Forcing tenants to pay rent online
Developer · Member since 2009 · 45 posts · 4 votes
Forcing tenants to pay rent online
Most Popular Reply
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
14yI remember before an investor was burned using pay rents online.
They had it where a tenant could pay and also could deposit money or wire money in.
What happened is the tenant sent in 300 instead of the 600 owed into the landlord's account.The tenant argued in court that the landlord accepted partial payment and was going to work with them on an arrangement.The judge sided with the tenant.
So the moral of the story if you are going to do this is only a set amount is allowed to be paid with no partials.If they try a partial it should reject the payment.
Of course you can work out a payment with them IF YOU want to but you want to control that and not the tenant.
On paying cash when I was 17 I was running low on cash.I went to the gas station at night and put about 11 in gas in the car.
I had the money in coins quarters,dimes,nickels and pennies.It wasn't rolled.The gas station employee refused the money and I told him he had to take it. He said he did not and I had to call someone to bring cash or was going to call Police.
I told him I will call Police for him and save him the trouble.The Police told him over the phone that the money is legal tender and he has to accept it.
He wasn't happy but took the money......
58 Replies
- Cambridge, MA · Member since 2013 · 6 posts · 0 votes12y
In California it's illegal to require that rent be paid online. If you're using an online service to collect rent, what do you like about with the service? Also, what do you not like about it?
- Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes12y
Just think of an apartment complex with 100 units , if they accepted cash they would need a couple of armed guards when the rent comes due .
- Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes12y
We use WilliamPaid and while we only have 6 tenants - all of them voluntarily use it. When we get new tenants we give them a list of payment options including WilliamPaid - the benefit to them is that it can be reported to the credit bureau for free and helps build credit. It is free to both the tenant and landlord unless the tenant wants to pay via CC. We also allow the money to be drafted out of their account on the first instead of received by us on the first
Second City Real Estate4.821 Reviews - Investor · Roanoke, TX · Member since 2013 · 49 posts · 26 votes12y
We just started using WilliamPaid with our new tenants. They were excited by the possibility of paying online and building their credit (though the credit is not the typical credit report).
It was pretty easy to setup. The main downside I see is the inability to reject partial payments.
- Lakeland, TN · Member since 2014 · 1 post · 0 votes12y
There is a service Paynearme.com that allows tenents to pay cash at Family Dollar and 7/eleven stores and it gets deposited directly to your account.
- 12yCliff H.Pro MemberRental Property Investor · Nashua, NH · Member since 2014 · 598 posts · 477 votes
Linked over to this discussion from a BP post on e-rent collection. To the question of whether you need to accept cash, why not just use a service that allows for an option for tenants to pay in cash via MoneyGram or other 3rd party services? Several of the services listed off the original post allow for that:
http://www.biggerpockets.com/rei/pay-rent-online-p...
I also started a simple spreadsheet that breaks out many of the online services from the article above by price and features.
https://docs.google.com/spreadsheets/d/1cQ5NEU7s9i...
Costs of these services has come down quite a bit over last few years, with a couple now offering entirely free or near free pricing for bank transfers.
Additionally, most break down to either:
- Tenant-initiated pay portals (tenants must opt-in to start payments)
- Automatic debit services (tenants must opt out to stop payments)
Depending on your situation you may choose to use a service like NAIL or ClearNow merely because payment is attempted automatically versus bugging tenants to initiate payment on their own.
- Knoxville, TN · Member since 2013 · 62 posts · 216 votes12y
Do I understand correctly that I erentpayments.com allows ach debit allowing the landlord total control (tenant can not cancel the auto deduct from their account without landlord approval)?
Also, I understand that clearnow does not have this landlord control feature and the tenant can opt out of the automatic ach debit at anytime. Even without the landlord's permission. Is this correct?
- Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes12y
I use www.erentpayments.com for most of my tenants. It's easy to know who paid what and when, as I get an email notification when their payment is debited. I can set it up so that it's an automatic debit on the 1st of the month, or any other date. They offer the option of letting the tenant initiate the debit itself as well. You can automatically send the tenant reminder emails a few days before, and Thank You emails after they've paid.
It's $3 per transaction per month, no commitment, no account fee, no set up fee.
Keep in mind that the tenant by law has the right to cancel the debit. I've had that happen several times. eRentpayment takes about 5 business days from the initial debit to verify the funds, then transfer them to my account. If the funds are returned due to NSF, I am not charged, but that's why it takes up to 5 business days to get the payment - because the tenant might cancel it, or because there is no money in their account. It's not a bulletproof system.
