Paying rent - processing time (deposit, documentation, house, landlord)
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If a tenant offers to pay a year's rent in advance and you don't take it, it's pretty shady to then complain that you have to wait for the monthly checks to clear.
NO, NO, NO!!!!!!! That's a tenant made up understanding. Many states treat prepaid rent as excess rent or security deposits returnable to the tenant upon demand. The LL can be held liable for the funds along with accounting yet reaps none of the benefits as you can make a demand for repayment (with interest in some states) and any option they could have taken instead of that option is now gone.
This is not a mailed check though, electronic transfer. When we signed the lease I suggested two different options, using the electronic transfer so he didn't have to deal with paper checks, or I would just give him 12 post-dated checks for the 1st of each month in advance. He chose the first one. I want things to be easy for everyone too, and was very flexible about how he wanted to get paid. If a tenant offers to pay a year's rent in advance and you don't take it, it's pretty shady to then complain that you have to wait for the monthly checks to clear.
The post-dated checks are a very bad idea. The banks will accept them and process them regardless of the date on the check. Post-dating a check provides you with no protection. You could find yourself with all of them coming due well in advance of when you intended.
There is no law that prohibits the issuance of a post-dated check; however, there are laws against issuing checks when you know that you don't have funds to cover them. Whether a particular state's bad-check law would make an allowance for the fact that a check was postdated is something you need to check in your own state.
Delivering postdated checks is not wise, however. That's because it's legal for your bank to pay a check even when it's postdated, unless you've taken the extra step to contact the bank and put it on notice about the postdated check, and requested the bank not to pay it until its date.
He gets an email instantly, and the funds are avaialble in his account 2 days later, similar to an out-of-state check, which it basically is. I know this is how it works because it's my girlfriend's account, and we do the exact same thing to transfer money to my account all the time. He doesn't get a paper check or anything, the money just goes right into his account.
We did look back at the history, and we've initiated the transfer on the 1st or a couple days before every month.
He lives in a different city, and if were mailing him a check that arrived on the 1st, which would be perfectly acceptable under the terms of the lease, he wouldn't get the money any quicker, and he'd also have to drive to his P.O. Box to pick it up, and go the bank to deposit it.
Interesting. At Wells Fargo, if I take a deposit into the bank, the money is available the day I deposit it, unless it is after 4:00 on Mon-Thur or 6:00 on Fridays, in which case, it is the next business day, regardless of where the check originated from. The only exception is if it is a very large check that they want to put a hold on, which is rare. I regularly deposit checks from all over the US, including some from small local banks/credit unions out of state, and I've never had a delay on having my money available on any single check under $5000 or so. To have a delay because the check is coming from out of state isn't something I've run into.
When I get an email from Wells Fargo that a tenant has initiated a transfer, I can go online and see that the deposit is pending, and the next business day, the money is available for use.
But anyway, if you are sure that he is getting the money delivered to his account prior to the 5th, you should be golden.
This is not a mailed check though, electronic transfer. When we signed the lease I suggested two different options, using the electronic transfer so he didn't have to deal with paper checks, or I would just give him 12 post-dated checks for the 1st of each month in advance. He chose the first one. I want things to be easy for everyone too, and was very flexible about how he wanted to get paid. If a tenant offers to pay a year's rent in advance and you don't take it, it's pretty shady to then complain that you have to wait for the monthly checks to clear.
Actually, from a landlord's perspective, having a tenant who offers a year's rent in advance, in any form is a HUGE red flag for me. We've had this work out well one time on a retired couple who we gave a discount for advanced payment of 6 months, but usually it ends badly. Either the time period runs out and the person has no more money and refuses to move, so you have to evict, or they trash the place, and you have to evict for that, and return a large chunk of money plus then sue for damages, or they are a drug dealer. We don't accept large advance payments anymore.
Actually, from a landlord's perspective, having a tenant who offers a year's rent in advance, in any form is a HUGE red flag for me. We've had this work out well one time on a retired couple who we gave a discount for advanced payment of 6 months, but usually it ends badly. Either the time period runs out and the person has no more money and refuses to move, so you have to evict, or they trash the place, and you have to evict for that, and return a large chunk of money plus then sue for damages, or they are a drug dealer. We don't accept large advance payments anymore.
Technically it wasn't advance payment, it was just giving him the checks for each month ahead of time. They couldn't be cashed until the 1st of each month. I was just trying to offer the easiest option for him, and asked what would be the most convenient way for me to pay him. If he just wanted a mailed check every month on the 1st, post-dated checks up front, electronic transfer each month, I told him I'd pay however he wanted.
Lets just clarify.
Lets say your rent is due on the 1st of each month. You said he gets an email, but is the funds actually deposited (not to be confused with cleared and available) on the first or is he just notified by email that a transaction from you has been initiated but the funds or a deposit isn;t actually made to the account ont hat day?
The funds are deposited but not available. We do it all the time to transfer money between my girlfriend and myself.
The funds are deposited but not available. We do it all the time to transfer money between my girlfriend and myself.
If the funds have been deposited (same as depositing a check or any other money) into his account on the date that it is due, the fact that his bank does not clear the funds until another date is not your concern or issue. Under most state laws, once he or his bank has the deposit instrument (check, cash, electronic deposit, etc) in their possession, you have fuillfilled your obligation to pay the rent on time. Now if its your bank that is "holidng" release or otherwise "preventing" the funds from being available, you have not paid the rent as required.
We pay our rent on the 1st every month using an electronic check from ING Direct. The last couple months he's been asking us to pay it early because it takes a couple days for the funds to clear, so even though he gets an email notification of the payment the funds are not available immediately, just like if he'd deposited a paper check.
Are we obligated to do this? The way I see it we've paid it on time, not to mention saved him a trip to the bank. If we were paying by paper check and he asked us to pay early so the check would clear by the 1st I would certainly think that was an unreasonable request, and I don't see any difference here.
The bank usually has an option to pay by paper check(where they will physically mail the check. He of course will not like this but oh well.
If you have a good relationship though I may consider conceding to his request. I personally think this request is a red flag that he may be having cash flow problems but that is speculation on my part.
Heres an idea...why don't you get the cash, get his bank account, and deposit it yourself? Or use a funds transfer?
Further - banks don't need to hold on to money...they just CHOOSE to. I have a new bank who pays me a full day later than my old one, because they choose to use my funds to play the overnight stock market.
Change banks if you don't like it...the smaller ones do not behave like this in my experience.
I think you are fulfilling your obligation.... I wouldn't quibble if the funds are credited without hold by the 6th of any month.
Banks can be funny.... If I go into a branch where they don't know me... I can always expect a hold with one Bank... just how they do things.
I even had them try and put a hold on funds I transferred from savings to checking for a Bank Check on a car purchase... told them to just give me the cash and let's not worry about it... they decided giving me a Bank Check without waiting to the next business day would be OK after all.
My experience is Landlords or Tenants living on the financial edge always ends badly...
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