In the last few weeks I rented an IP and the payment method is one I have not come across before. In the past, if a lease started on, say, 9 February, then the rent would be paid a little before this, with subsequent payments due on or before the ninth day of each month. The rent is weekly amount X 52/12, which is a bit high or low but works out over a year. The new PM does it differently. The lease started on 28 July, and the first payment was to 20 August, the date when all the rents for this REA are due. After 20 August the payments are monthly as has been the case for all of my other rents. Is it usual for a PM to have all rents due on the same day? Secondly, I expected that if payments are made on time by direct credit to the REA account I would get the rent less the management fee a few business days later. My understanding is that direct credits are equivalent to cash, that is, instant credit. The PM says that it takes 2-3 business days to clear into the account, and then payment is at the end of the month. It's done by computer, automatic, so if the funds are paid then they should be cleared and processed instantly. Payment by the tenants on a Monday, sent to me on the Tuesday. Can someone please advise if direct credited funds take 2-3 days to clear? It could be that the REA system is designed to hold onto the funds for as long as possible, and that this can be changed to paying me a few business days after the tenant pays the REA, regardless of when this is. TIA.
There are more than 52 weeks in a year (that's only 364 days, close but not correct), calculation for an equal monthly rent is daily rent/365 [or 366 for leap year like next year] days). Does Victoria permit monthly rent at the owner's request (not possible in NSW unless the tenant volunteers it). The names of the transferror to a bank account doesn't appear for a day or so (depends what time the transfer is made), so yes it can take a little while to identify who has paid into an account. If your payment is at the end of the month, does it matter other than for the agent to be managing arrears? Even if the agent's system is holding on to the money for as long as possible, it sits in a trust account which attracts no interest (to you or the agent)
direct credits can take up to 3 business days to clear there is a lot of grey area re: when they tenant makes the transfer and can provide a transaction receipt as evidence to the fact, is that taken to be when the payment was made, or is it when the money is received in the trust account and appears on the statement (the other side to the 'statement of fact' coin). In practice, tenants can lie and photoshop and do all sorts of crap, in reality, a Lessor/Agent can only go off what they have, which is money in the bank account. It is standard practice to inform tenants that direct credits can take up to 3 business days and they need to allow for this when considering when to pay their rent. Lessor/Agents have no control over when and how much rent a tenant pays, so far as, you can tell them, breach them, remind them, etc, but if they don't pay on time or the correct amount, you can do little about it, and still have to receipt it. In QLD a tenant can lawfully sit between 1-7 days in arrears, a breach notice can only be issued on day 8 of arrears. A lot of Lessors do not understand this, and their world melts down when they don't get exactly '1 months rent' in the disbursement, and also think it is a failing of the Agent, forgetting the fact the payment period is (generally) specified as weekly in the lease, and amounts less or more only advance the paid-to date by blocks of the payment period. There is absolutely zero incentive for an Agent to hold onto trust money any longer than they have to. An Agent only gets paid when they do a disbursement, that is, in QLD, under the AFA Act, the Lessor must be paid first, then the Agent can take their commission. A common reason trust money is withheld is to pay upcoming invoices and bills, this is generally transparent to the Lessor. In practice, it becomes less important when and how much the tenant pays money, so long as they are not more than 7 days in arrears. I am often surprised when Lessors blame their own budgeting problems on the Tenants erratic yet lawful payment behaviour. I have yet to see a successful tenancy termination on the grounds of payment amount and frequency when they're not actually in breach via rent arrears. For example, yes in Item 8 of the GTA (QLD) the lease specifies a day and frequency of when the rent amount in Item 7 should be paid, but this is seldom stuck to, and provided they're not in breach for rent arrears, it is unlikely and adjudicator would actually grant a termination simply for repeated breaches of Item 8.
This is wrong way of calculating rent. This is clever. It means all their rents come in one day. Meaning their bulk arrears reminders can go out together on 22nd, 25th, etc depending on what their protocol is.
Quite a bit to break down in that paragraph! Might be easier to do in dot points. - yes it can take 2-3 days, but not always. It will depend on the bank (same bank transfers are generally faster) and what time in the day the tenants do the transfers. You will find if you dig the banks even do batch payments and depending on the time of day it may not be processed from the banks end until the next day. - an agent can only receipt a payment when it is received. For EFT that is when it appears as cleared funds in the bank account. In addition, generally speaking an agent will receipt and reconcile the trust account once a day eg. First thing in the morning they will receipt the previous day's payments. - again generally speaking agents will do monthly or twice monthly disbursements. Some offer weekly and I have seen daily. Nothing wrong with this at all but it can have some unintended complications, mainly around the ability to accrue enough rent to cover larger bills such as rates and BC. - the payment from the tenant to the agent may be "done by computer, automatic", but the payment to you from the agent is not a completely automated process. Software has certainly made the process of disbursing a trust account much easier, but it is not completely automated. Individual disbursements can be done, but doing them for hundreds if not thousands of owners individually as rent is receipted is practically not an option. - Luke
I hope you don't do that Michael Mitchell! Your profile says Brisbane, and according to QLD law all rent payments are considered to be received on the day the tenant initiates the electronic transfer, not when the LL or REA actually receives the funds. For any other state I would agree with you (and I think that the QLD law is dumb).
Yes true but section 86 is very difficult from a practical point of view for a whole range of reasons. - Luke
Yes, until the money doesn't arrive because they used the wrong bsb/account number, or any other number of reasons, in which case, the show must go on - breach notices get issued according to timelines, etc. because at the end of the day, the tenant has a responsibility to pay their rent on time, and see that it arrives on time, and for matters outside their control, they can explain that to the adjudicator, or the money does arrive and the matter is simply resolved (notices withdrawn etc. and life goes on as normal) once the issue has been corrected [process still gets followed though to protect the Lessor]
Hence why I think that this particular law is "dumb". It requires the tenant to provide documentation to the REA/LL as to when they paid, and for the REA/LL to manually update the ledger. I did read a few months ago of a QCAT case where a tenant challenged a REA over their ledger showing late payments due to this. The tenant was concerned that the ledger showing late payments would affect getting their next rental. The tenant won.
Mute point but if the funds aren't in the account you cannot adjust the ledger to reflect that they have been received, this is fraud and will be picked up at the annual audit as the bank statement does not match the ledger for the day.
The tenant might have 'won' but the ledger was not wrong. My favourite saying of late - "the ledger never lies", like something out of a tv show haha. There's actually two ledgers here, a tenant ledger kept by the Lessor/Agent reflecting their bank account (credits), and a tenant ledger kept by the tenant reflecting their bank account (debits). Both would be correct in terms of the dates they show... This is just a classic example of how the law has not caught up with changes in technology.
There are very interesting posts above. My understanding is that EFT from one bank to another are recorded at the receiving bank the next business day, with some taking a day or three to clear. The REA folded when I said that other REAs may have immediate payment. So the tenants pay, and a few business days later I get paid, which is fair to the REA and me. Law lags society and technology by 5-10 years.
