Earlier this month, we discussed various rent payment options and the importance of offering your tenants several ways to pay their rent.

Now let’s chat about what happens with a dishonoured rent payment and what to do when Landlords change their banking details.

Dealing with dishonoured rent payments

A dishonoured rent payment is when a payment made by the tenant bounces in the Trust Account.

When a payment is due to be debited from the tenant’s account, if there are insufficient funds, it bounces on the Agent’s side. It is then shown on the debit column of the bank statement.

If you pay the Landlord funds that you technically have not received, it will result in a major breach.

So how do you avoid it from happening?

You stop it in its tracks before it can occur.

Introducing the 3-day clearance rule

First of all, turn on the 3-day clearance rule in the back end of your software under banking settings.

This one action will stop rejected payments from being sent to the owner.

Instead, uncleared rent payments will now show on the Owner’s EOM statement.

Be aware, it will be questioned by the Landlord.

Here’s a sweet and simple explanation for you to explain the situation to enquiring Landlords.

“The method we have for collecting rent is via Direct Debit from your tenant’s account. Unfortunately, the bank shows these funds in our account as clear transactions. However, like a cheque, they have a 3-day clearance. We legally cannot disburse funds to you that haven’t cleared our account.”

This explanation will put your Landlord’s mind at ease and help you to avoid any nasty breaches.

When Landlords change bank details

Another common occurrence is when Landlords change bank details.

Seems harmless enough? Most of the time it is. However, there are dodgy criminals at every corner, trying to fool unsuspecting people out of their money.

So, here are tips if you receive a notification of changed bank details from your Landlord.

  1. ALWAYS make sure it is in writing. This does not mean text message – ensure it is email or direct mail.
  2. ALWAYS follow up with a direct phone call to ensure the change of details. It’s amazing how legit crimes can make a letterhead or email look.
  3. ALWAYS check the email address the notification comes from. As above, if anything seems fishy (and even if it doesn’t – always call to check over the phone).
  4. The final sweet little trick is to ask your clients to set a password at the start of your agreement. When any changes are made to the agreement, they must cite the password. They may question the reasoning, but once they know it is to ensure maximum security, you can bet they will be happy with the request.

So there you have it. What to do with a dishonoured rent payment and how to ensure you manage any changes to bank details appropriately. All helping to ensure you have the smoothest operating agency in town!

Jane Morgan is the Director of End of Month Angels, a consultancy firm specialising in Trust Accounting. Jane knows the legislative requirements of running a successful Real Estate office through her 25 years’ industry experience. Don’t trust just anyone with your trust accounting. Book an appointment with an End of Month Angel today.