Order to apply tenant payments

[Mark Wolka]

Hello,

What is the order that rent, fees, and utilities are applied when a tenant makes a partial payment?

For example, a partial payment of $600 was made for the following due:

$800 rent

$25 pet fee

$35 late fee

$40 water

and the PM takes his cut of $80 (10% of rent).

I understand that if the tenant had any remaining balance from the previous month, that would be paid first.  But then after that, how does one figure out the sequence?

My brother and I are partners, with me acting as the PM, and taking the fee, but we have no formal agreement on sequencing the payment.  We had to kick the tenant out so their last payment did not cover everything.

Please Help!

Thanks in advance.

Mark

[Marcia Maynard]

Put it in your rental agreement. Here is an excerpt from ours:

"PAYMENTS.  All payments made by Tenant to Landlord after the tenancy commences, no matter how designated by Tenant, will be applied as follows: first, to any outstanding amounts due for damages/repairs, utilities etc.; second, to any outstanding service charges and fees from prior months; third, to any rent outstanding from prior months; fourth, to any service charges or fees due in the current month; and lastly to the current month’s rent."