Housing

Landlord/Tenant Law: New Partial Payment Rule

On June 8, 2019, Arizona Governor Doug Ducey signed House Bill (HB) 2358 into law. When HB 2358 goes into effect in late August, it will become somewhat easier for residential landlords across Arizona to evict low-income residential tenants for nonpayment of rent even if the landlord has already received partial payment.

What does HB 2358 do?

HB 2358 alters Sections 33-1310 and 33-1371 of the Arizona Revised Statutes (A.R.S.), which form part of the Arizona Residential Landlord and Tenant Act (ARLTA).

The ARTLA is the set of laws which govern the relationship between landlords and tenants in rented apartments, condos, single family dwellings, and certain other kinds of homes. (The ARLTA does not apply to mobile home parks, unless the same landlord owns both the lot space and the mobile home, in which case the ARLTA does apply.)

What did the ARLTA say before HB 2358 was enacted?

Under the ARLTA, residential tenants are required to pay their rent on time and in full (A.R.S. 33-1368(B)) and landlords are permitted to reject “partial” payments (A.R.S. 33-1371(A)).

However, the ARLTA has long stated that if and when a landlord chooses to accept partial payment from a tenant for any given month (or other rental period), then the landlord may not evict the tenant for nonpayment of rent for that month – unless at the time the partial payment is accepted the landlord and the tenant agree in writing that if the balance of the rent has not been paid by a certain date, then the landlord will seek the tenant’s eviction for nonpayment (A.R.S. 33-1371(A)).

How does HB 2358 change the ARLTA?

HB 2358 changes the ARLTA by stating that “housing assistance payments” are not partial payments.

What this means is that a landlord who has received part – even most – of a tenant’s rent in the form of a subsidy from a third party may nevertheless seek to evict the tenant for nonpayment of rent if and when the rest of the tenant’s rent is not paid on time and in full.

What counts as a housing assistance payment?

Under HB 2358, a housing assistance payment is “any payment made to the landlord by a government agency, a public housing authority or any third party on behalf of a government agency, a public housing authority or any for-profit entity pursuant to a separate written rental assistance or subsidy contract between the landlord and the government agency, public housing authority or third party on behalf of a government agency, public housing authority or for-profit entity.”

In other words, a housing assistance payment is any rent subsidy that the landlord receives from a government agency or a public housing authority or a for-profit organization according to a written contract between the landlord and that agency/authority/organization.

What does not count as a housing assistance payment?

Under HB 2358, payments made by faith-based organizations, community action agency programs, and nonprofit entities do not count as housing assistance payments for this purpose.

An example

Here is an example of how the change to the ARLTA could affect a low-income tenant:

Before HB 2358, if a tenant were renting an apartment for $800 per month, and a third party was subsidizing that rent by making a payment of $650 each month directly to the landlord, then the landlord could not seek to evict the tenant for nonpayment of rent even if the tenant failed to pay the tenant’s own $150 portion, because the landlord would have already received a “partial payment” of $650.

After HB 2358, however, such a payment – so long as it meets the definition (above) of a “housing assistance payment” – will not count as a partial payment, so even if the landlord has already received the $650 subsidy, the landlord will still be able to seek the tenant’s eviction for nonpayment of rent if and when the tenant fails to pay their own $150 portion on time and in full.

Why is it important for residential tenants to pay their rent on time and in full?

A residential tenant who fails to pay their rent on time and in full may find themselves facing eviction.

Once a landlord has provided a tenant with a written 5-day pay or quit notice, the tenant has 5 days to either (a) pay all outstanding rent as well as any reasonable late fees that were specified in a written rental agreement or (b) return possession of the rented dwelling to the landlord – by notifying the landlord of their intention to vacate the dwelling within the 5 days, by moving themselves and their personal belongings out of the dwelling, by returning the dwelling to the condition it was in when the rental agreement began (ordinary wear and tear excepted), and by returning the keys to the landlord.

A tenant who remains in possession of a rented dwelling after receiving a 5-day notice becomes liable not only for all outstanding rent as well as any reasonable late fees that were specified in a written rental agreement, but also costs and reasonable attorneys’ fees (A.R.S. 33-1368(B)).

Even if a tenant vacates the rented dwelling after the landlord has filed an eviction complaint with the court but before the court hearing takes place, the tenant will still be evicted – and have an eviction judgment placed on their record – unless they pay the total amount that the landlord is seeking, including costs and attorneys’ fees, before the case is heard by the judge.

Tenants who have eviction judgments placed on their records often have difficulty finding housing – especially subsidized housing – in the future.

To where may a residential tenant turn for legal assistance if they believe that their landlord is seeking their eviction for nonpayment of rent despite having already accepted partial payment (excluding a housing assistance payment)?

There are links to free and low-cost legal services at: http://www.azlawhelp.org/accessToJustice.

Sources and further reading

Arizona Department of Housing: https://housing.az.gov/

Arizona Department of Housing – “Arizona Residential Landlord and Tenant Act” (pre-HB 2358): https://housing.az.gov/sites/default/files/documents/files/Landlord-Tenant-Act-ADOH-Publication-July-2018.pdf

State of Arizona – House Bill 2358: https://apps.azleg.gov/BillStatus/GetDocumentPdf/471267

 

 

This website has been prepared for general information purposes only. The information on this website is not legal advice. Legal advice is dependent upon the specific circumstances of each situation. Also, the law may vary from state-to-state or county-to-county, so that some information in this website may not be correct for your situation. Finally, the information contained on this website is not guaranteed to be up to date. Therefore, the information contained in this website cannot replace the advice of competent legal counsel licensed in your jurisdiction.

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