In the current economic climate this question might seem somewhat bizzarre.!! A tenant's main aim is to preserve his business including occupation of any premises by paying rent. The landlord's main focus is to maintain a rental income stream by accepting rent. The reality may be different. Often the first signs that a tenant is experiencing problems is by making late or irregular payments of rent. If rent is not paid then a remedy for the landlord is to end the lease (by way of legal forfeiture) In recessionary times this is not such an attractive proposition for many landlords so many prefer to accept rent as and when paid.
But what is the legal effect of doing so and more importantly what practical consequences does this have for both landlord and tenant??
The Situation
C onsider this not uncommon situation, the tenant is obliged to pay rent monthly but in fact fails to pay November, December and January's rent. The tenant then suggests payment by specific instalments specifying instalments to pay off December and January's rent (but not November!) and then makes payment and the landlord accepts the money.
The Landlords Perspective
T he legal consequences are:
- that the landlord is bound by the tenants apportionment of rent;
- it is not open to the landlord to say that the monies paid are in fact rent for November and December and that January's rent is unpaid and its rights to end the lease are intact.
Why would this be of concern to a landlord? Is the right to end a lease worth preserving in the current economic climate? Certainly landlords do need to preserve their rights and to do so must make clear to tenants how they apportion any rental monies received. In essence by leaving the most recent rental payment in arrears the landlords right to terminate the lease are intact. A landlord will then have greater flexibility and more options.
The Tenants Perspective
The law gives you the upperhand. If you tell a landlord which
payments relate to which arrears then the landlord can either
accept this and lose its right to terminate or refuse payment of
rental altogether and preserve its rights.
Final Note – landlords wanting to end a lease for payment of rent do not accept rent on any terms!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
