I no longer accept checks or money orders - just PayPal, QuickPay, Pop Money, etc.

It's a temporary measure until I lock down a better system.

Anyway, rent is due by 5:00 PM today. At 4:15 I received a message from PayPal regarding a tenant:

"Funds Are on the Way!

Hello!

It usually takes 3-5 business days for an eCheck payment to clear."

Too bad the tenant waited so long. She paid today, but the rent won't be received for several days. So now she gets hit with an extra $50 today and $25 per day.

I wrote to her and explained it, and hope she fixes it before 5:00. If not, it's on her. She has never done this before.

If she doesn't clear it up she will get served with a 3-day notice even though she has (kind of) paid rent. She won't be happy.

Just one of those weird things that can happen with this sort of thing.

If she's pays it today (on the 1st) and YOUR rent collection method has a 3-5 delay, that's on you dude.

She paid by the 1st.

I have many tenants on autodraft that pay on the first. With the 3 business day hold, I won't see those funds until next week.

You're wrong. The lease clearly states that rent must be received by 5 PM on the first.

I take it you run a loose ship and don't have many tenants.

"I take it you run a loose ship and don't have many tenants."

It's not apples and washing machines. What do you do to your tenants that send a check or money order (suppose you do for the sake of conversation) and the 1st lands on a holiday or Sunday?

Do you charge a late fee?

If you are taking rent payment via electronic methods, you're subject to those delays based on the program your using. Some are instant, some have hold times.

Clearnow autodraft (recommended by this site) DRAWS payment on the 1st, holds 3 business days and then deposits into my account. If anyone goes NSF, I'll know tomorrow by an email. Then I would deal with them. If not, I consider everyone paid ON TIME and in full until it does or doesn't hit my account next week.

This month's delay causes the rents to hit my account next Monday or Tuesday. Are my tenants late?

Absolutely not.

Neither are yours.

They are expected to pay on the first. Not the 27th or 28th to get to you electronically by the 1st.

My lease says noon of the first day. My tenants don't know about the delay that happens on my end and they don't need to.

If you want to make them wise to the delay on your end, that's fine but you should make them aware to pay early.

I gotta side with your tenants on this one.

I will admit that it's a gray area. That's why I posted this. I see your point.

But...

First, I don't accept checks. But with Check 21 they can clear the same day or the next day. If I were to deposit a local check into my local Chase branch, I could draw on it the next day.

Second, the tenant didn't plan very well here.

Three - five days before I get my money isn't how it's supposed to work.

Also, I'm not upset about the sleazy pet fee, you made. I was just saying that it's no different.

Thinking about it though, it is kind of different. The nonrefundable pet fee is very common practice in different areas. It's widely accepted by tenants as well. Although, I don't want to take this thread off course with that discussion.

That makes sense, but in my opinion basically a note from PayPal saying that I will get my money in 3-5 days doesn't cut it. AT least not for me. I can't spend it tomorrow.

After all, they paid PayPal - not me. It's not up to PayPal to pay me.

Again another example of why this is not a great payment system. (It is just good - nothing more).

Also, as a test:

Pay the IRS or your property taxes via PayPal e-check on the date they are due, knowing that it would be up to 5 days before receipt. Or a mortgage on the last day of the grace period.

I'd like to know what happens.

Now, paying the IRS your tax bill that way vs a monthly recurring rent payment from tenants IS comparing apples and washing machines.

Unfortunatly I will be getting a refund.

Well Jeff, if your mortgage payment is set up on autodraft for the 1st of the month and the first of the month happens to fall on a Sunday or a holiday and your payment is made on the 2nd, certainly your bank is not going to charge you a late fee.

Now, you mentioned grace periods which is not what we're talking about here. And you didn't say anything in regards to a grace period with your tenants regarding this payment not hitting your account today.

I have a non-written grace period. My tenants do not know about it. They don't need to. If I don't have my rents by tomorrow, that come in the mail, game over. They owe late fee. Giving them that one day non written grace period is for me and me alone. It keeps me from running to the magistrates every month and filing on people for no reason at all. Part of running a tight ship is also knowing when to not overreact.

