UNDERSTANDING THE PITFALLS BY ANDREW M. HULL, ESQ.
Andy M. Hull is the principal of Hull, Holliday and Holliday, PLC. He can be reached at 602-230-0088.
Landlords depend on timely rent payment for a number of obvious reasons. The primary ones are cash flow to make mortgage payments and maintain the property. It also is a concern of residents, since they do not want to pay unnecessary late charges and a tarnished credit record.
Management should be aware of potential problems with the delivery of rent. This article will provide an overview of some of these pit falls.
A.R.S. § 33-1314 states in part: Rent shall be payable without demand or notice at the time and place agreed upon by the parties. Unless otherwise agreed, rent is payable at the dwelling unit and periodic rent is payable at the beginning of any term of one month or less and otherwise in equal monthly installments at the beginning of each month.
In other words, the lease agreement should specify where a resident needs to pay rent. Normally, it’s at the leasing office during normal business hours. However, failure to designate a location requires management to collect rent from a resident at his or her unit. This could create delays if the resident is not home during collection times.
The resident also could argue that he or she is exempt from late charges since the rent was ready for pick up. Careful drafting of your lease should correct this problem.
Night drop boxes Another potential problem is night drop boxes. Residents use these for submitting rent during non-business hours or when the office is closed. This could lead to problems.
The resident can claim he or she submitted rent through one of the devises and management misplaced it. It takes time to trace money orders to determine if someone cashed them. If the landlord tries to evict the resident for nonpayment of rent, he or she may use this example as his or her defense.
Additionally, a renter may claim that management offers the night box for his or her convenience. The individual therefore assumes that he or she can pay rent in this manner every month. Both the landlord and renter could potentially argue over the timeliness of rent payment and if late charges are appropriate.
If your community offers these devises to residents, include a disclaimer in the lease. This should state that a resident who uses the night box is doing so at his or her own risk, and it is his or her obligation to make sure the rent arrives timely to the landlord.
Some final problem areas include mail, direct deposits and cash. If a resident mails you the rent, make sure your lease states when the community must receive it. For instance, management should require the envelope be postmarked by the first of the month; if it isn’t, late charges apply.
Some landlords have their residents direct deposit the rent into their bank accounts. The biggest problem with this method is partial payments. The resident could direct deposit a partial payment of rent a few hours before his or her eviction hearing. This could constitute a waiver and result in the case being dismissed. Finally, use caution when accepting cash. Cash is legal tender, so you may wish to word your lease to restrict payment of rent in this form.