Many small claims courts do not permit a landlord to accept a rent payment from a residential tenant after the landlord commences the eviction lawsuit but before the actual eviction. The courts consistently hold that the landlord waives a claim for eviction by accepting a rent payment from the tenant—even if it is only a partial payment.
We respectfully disagree. A blanket rule prohibiting a landlord from accepting any late rent does not adequately address all of the legal questions raised by this scenario. To the contrary, under Indiana contract law, a landlord has a duty to mitigate damages, which should include accepting back rent, rather than waiting to add them in the final judgment amount.
Furthermore, a tenant’s obligation to pay rent does not cease simply because the landlord has filed for an eviction. The unpaid rent continues to accrue, often to an amount that is too large for the tenant to pay later on down the road. When a tenant does not pay rent, it is highly unlikely that the tenant is “saving” that money to pay the landlord at a later date (e.g., the damages hearing). Typically, when a tenant fails to pay rent it is because they are having financial difficulties. The money that should be going to the landlord typically goes to cover other expenses instead, leaving the landlord with nothing.
Although we respectfully disagree with the courts’ opinion on this matter, it is the rule, and there are few exceptions. Once an eviction is filed, a landlord should only accept payment-in-full—this includes any and all unpaid rent, late fees, attorneys’ fees, and court costs (if the lease permits). Once a payment is accepted, the Court will dismiss the case and the tenant will be allowed to stay in the property. However, if a tenant then fails to pay the next month’s rent, the landlord may re-file for an eviction, but the process starts all over.
If you have questions regarding this article or other landlord-tenant law issues, consult with a knowledgeable Indiana real estate attorney.
Also recommended: The 3 Rules of Landlording