NE, I only have autodraft for 3 properties. But I bet if the grace period ended on the middle of the week for the others, and I paid it on that day, with the check to be received in 3-5 days, I'd get hit with the penalty. Is that wrong?

Jeff, you 'hired' a system to work for you in the area of accepting rents. You knew there was a delay. Well,let that system work for you. You have a confirmation that the tenant paid the system you hired on the correct day. This is NOT the same as a tenant saying "the check's in the mail." Your payment is already in the pipeline and will get to your bank. There is nothing for you to do except be happy that the money WILL arrive in due course.

Lynda, you don't understand the problem. I get many Quickpay payments. They are credited within seconds.

I receive many PayPal payments. I transfer the amounts on the first and I receive them the next day. No problem.

Incorrect. If a tenant pays by check today and it's received in 5 days is it on time? Not with the landlords I know.

Regarding the IRS tax payment example, if it's postmarked on the 15th, it's still on time. They don't penalize you if they don't physically have it by the 15th.

Plenty, finally someone who gets it! Thank you! Your example is a good one.

You're right - it's not paid until we have it.

I am going to fine tune that section of my leases.

If she had responded with an e-mail explaining that there was some confusion since it was her first time with this aspect of PayPal, I would have worked with her. That not being the case, I gotta go tough! :)

I usually get written checks, even if I get to the bank that day, they holds funds for a day or two. I still consider it paid on time. Sometimes I don't even get to the bank for a day or two. I still don't have the cash to spend, but I consider it paid on time. Yes, you said you don't take a check, but if I paid by check in a store, it is considered paid when they get the check.

For a tenant that has always paid on time, I would not collect a late fee for an occasional day or two late anyway. Especially if they let me know. In this case maybe she doesn't know e-checks take longer.

Personally, I prefer to not be a hard@$$ with my tenants because someday I may run into difficulty getting something fixed as soon as I should and I hope they give me some leeway. NOW for PITA, or constantly late paying tenants it is another story. I don't think I would take the time and effort for a 3 day notice when I know it is coming. I have better things to do with my life.

But everyone does what works for them in their area. Funny, even if I did insist on a late fee, I probably would not be flaunting it to others.

"But everyone does what works for them in their area. " Very true.

"Funny, even if I did insist on a late fee, I probably would not be flaunting it to others."

AllyM, if you accept an e-check, by your reasoning you should ship on that day. Also, I don't care what you or anyone else accepts. I flat out don't tolerate late rents. So yes, I am that rigid when it comes to income.

Hi Jeff,

Was tenant aware of this delay? If this is new to the tenant, the first time, I'd say, "From this day forward, we discourage the use of E checks because of the delay in receiving funds--the rent has to be IN our hands/bank before 5." She paid you, a third party just verified it and likes to play with it for a few days.

How has she otherwise paid you in the past? Is she usually late? Full of fun and games?

I also agree with the others and MIkeA made it more clear.

You picked paypal as a method of payment. A judge would look at it as paypal is in a sense acting as your agent.

If your agent holds it for 3 to 5 days that has nothing to do with the tenant.

Same as if the tenant gave you a paper check and

your bank told you that it will be 3 to 5 days before you can draw on the funds.

As long as they make the payment by the due date in just about anyway I would not complain.

You can and should only expect tenants to pay on time. This needs to be this simple.

Hi Amy,

As I mentioned, I did contact her earlier. She has been a great tenant. This may be a PayPal problem - she's looking into it. She is not playing games. If she gets this sorted out by tomorrow I will cut her a break. She said that she has been paying this exact same way for a year now - so she could be right about PayPal.

With many landlords, late pay is an issue. With me, it's not. I handle it as a problem.

RR78, so if you accepted PayPal e-checks, what would you consider to an acceptable amount of time? 3 days? 5? A week?

Consider the scenario *IF* you accepted cash and the tenant dropped you Ben Franklins at 4:59pm on the first of the month.

Technically, the tenant has paid on time, but you cannot spend it until after your imposed deadline. Does the tenant now owe you a late fee because you cannot get to the store that closes at 5:00pm?

Cut your tenant a break, thank them for their payment and "lock down a better system" before the next payment due date.