The tenant cannot cancel their eRentpayment account itself, no. But they can cancel individual payments. Tenants that are leaving in a month have done that - they decided I should use their security deposit as the last month's rent and simply canceled their auto-debit. They were served with a Pay or Quit Notice.
I also offer my tenants the option of paying by depositing the rent money, or a check, into my business account at TD Bank. That usually clears within 2 business days.
- Investor · McKinney, TX · Member since 2012 · 588 posts · 224 votes12y
I use paynearme and erentpayments. From now on, i will only do erentpayments. I do not have to go to the mail box to see if any rent checks came in today, no trips to the bank to deposit. On paynearme, I get an email about 1 minute after they pay (at 7-11) and erentpayment it get drafted out of the tenants account. Its about as easy as it gets.
What I did on my last one is I told people that monthly draft was my preferred method of payment during the "interview". People who didn't like it were weeded out that way.
- Flipper/Rehabber · King, NC · Member since 2016 · 88 posts · 36 votes10y
I added it to my lease as a requirement a short while ago. This is the only way I will lease to anyone. It is the best way. No more "checks in the mail". It keeps everyone honest and automatically adds the late fee and dont allow anyone to pay partial payments either. Another aspect is the online rent collection company becomes the bad guy not you. Lay down the law to your current tenants and make them use it.
- Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes10y
We present collecting rent electronically as the way we do business and we have never even had to demand it.
We simply say "all of the other tenants in the building are paying electronically, would you like to do the same". Never had one tenant say no to that in 3 years.
The area you are investing in will go a long way in determining whether you will get cooperation from the tenants.
We have all of our tenants card info on file and work out with them the day we run their card for the rent. Some want it run the first day of the month and others want to wait until their first payday of the month and we accommodate that as well.
- Vendor · Durham, NC · Member since 2009 · 42 posts · 9 votes10y
Great suggestion, Michael.
- West Palm Beach, FL · Member since 2015 · 36 posts · 18 votes10y
I have my tenants deposit the money to my wellsfargo account either in person or through bank transfer. I'm switching over my dad's tenants to the same system. They've been paying via check for the last 20 years and my dad had been traveling 90 minutes round trip to pick up the checks (multiple times per month since of course they would claim they dropped the rent through the drop slot and it must've gotten lost in the room). If dealing with multiple tenants paying the same amount, have them notate their apartment number on the back of the deposit slip. You can get images of the slip from the bank. If paying through online transfer you'll see who paid.
You can in fact put pretty much anything you want in a lease. There are very few laws that you can not contract away and if it is the case the law will say so. For example, safe and sanitary housing can not be contracted away in a lease. You also can not contract for something that is a crime/illegal. But pretty much everything else goes. If there isn't a law addressing it it's fair game. Judges and lawmakers will see when legislation is needed if issues repeatedly come up or someone makes a loud noise. That's why it's important to keep abreast of changing laws in your state.
I was paying rent online as a tenant and they introduced a charge to do so later on. At the start of my lease, whenever I would pay with money orders the manager repeatedly encouraged me to pay online. So I started, it was free unlike the last place so I didn't mind. It seems that once I got used to paying rent online, the company introduced a fee. I'm upset. Feels like a bait and switch. The apartment has no drop slot to accept after hours payments. So even though they encourage and it's not written in the lease, they've made it impossible for you to pay by check or money order unless you mail it or drop it off in person during business hours. Rent is late on the morning of the second with a $119.00 late fee. I'm guessing most tenants are opting to pay online.
The point of the story is, if you require electronic payments, provide a way for them to do so without additional charge. My two cents.
Jennifer Duclair, Esquire
West Palm Beach, FL
- San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes10y
Originally posted by @Jenny Duclair:
I have my tenants deposit the money to my wellsfargo account either in person or through bank transfer. I'm switching over my dad's tenants to the same system. They've been paying via check for the last 20 years and my dad had been traveling 90 minutes round trip to pick up the checks (multiple times per month since of course they would claim they dropped the rent through the drop slot and it must've gotten lost in the room). If dealing with multiple tenants paying the same amount, have them notate their apartment number on the back of the deposit slip. You can get images of the slip from the bank. If paying through online transfer you'll see who paid.
You can in fact put pretty much anything you want in a lease. There are very few laws that you can not contract away and if it is the case the law will say so. For example, safe and sanitary housing can not be contracted away in a lease. You also can not contract for something that is a crime/illegal. But pretty much everything else goes. If there isn't a law addressing it it's fair game. Judges and lawmakers will see when legislation is needed if issues repeatedly come up or someone makes a loud noise. That's why it's important to keep abreast of changing laws in your state.
