How do I count the payment of the rent when the tenant pays late?
The tenant's primary responsibility is to pay the rent on time. Arrears may end in termination of your lease, or late payment interest may be charged. What if a tenant in arrears pays an amount that is not enough to cover the entire debt? How to count the payment of the rent and who decides about it? Can the payment of delay interest be credited?
Who decides how the rent is credited?
How the rent is credited is decided (in the following order):
the content of the contract, which may specify in detail the method of crediting payments;
the debtor who indicated when making the payment the method of its credit;
the creditor who (if the debtor does not indicate the method of crediting the payment) may credit it at his discretion, provided that he provides the debtor with a receipt and the debtor accepts it;
the debtor who, after receiving a receipt from the creditor with the method of credit, immediately objected to such credit and indicated how to credit the payment of the rent;
the principle resulting from the Civil Code that if neither the creditor nor the debtor has indicated the method of crediting the payment, it should be credited to the oldest debt (the oldest due).
What to do after receiving the outstanding payment?
If the tenant is in arrears with the payment of rent for several months and makes a payment that is not enough to cover the entire debt, the creditor should correctly credit this payment. How do I count the payment of the rent?
First of all, it is necessary to determine what the rental agreement says about crediting the payment. There may be provisions stating, for example, that the payment is always credited first to the oldest debt and the related interest. If the contract specifies how to account for the payment of the rent - follow its provisions.
If the contract does not specify the method of crediting the payment, check whether the tenant indicated the period for which he is paying when making the payment. If, for example, he entered in the title of the transfer that it is "rent for March 2019", then its payment should be included in the rent for that month. The only thing that can be done in this situation is, even without the debtor's consent, to include his payment in the first place on overdue interest - but only the interest on the rent for March 2019, i.e. for the month to which the payment made by the debtor relates.
If the tenant did not specify when making the payment for which month he pays the rent, the initiative on how to credit the rent payment is transferred to the creditor. But the creditor has to act fast. Should:
immediately after receiving the payment, credit it at your discretion, and
immediately provide the tenant with a receipt indicating the method of payment;
if, on receipt of such a receipt, the debtor does not object to the method of credit indicated therein, credit shall become final;
if the debtor immediately objects to this crediting, it ceases to be effective; the initiative is then returned to the debtor, who may indicate how to account for the payment of the rent.
What if neither the tenant nor the landlord took advantage of the previously described options to indicate how to credit? Then you should count the payment towards the oldest rent (the oldest due).
The tenant may indicate for which month the rent is paid and the landlord must include the payment for that month The described rules result from Art. 451 of the Civil Code regulating the method of crediting payments.
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How to credit the payment of the rent - sentence of the Supreme Court
There is a well-established position in the jurisprudence of courts that if the lease agreement does not specify anything else, the debtor (lessee) may indicate the period (month) for which the rent is paid. The landlord has to include the rent in this way.
This was confirmed, inter alia, by The Supreme Court in the judgment of 7 January 2009 (file reference number II CSK 409/08). In it, the court stated:
“This is the difference between a periodic benefit and a one-off benefit, paid successively or in installments, in that the amounts paid periodically are not counted towards one benefit. A rental benefit consisting in paying rent is a number of periodic benefits, each of which is due on a different date, and is also subject to a statute of limitations on a different date. As a result, each of these benefits constitutes a separate debt, although they are of the same nature. The debtor may, therefore, when fulfilling the benefit, indicate which debt (rent for which period) he wants to pay. And what is due for this debt (for a specific period), the creditor may charge for the side receivables associated with this particular benefit. This is what the application of Art. 451 § 1 of the Civil Code for periodic benefits. "
Interest on late payment of rent
If the tenant is in arrears with the rent, they may be charged late interest. Interest can go up to a large amount. When the tenant then pays an amount as rent, the question is whether it can be offset first against the late interest arrears rather than the rent itself. How to count the payment of the rent in such a situation?
Since the rent for each month is a separate debt, you cannot count the payment made for one debt first into interest on another debt. This could only be done if the possibility was provided for in the contract. So the payment for June can first be counted towards the interest on the rent for June. However, it cannot be counted for other interest - unless the contract allows it.
J.an Nowak is in arrears with the payment of the rent for a few months. In the past, too, he had paid his rent late and was charged interest. The total amount of interest is PLN 3,540 for late payment of the rent for various months.
The monthly rent is PLN 3,000. Jan Nowak made a payment of PLN 3,000 and entered "rent for June 2018" in the title of the transfer.
How do I count the payment of rent made by Jan Nowak? If the contract does not provide for the possibility of crediting the payment in the first place as interest for the delay for months other than the one to which the payment relates, the landlord may not include the payment on this interest. The landlord must include the payment towards the rent for the month indicated by the tenant, i.e. for June 2018, in accordance with the tenant's will. The only thing that the landlord can do in this situation is to include the payment in the first place for the overdue interest on the rent for June 2018 (if, of course, the rent for this month was paid late) - the lessee does not have to agree to such a credit.
If Jan Nowak paid PLN 3,000 and did not indicate the period for which he is paying, the landlord could credit the payment for interest, provide Jan Nowak with a receipt with an indicated method of credit, and count on Jan Nowak not to object to it.
If neither the tenant nor the landlord did not indicate the method of including the payment, it should be included in the oldest rent and interest on the oldest rent. If there is any "free" amount left after such credit - it can be credited to the next, oldest rent and the interest related to it.