All property managers here on the Sunshine Coast in Qld use software to run their property management business and trust accounts. A lot of what the property management software does is automated. Rental appears to be part of that. It’s common for tenants to be sent rental arrears emails and SMSs even if they believe they are not actually in arrears. In this article, I want to explain why this is happening to you as a tenant.
PAYING RENT INTO THE PROPERTY MANAGER TRUST ACCOUNT WITH NO REFERENCE NUMBER
We are a relatively small agency. But we get a load of money coming into our trust account daily. Every morning, Kath receives all the money that comes into our trust account. If money comes into our trust account with no reference number, Kath has no way of knowing who made that payment, so the funds have to sit unallocated until she can chase down who made the payment & have them supply proof. Sometimes this can take a week for it to be worked out. As I write this article, we have around $170,000 in our trust account. But we have also had as much as $700,000 in our trust account, so as you can see, this is a big job. And yes. Every morning it’s receipted & reconciled. So if you’ve made a rental payment with no reference, we’ll not be able to update your account, and we will assume your rent is still in arrears, so you’ll continue to get arrear notices.
YOUR RENT PAYMENT IS TAKING A FEW DAYS TO APPEAR IN OUR TRUST ACCOUNT
If your rent is due and you’ve paid it today, it does not show up instantly in our trust account. Depending on what voodoo activities the banks are doing, it can take several days to appear in our trust account. Sometimes a tenant will make a payment and send us a receipt as proof, but we cannot receive this until we see it hit our trust account. We currently bank with the ANZ, so if a tenant is with the ANZ, this may be instant, but other banks do vary. So when you pay your rent, keep in mind it may take a few days for us to see it, so as far as our system is concerned, you are still in arrears. What’s interesting to know is that legislation states that if you have paid and can prove you have paid, that’s fine, too; our system can’t update it. So if you are a bit late and pay, send us a copy of a receipt, so we know it’s coming.
NOT PAYING YOUR RENT ON WEDNESDAYS
We ask our tenants to pay their rent on Wednesdays. We do this because on Fridays we pay our landlords. This will allow two business days for the rent to appear in our trust account. Sure, it’s possible if you do this on Thursday, it may still hit our account by Friday, but it may not. Of course, you may get paid on Fridays, so you may have no choice but to pay Fridays. If you do this, you must realise your rent will always be in arrears. The only way to avoid this is to spend a week early on Fridays, so you are then always slightly ahead.
RENT DUE IS CALCULATED DAILY
Most tenants don’t realise rent is not calculated weekly. It’s calculated daily by our computer system.
If a tenant’s rent is due and they pay today, because rent is calculated daily, often the tenant is instantly overdue the next day because they are already behind.
It’s not the property manager tracking this; it’s the computer software.
Rent is tracked via computers now. They don’t lie. If the system is saying you are behind in rent, you probably are; you may not realise it because it can be confusing.
Banks are not open on Public Holidays. Easter is a good example. Banks were closed this year on Friday and Monday, so many people would have paid their rent, but it may not have hit property managers’ trust accounts until Tuesday or Wednesday. So this just throws everything out. It’s possible tenants would have been sent arrears notices automatically on a Tuesday or Wednesday, even if you are up to date, just because the banks did not process the rent over the holidays.
HOW TO NOT GET AN ARREARS REMINDER
Simply pay your rent on time. Tenants often tell us they always pay their rent weekly on a Wednesday. Which is excellent, and they should. They are often paying it weekly, late, or when we check, it’s not always on a Wednesday. Sometimes it’s the following Monday. So if you can pay a few days in advance, or even better, a week in advance, this will ensure you never get an arrears reminder. When a tenant moves into a property, they must pay two weeks’ rent in advance. If they then chose to keep paying weekly from the move-in date, they would never get behind. Oddly most tenants don’t do this. They give themselves a two-week holiday from rent, then fall a few days behind, and they start paying then. Now they have kind of buggered things up for themselves & it’s hard to catch up.
In addition to your weekly rent, you may have been sent an invoice. These are usually for water bills, but depending on your lease may also be for electricity or internet. What’s interesting is with these invoices, you have up to 30 days to pay them.
But on day 31, the property manager can send you a breach notice. Often these amounts are relatively small, and they are easily missed. But just like rent, you can be breached and asked to leave for non-payment of them.
Keep in mind that when you pay these invoices, you need to make it clear the money you are paying is for this invoice and not part payment of rent, as your property manager will need to allocate this correctly.
DO YOU HAVE TO PAY RENT IN ADVANCE?
Many people seem to believe tenants are required to pay rent in advance. But that’s not the case.
Legally tenants are not required to pay rent in advance. A tenant just needs to keep the rent paid up to date. What I see happen all the time, though, is a tenant will get a few days behind. Then pay a week to fix up the arrears, not realising they need to pay more than a week to get up to date, so now they are constantly a few days behind all the time.
WHEN DOES RENTAL ARREARS GET SERIOUS?
While property managers can chase a tenant for arrears between days 1 to 7, a property manager can’t take any action other than asking for payment. On day 8, a property manager can give a tenant a breach notice, Form 11. This is when things start to get very serious. Because the tenants not only need to pay the overdue rent but also need to pay the rent up to date, which is more than a week’s rent. They have 7 days to do this, or they can be given the Notice to Leave, Form 12. Things can escalate quickly, mainly because a tenant will assume paying the one week’s rent will sort things out, but it doesn’t. Because by day 8, they are now over one week behind. If you are sent Notice to Leave, which is a Form 12 due to unpaid rent, you have 7 days to get out, yes, vacate the property & that would usually mean you are now living with family or in a car. No one wants to get themselves into this type of situation.
WHY DO NOTICE TO LEAVE GET ISSUES SO FAST?
Not paying your rent on time is serious. While the RTA holds a bond, it does not go very far if a tenant is two weeks behind in rent. The legislation is in place to protect the landlord. If a property manager or landlord lets a tenant get more than two weeks behind in rent, it can be challenging for a tenant to catch up. All tenants’ number 1 priority needs to be paying rent on time.
WHAT ABOUT A PAYMENT PLAN TO CATCH UP?
Your property manager may consider a payment plan for you to catch up with your rent. But this is a fine line, and the property manager is then exposing themselves to potentially having too much overdue rent. But if the tenants miss just one payment, they need to realise the property manager will probably have no choice but to issue a breach notice and then a message to leave.
WONDERING WHERE YOUR RENT CURRENTLY STANDS?
At Asset Agents, all our tenants have direct access to our software that tracks all this. Our Tenants can log into it here and see precisely where your rent is at. It is the perfect place to keep a close eye on where you stand.
If you are not with Asset Agents and your property manager does not have an online portal, you need to ask them for a copy of your ledger; this will show you exactly where your rent is.