I was paying rent online as a tenant and they introduced a charge to do so later on. At the start of my lease, whenever I would pay with money orders the manager repeatedly encouraged me to pay online. So I started, it was free unlike the last place so I didn't mind. It seems that once I got used to paying rent online, the company introduced a fee. I'm upset. Feels like a bait and switch. The apartment has no drop slot to accept after hours payments. So even though they encourage and it's not written in the lease, they've made it impossible for you to pay by check or money order unless you mail it or drop it off in person during business hours. Rent is late on the morning of the second with a $119.00 late fee. I'm guessing most tenants are opting to pay online.
The point of the story is, if you require electronic payments, provide a way for them to do so without additional charge. My two cents.
Jennifer Duclair, Esquire
West Palm Beach, FL
If the only way to pay on time, without having to go into the office, requires a fee, couldn't you sue? It seems to me this would be an increase in rent, or a fee you did not agree to in your lease, and therefore, not allowed.
- Real Estate Broker · Kansas City, MO · Member since 2016 · 36 posts · 38 votes10y
Originally posted by @Kevin C.:
My lease specifically states, under Method of Payment, "Unless the parties agree otherwise, Tenant may not pay rent in cash and will pay all rent by check, cashier's check, money order or other means acceptable to landlord".
Tenant agrees to those terms when they sign the lease.
I generally caution Clients against being confident in language written into their Lease(s) which is counter to established law. Just because you put the provision in writing (and have a tenant's signature agreeing to it) doesn't make it enforceable in Court. An analogy I would offer is that suppose I have a tenant who is comfortable with me cutting off their hand if they are more than 2 days late on rent. If I in fact remove that tenant's hand upon being 3 days late (with their willingly given permission).... a signed document allowing me to do so would not prevent a charge of battery levied by law enforcement.
No Lease Agreement can supersede Federal or State law. Most likely, you'll be able to convince tenants to go along with this "no-cash" provision without incident at your discretion - but do be careful to check current statutes if you get any push-back from tenants who wish to challenge you on this. Rent is a legal/legitimate debt, and United States tender is a legal/legitimate source of absolving that debt. It's not worth several hundred dollars in legal fees attempting to enforce a provision that you're not legally able to enforce....
Best to you.
- Oakland, CA · Member since 2017 · 1 post · 0 votes9y
John, I'm not sure where you and your property are based, but in California, no, you absolutely cannot. states that a landlord and tenant can agree rent may be paid through an electronic deposit process, but only if the landlord allows an alternative method of payment.
That you may have drafted a rental agreement stipulating electronic transfer only means very little. In California, the statute declares any such condition in a rental agreement to be void and unenforceable. Section 1947.3 defines "electronic transfer" broadly, essentially any transfer of funds not initiated by a check or other paper "instrument," including transfer via computer, telephone or point-of-sale contact or direct deposit permitting a financial institution to debit your account. This statute preserves your right to pay rent by check or some other old-fashioned method.
Hope that helps.
* See also Nolo and the L.A. Times.
- New York, NY · Member since 2017 · 19 posts · 8 votes9y
I personally such services and my tenants also like it. It's comfortable and IMo there is nothing wrong if you will ask them to do this online. I'm not actually confident about % on your site, but in my rental paying system , the only one who pays - me, that's why tenants find it nice and normally have no argues.
- Jamestown, NY · Member since 2017 · 1 post · 0 votes9y
1 a landlord try to force me not to use cash will go to court 2 i will never give my bank info to any landlord to many landlords are slumlords and crooks
- Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes8y
I also really prefer that tenants pay me online. I offer online payment through our property management software (Buildium). For some of my older tenants that don't have internet, I have an ACH agreement form and I just set up the Buildium account with automatic recurring payments for them. I have retail stores in the area so I do take cash there because I have staff making regular bank deposits anyway. If I didn't I would sign up for "paynearme" and let tenants that insisted on paying cash pay that way. I'd still get my online money but it would cost tenants $3-5. I don't think you have to accept cash since your tenant is signing a rental agreement that requires online payment.
- 8yRyan TulejaPro MemberRedmond, OR · Member since 2017 · 98 posts · 36 votesi would re-frame this question. Dont FORCE them to use it, ALLOW them to use it. Point out the benifits of being able to pay without leaving home, not buying stamps or checks and of proving payment was made on time. some of these softwares even build a "Renter profile" they can use as a reference in the future..... no, i would not speak of this as a difficulty bit as a service that you are providing them.
