How to word clause in lease allowing tenants to pay electronically

19 Replies

I'm working on my Florida lease and trying to figure out how to have generic statement in the lease that would allow for rent payment  options such as direct deposit / ACH transfer / online payment (Cozy, erentpayment etc...) ?

IMO:   Why try to name all the options? 

Rents are to be delivered so as to provide credit of good funds to the account of the tenant for the benefit of the landlord by the date required. A grace period of X days allows for the delivery of good funds without penalty (if applicable) and a late fee of $250,000 shall be assessed per day (as applicable and allowed). In the event any draft or deposit is made without good funds available a fee of $500,000 shall be assessed for each worthless draft or deposit as an accounting charge. 

Then continue as to what constitutes default and actions required or taken.

Okay, maybe my fees are a little too stiff, LOL  

"delivered" means by hand by the tenant or their agent, by carrier pigeon, by electronic transfer, automatic withdrawls, U.S. Mail, or any other system that accomplishes the task required.     

I'm not an attorney, but that should be common knowledge here. :)

@Bill Gulley I was advised by a RE that charge hefty late charges and for worthless NSF returned checks to deter such moves by the tenant. So though you are sky high :-), you have the right intent. My tenant is late now by 3 months, BUT thus far committed to staying and catching up. I am nearing the end of my patient wait with the tenant.

@Mike X. I think, you should be able to type it in your lease agreement the means of your rent collection and that is definitely reviewed and signed by them. So imo it should be an easy fix to do.

Originally posted by @Abhilash Joseph :

@Bill GulleyI was advised by a RE that charge hefty late charges and for worthless NSF returned checks to deter such moves by the tenant. So though you are sky high :-), you have the right intent. My tenant is late now by 3 months, BUT thus far committed to staying and catching up. I am nearing the end of my patient wait with the tenant.

@Mike X. I think, you should be able to type it in your lease agreement the means of your rent collection and that is definitely reviewed and signed by them. So imo it should be an easy fix to do.

 LOL, The amount of my fees were a joke! Such fees are generally regulated by state law, you can't just make up some big number as a deterrent. :) 

Thanks, this is something to consider

I would be less worried about the electronic clause and more about...." late now by 3 months, BUT thus far committed to staying and catching up. I am nearing the end of my patient wait with the tenant"....

Pay or quit time.   Three months is a lot of behind on the rent. Is he  committed to paying?  If so my thought would be to serve notices so that if your patience runs out and he isn't paying you have all your legal notices in place.  He is your tenant though , you have all the background.

We give our tenants two options. Pay online through the tenant website or in person at our bank. Here is how we word it in our lease:

Rent payment procedure: Tenants agree to pay their rent to Progressive Properties of Greenville via the tenant website provided by landlord. A password will be emailed to you within 48 hours of you signing your lease. Tenant is required to have a bank account to pay online. Online payments cost an additional $3.00. Payment may also be made at any Sun Trust bank (please ask for details) 

Most tenants pay online but we do have a few that pay in person at the bank. Either way this eliminates taking any payments in person and avoids checks getting lost in the mail excuses. 

@Brian Walsh How were you able to set it up so a bank cashes your rent checks? Is this a service that most banks provide? I hadn't ever heard of that before.

Sounds fine to me. In my previous lease agreement, I actually named the website that was to be used. "Tenant agrees to pay rent through WEBSITE electronically by the (DATE) of each month. Electronic payments incur an additional $$$ fee. If the tenant wishes not to utilize electronic payments, then tenants must deposit rent by the (DATE) at BANK into ACCOUNT, etc"

I don't think it needs to be formal, just clear and precise.

Chris, 

We simply have the tenant go to our bank, fill out a deposit slip with their address written on it so we know who made the deposit. Our bank scans all deposit slips so we can see the image online. We then log their payment into our software. 

@Brian Walsh Great idea - I love the hands off approach and that you can accommodate them whether or not they are electronically inclined.

Imagine not only tenants, but 2,000+ mortgage/contract payments! 

$600 average payments, 25% late, 10% late payment fee, you'll pray that more pay late than on time, That's $3,000 a month on fees! Not big money, but I could live on it here, back then!

Only took about 25 late payment fees to pay for a new car! 

Please send your payment late, with bad funds! No, I never said that! :)  

Originally posted by @Brian Walsh :

We give our tenants two options. Pay online through the tenant website or in person at our bank. Here is how we word it in our lease:

Rent payment procedure: Tenants agree to pay their rent to Progressive Properties of Greenville via the tenant website provided by landlord. A password will be emailed to you within 48 hours of you signing your lease. Tenant is required to have a bank account to pay online. Online payments cost an additional $3.00. Payment may also be made at any Sun Trust bank (please ask for details) 

Most tenants pay online but we do have a few that pay in person at the bank. Either way this eliminates taking any payments in person and avoids checks getting lost in the mail excuses. 

I could probably do something similar in my lease, thanks

Originally posted by @Drew Castleberry :

Sounds fine to me. In my previous lease agreement, I actually named the website that was to be used. "Tenant agrees to pay rent through WEBSITE electronically by the (DATE) of each month. Electronic payments incur an additional $$$ fee. If the tenant wishes not to utilize electronic payments, then tenants must deposit rent by the (DATE) at BANK into ACCOUNT, etc"

I don't think it needs to be formal, just clear and precise.

I'm curious do you provide the with deposit only ATM card?

Mike,

No we don't. We use to provide preprinted deposit slips but do not anymore. The tenants just use a generic deposit slip from the bank. 

Originally posted by @Abhilash Joseph :

@Bill Gulley I ...

.... My tenant is late now by 3 months, BUT thus far committed to staying and catching up. I am nearing the end of my patient wait with the tenant.

...

Abhilash - sounds like you are running a charity ... you should not allow the arrears beyond one month because when they have a hard time coming up with one month of rent, getting two months worth becomes a near impossible accomplishment for the delinquent tenant. Yours now has to find three or four months of rent just to catch up ...

@Mike X. :

I'm curious do you provide the with deposit only ATM card?

 No I never did. Just use generic deposit slips as Brian mentioned.

Has anyone used Cozy with success or have ideas on using that? I just found out about it today and it sounds great! I hate the thought of checks/cash because that requires a trip to the bank. 

We state that tenants are required to sign up and maintain an account with www.clearnow.com. Their rent is actually "credited" $200/month for using this service. In other words if they don't pay clearnow the rent is $200 higher. We haven't had a problem with this method.

@Steve Babiak - I don't deny your evaluation. And, I have been told that I am not investor material in terms of my approach to tenants and personality. :-) Therefore, I am seriously considering property management for my next lease term, whereby I start treating this as a business than a charity.

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