If I agreed to accepted Paypal then an acceptable time is what ever it takes paypal to give me the actual funds.

Also on how you pay your mortgage. If they received your payment on time but did clear for 3 to 5 days would you be charged a late fee?

And lets say for any reason. They did not deposit. Software problem, or they misplaced it. Would not happen. But say that is just the way they do business like papal.

Unless it was caused by a bad check or NSF.

Again Judge would look at it like Paypal was your bank or agent. Have a problem with their processing time take it up with your people.

As a vegan laundry worker I'm still pretty triggered about the whole apples and washing machine statement. And I thought this was a safe space. ;)

As for the rent, one of my screening tricks is there is a bank across the street from my apts. New tenants are required to either have or open an account there. If they can't open a bank account I don't want them as tenants anyway.

Rent is to be deposited in my account before midnight on the 1st. They can do an account transfer online from their account to mine. It has made it very simple. Otherwise they can walk across the street and physically deposit it though nobody has done that in awhile.

All my tenants now are 62+ so basically they get their SS checks on auto deposit and then just transfer the rent and their other bills that aren't already on auto pay. If I was bigger I'd go with an autodraft like ClearNow.

It's fun to stumble onto a thread that starts out pretty straight forward, runs a gamut of personal attacks, apologizes, justifies, walks back, and then ends kinda with no resolution....

Happy Friday, All.

I have read all three sides of the argument (let it go, don't let it go, compromise). Each has good points made. Bravo to the wise thinkers.

I can only say what I would do, not what Jeff or anyone else should do. If it were me, and this was the FIRST TIME (Jeff said it was) I had ever had an issue with an E-Check, I would chalk it up as a lesson learned, discuss it with the tenant that in the future this would result in a late fee, and in the words of Elsa of Arendelle... "Let it go."

But if Jeff chooses not too, that's fine too. It's his business and he runs it the way he thinks best. I don't have this issue since I don't accept E-checks or personal checks: cash or cash equivalents only that credit to my account immediately or next day at the latest. However, before trying to enforce it in court, I would check with local land lords who have had similar situations to get a feel for what the local judge says. Also, might consider how this would be an opportunity to buy future goodwill from the tenant at virtually no "hard cost" to yourself.

S i d, I think you summed it up nicely. Most of us like this board because we can get opinions from the big LL, the little LL, the small town and big, east and west and everyplace in between. This is why I try to format my post with "I would". It is food for thought about how different people handle it. That thought is what allows us to see better and worse ways of how to do it, and again mileage may vary depending on where you are.

NC has a 5 day waiver so we cannot issue late fees until the 6th. When we were still accepting mailed checks we charged a late fee for any envelope postmarked on the 4th. It was our contention they had no reasonable expectation that it would arrive the next day.

When we switched to digital I found many tenants paid on the 5th. At that time funds did not transfer immediately so it begged the question if "no reasonable expectation" would still apply.

I called the legal dept. of the NE Re Comm. who directed me to the NC Bar. The Bar's position was that when a person makes a payment through a digital paymaster be it their bank or paypal, etc., their funds are automatically withdrawn from the their account usually within minutes.

The fact that the payee (us) uses a paymaster whose TOS allows them to hold those funds is beyond the control of the payor and the payor has a reasonable expectation that the funds will be transferred within the same time frame that their funds are withdrawn.

This was their conclusion several years ago when instant transfer was rare. Today it is generally SOP except with the rental paymasters which is why I don't use them. I was very surprised about PayPal since I receive and send funds through PayPal and transfers both in and out are received in minutes.

One last thought. When we were accepting checks our on time ratio wasabout 58%. And then we had to deposit the checks and wait for them to clear.

Digital has us at 98-99% on time payment. And I don't have to wait for my funds. If my tenants pay between Sunday - Thursday funds are in my account next day.

I wouldn't consider it late. When I pay my mortgage I use an e-check. If I pay on the 1st it takes 2 days to be pulled from my checking account. It is still considered paid on the 1st. Same thing happens with my credit card payment - even when I pay it on the due date. The payment is not considered late.

@ Jeff, if the funds arrive soon, I would only have a chat, not hit her with late fees. (What will a judge rule when this get to court)?