- Investor · Cincinnati, OH · Member since 2008 · 118 posts · 22 votes8y
I worked at Entrata (Property management coputer software) for a few years, so although I'm not a legal professional, I know this issue more than the average bear.
Basically you can't REQUIRE it, but you can strongly encourage it. You have to give them an address to be able to send a check, but you can eliminate a dropbox on the property (mostly used at large apartment complexes).
You will find that the biggest barrier to somebody actually using the online payment process are the fees (Can be minimized by ACH, or online check, because cc processing fees are pricey) and the knowledge of how to do it (Training). If you give them an ACH option, and teach them how to do it, your chances of them actually using it go up by a lot.
Food for though.
- Real Estate Agent · Phoenix, AZ · Member since 2012 · 640 posts · 457 votes8y
I gave my tenants the choice of going to the bank to deposit their rent, or paying online through my Buildium portal. All but one older tenant happily switched to using the online payment method. The feedback I've received from tenants (both new and long term) using the online payment method is entirely positive. No more needing checks, stamps, envelopes, or having to drive to the bank to wait in line. They have the option to pay from their smartphones, or set up recurring monthly rent payments.
- Los Angeles, CA · Member since 2012 · 24 posts · 5 votes7y
Originally posted by @Carlis Robins:
John, I'm not sure where you and your property are based, but in California, no, you absolutely cannot. states that a landlord and tenant can agree rent may be paid through an electronic deposit process, but only if the landlord allows an alternative method of payment.
That you may have drafted a rental agreement stipulating electronic transfer only means very little. In California, the statute declares any such condition in a rental agreement to be void and unenforceable. Section 1947.3 defines "electronic transfer" broadly, essentially any transfer of funds not initiated by a check or other paper "instrument," including transfer via computer, telephone or point-of-sale contact or direct deposit permitting a financial institution to debit your account. This statute preserves your right to pay rent by check or some other old-fashioned method.
Hope that helps.
* See also Nolo and the L.A. Times.
Thanks for your links.
I read section 1947.3 https://leginfo.legislature.ca.gov/faces/codes_dis...
(1) It seems like a very awkward and backwards way of saying that checks (OR "another form of payment that is neither cash nor electronic funds transfer"?) must be allowed. The big question is: What is another conceivable form of payment that is not cash or electronic? Gold bullions? Postal service stamps?
(2) Your Nolo link https://www.nolo.com/legal-encyclopedia/what-types... stipulates that "Cash means currency and does not include cashier’s checks or money orders, which the landlord can require in the lease or rental agreement."
Question: Can I offer electronic payment, cash, or money orders/cashier's checks (but exclude personal checks), to make it more difficult for the tenant to pay with paper instruments? Would that comply with "at least one form of payment that is neither cash nor electronic funds transfer"? For money orders/cashier's check, they would have to make a trip to their bank, right? Could I then also have them make a trip to my bank to deposit it into my account (like if they were to use cash for rent payment)?
(3) Am I allowed under the law to incentivize electronic payment by offering a rent rebate of e.g. $5 representing my reduced handling and processing cost of paper checks? (I assume that I would not be allowed to add a fee for paper payments.)
What are your opinions?
Why am I asking these questions? Like many of the commenters above me, I hate dealing with periodic manual tasks. I'm a computer guy and like to automize stuff. Also, I might be traveling or whatever and not be at home on every 1st of the month. Plus, nowhere else in the developed world but the U.S. is it common to send little pieces of paper across the country and to/from banks to make payments. What a retarded legislation.
- Property Manager · Redondo Beach, CA · Member since 2014 · 45 posts · 6 votes7y
I'm in CA and my leases show two ways in which tenants can pay rent.
1. Online via ACH through their tenant portal.
2. In person at a physical location (7-11 or CVS Pharmacy) which is set up to accept cash and post the payments directly to my property management software, Appfolio.
No more dealing with cash, checks, money orders or cashiers checks.
- Specialist · Dunedin, New Zealand · Member since 2018 · 71 posts · 38 votes7y
@Paul Gwilliam, @Ryan Swan @Jason Conroy There is some great software out there called Renttrack (I'm not at all affiliated), which heavily incentivizes tenants to pay online to build their credit score, via ACH or CC/Debit card. It's also something tenants can use without their landlord enforcing it.
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