Introduction
Not all rent payment methods are equal. As a homeowner, you want to choose payment options that are easy to document and allow you to receive funds quickly. Below are eight forms of rent payment to consider, including four options to accept and four options you may want to avoid.
4 Acceptable Rent Payment Options
As a homeowner, you have the right to determine which forms of rent payment you will accept from tenants. The following four options are considered the best for homeowners. These methods are easy to verify and more secure.
Cashier’s Check: A cashier’s check is issued by the bank. It is proof that the tenant’s account has the necessary funds available at the time the check is written. However, there is no guarantee that those funds will remain in the account when you actually deposit the check. Therefore, this type of payment is more secure than a personal check, but not as safe as a money order.
Money Order: A money order is similar to a cashier’s check. However, there are larger fees associated with a money order, and it is only issued by a bank where the tenant has an account. The bank will withdraw the money from the tenant’s bank account and guarantees the amount related to the money order. Since the bank guarantees this amount, you don’t have to worry about the availability of funds when you try to cash the money order.
Cashier’s Check: Cashier’s checks are available at banks or at local post offices or other convenience stores for a small fee. The tenant must convert cash to obtain a cashier’s check, so it is similar to receiving a gift card for rent. For example, if a tenant wants a cashier’s check for $1,000, they give the post office $1,000 in cash. The post office then gives the tenant a cashier’s check for $1,000, which they give to you.
Electronic Payment: Electronic payment that does not require you to provide any of your personal banking information to the tenant is a good option. It is quick, as the funds usually transfer immediately or within two days, and requires minimal effort. There are many online rent payment sites such as ERentPayment, RentPayment’s RentMatic, and RentMerchant. Person-to-person electronic payment platforms, such as Venmo or Zelle, are also smart options as they allow you to pay rent to the homeowner using their email or phone number.
4 Rent Payment Options to Avoid
Homeowners may also refuse to accept certain forms of rent payment from tenants. These forms can be difficult to document or even lead to fraud. The four options to avoid include:
Cash: Do not allow tenants to pay rent in cash because it is difficult to document and easy to dispute. A tenant might claim they gave you the full rent amount in cash, but you may realize they are short by $20 when you actually count the money. If the total rent amount is not in the envelope, there will be a dispute between the parties with no way to prove the actual amount of cash in the envelope.
Credit Cards: Do not allow tenants to pay rent using a credit card. First, you usually have to pay a transaction fee to the credit card company. Secondly, the tenant always has the opportunity to dispute this charge with the credit card company as fraudulent, leaving you without payment until the issue is resolved, hopefully in your favor.
Direct Deposit into Your Bank Account: Do not allow tenants to directly deposit their monthly rent into your bank account because that requires you to give them your account number and routing number. If they are able to put money into the account using this information, they can also withdraw money from the account using this information. Although most people are honest and would not commit this type of crime, there is no value worth the risk.
Check
Personal: With personal checks, there is no way to verify whether the check is genuine or if the funds are available until you attempt to deposit the check and it does not actually clear. Once the tenant establishes a payment record using a more secure method, you may decide to accept personal checks as they build a level of trust.
Conclusion
In short, homeowners should accept certified checks, cashier’s checks, money orders, and electronic payments as options for rent payment. On the other hand, they should avoid accepting cash, credit cards, direct deposits into your bank account, and personal checks as options for rent payment.
Source: https://www.thebalancemoney.com/what-forms-of-payment-to-accept-as-rent-2125012
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