unless: o The landlord accepted the partial payment of rent before he/she gave a nonpayment of rent notice based on the tenant’s agreement to pay the balance by a time certain and the tenant does not pay the balance of the rent as agreed; o The landlord’s 72-hour notice must be served no earlier than it would have been permitted under the 72-hour notice statute, had no rent been accepted; and o The notice permits the tenant to avoid termination of the tenancy for nonpayment of rent by paying the balance within 72 hours or 144 hours, as the case may be, or by any date to which the parties agreed, whichever is later; or o The landlord accepted a partial payment of rent after giving a nonpayment of rent termination notice and entered into a written agreement with the tenant that the acceptance does not constitute waiver. The written agreement may provide that the landlord may terminate the rental agreement and file for eviction without serving a new 72-hour notice if the tenant fails to pay the balance of the rent by a time certain. • Note that a landlord and tenant may by written agreement provide that monthly rent can be paid in regular installments of less than a month pursuant to a schedule specified in the agreement. Such installment rent payments are not partial payment of rent under ORS 90.417.