Can I require automatic debits?

1 Reply

Hi all, I'm a complete real estate novice. Bigger pockets is an awesome resource/community I'd like to be a part of. I couldn't find my answer to this question using the search function.

I own 12 self-storage units (they came with a piece of property I was purchasing anyway). Can I require automatic monthly ACH withdrawals as a condition of the lease agreement? I think this would do several things:

1. Payments would never be late so long as the renter had the funds.

2. It would discourage people without checking accounts from applying. In my experience folks that don't have checking accounts tend to be financially irresponsible. Think payday loans, 18% cash advance on credit cards, title loans, whole life insurance etc...

3. For self-storage units it might keep the expense under the radar. If they aren't writing that check every month, they'll be less likely to decide they don't need to store their junk. Out of site, out of mind.

Is it legal or ethical to require automatic ACH debits for residential rentals? I think the benefits would be the same. Does it discriminate against a protected class or break fair housing laws? Would requiring it put you at a disadvantage over landlords who allow checks and money orders?

Sorry for the long first post. Thanks in advance for any feedback.

I require this for all of my residential leases, however the tenant can simply tell the company I use not to deduct funds. Since I have a $50 rent reduction if they use automatic debits this doesn't happen very often.

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