Is accepting late money after filing a TN eviction case okay? Yes, it is! However, you need to be sure to include the clause “Accepted with reservation” on any receipts. Otherwise, you may be waiving your right to terminate the tenant – even if the tenant only gave a partial payment.
Tennessee law states that “[i]f the landlord accepts rent without reservation and with knowledge of a tenant default, the landlord by such acceptance condones the default and thereby waives such landlord’s right and is estopped from terminating the rental agreement as to that breach.” Tenn. Code Ann. § 66-28-508. (Waiver of landlord’s right to terminate.)
The best policy would be to write “accepted with reservation” on any late, partial payments, regardless of whether a case has been filed in court, or whether a possession has been granted by the court. I recommend getting a stamp and making it a habit to stamp every receipt from defaulting tenants. Otherwise, the tenant can make the legal argument that the landlord’s acceptance of any partial payment after the 5th of the month waives the right to bring a case at all.
What about if the money is through direct deposit? I recommend placing a provision in the lease stating that the tenant agrees and understands that all wired payments are accepted with reservation. I would also try to place such notes in a return receipt that is generated online.