All property managers here on the Sunshine Coast in Qld use software to run their property management business and trust account. A lot of what the property management software does is automated. Rental appears is part of that. It’s common for tenants to be sent rental arrear emails and SMS’s even if they believe they are not actually in arrears. In this article I hope to explain the various reasons why this maybe happening to you as a tenant.
Paying rent into the property managers trust account with no reference number
We are a fairly small agency. But we get a load of money coming into our trust account daily. Every morning all the money that comes into our trust account is receipted by Kath. If money comes into our trust account that has no reference number Kath has no way of knowing who has 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 sitting 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 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 are unable to receipt this until we see it hit our trust account. We currently bank with the ANZ, so if a tenant is with the ANZ this will possibly 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, it’s just 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 2 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 Fridays but it may not too. Of course you may get paid on Fridays so you may have no choice but to pay Fridays. If you do this you need to realise your rent will always be in arrears. The only way to then avoid this is to pay 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 tenants 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 then you probably are, you just may not realise it because it can be confusing.
Banks are not open on Public Holidays. Easter is a good example. This year banks where closed 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 even 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 in fact you are up to date, just because rent was not processed by the banks 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 great and they should. Often though they are paying it weekly, late or when we check it’s not always on a Wednesday sometimes it’s the next 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 are required to pay 2 weeks rent in advance. If they then chose to just keep paying weekly from the move in date they would never get behind. Oddly most tenants don’t do this. They give themselves a 2 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 then 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 even Internet. What’s interesting is with these invoices you have up to 30 days to pay them.
But on day 31 yes the property manager can send you a breach notice. Often these amounts are fairly 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 if when you pay these invoices you need to make it clear the money you are paying is in fact 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 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 really 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 day 1 to 7, a property manager can’t take any other type of action other than ask for payment. On day 8 a property manager can then give a tenant a breach notice, which is a Form 11. This is when things start to get very serious. Because the tenants not only need to pay the overdue rent, they also need to pay the rent up to date, which is then more than a weeks rent. They have 7 days to do this or they can be given a notice to leave, which is a Form 12. Things can escalate very fast mainly because a tenant will assume paying the 1 week’s rent will sort things out, but it doesn’t. Because by day 8 they are now over 1 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 is holding bond, it does not go very far if a tenant is 2 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 2 weeks behind in rent it can be very hard for a tenant to then catch up. All tenant’s number 1 priority needs to be paying rent on time.
What about a payment plan to catch up?
It’s possible your property manager may consider a payment plan for you to catch up with your rent. But this is a very fine line and the property manager is then exposing themselves to potentially having too much rent overdue. But if the tenants misses just one payment they need to realise the property manager will probably have no choice but to issue a breach notice then a notice to leave.
Wondering where your rent currently stands?
Here 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 exactly where your rent is at. This is the perfect place to keep a close eye on where you stand.
If you are not with Asset Agents and you property manager does not have an online portal you need to ask them for a copy of your ledge, this will show you exactly where your rent is at.