Skip to main content

How to Close Eviction Loopholes with the Help of Online Payments

The universal hope is that every resident will be quintessentially clean, quiet, respectful, and punctual with their rent payments. But we don’t live in a Stepford world. Occasionally residents will incorrectly input their bank account details, causing returned payments. Sometimes, card holders will intentionally cancel a payment. For example, student tenants often use a family member’s credit card to pay their rent online. Their relative may not remember making the payment or recognize the line item on their credit card statement, and will issue a chargeback. Other times, unfortunately, residents cannot afford to make their full rent payment, so they submit partial payments in order to avoid eviction. In some states, even a payment of as little as $1 gives the resident legal permission to stay at your property. Whether or not an incomplete payment was intentional, you know the amount of rental income your building is supposed to bring in per month. So you need to be able to evict residents who don’t pay. How can you team up with your payment solution to ensure all balances are paid in full, or worst case, the eviction process is as smooth as possible?

3 of the Best Online Payment Features for Property Managers

Evictions are tricky enough. The easiest part of the process should be blocking delinquent residents from making online payments. That’s where a smooth accounting software integration can help. Your software should automatically push the most up-to-date list of blocked or “cash-equivalent” residents to your online payment system in real-time. And timing is crucial. If you have to go in and manually block residents from your system, you’re giving them a longer window of opportunity to sneak in and make a partial payment. It is critical that once your list of delinquent residents syncs with your payment solution, those residents are blocked immediately. Otherwise you’re putting your bottom line at risk.

Evictions are time-consuming, complicated processes. If you don’t do everything by the book, the resident you’re trying to evict might come up with enough ammunition to retaliate. And unfortunately, the law tends to favor residents over landlords and property management companies in most scenarios.

Stop Blocked Residents From Paying Through a Backdoor

To manage resident payments, you need to have a system in place to help automatically block certain residents, payment types, and payment dates. Doing it manually is a grind, and leaves room for human error. A customizable solution is a must. Think of your online payment flow in terms of traffic.

Green Light: Your favorite residents who always pay on time have the green light, which means they can make a payment using credit, debit, eCheck, or whatever other payment options you offer.

Yellow Light: If a resident payment is returned due to an NSF (insufficient funds), you might decide to put them in a “cash equivalent only” state; the yellow light. This means they can only make payments with verified funds, such as money orders, credit card payments, cash, etc. Some payment systems have a built-in counter that automatically converts residents to a “cash equivalent only” status after a certain number of failed payments. It’s like having a little digital employee that works ‘round the clock to proactively catch errors before your first cup of coffee.

Red Light: If you are evicting a resident and do not want to accept any type of payment from them, you can block them from your payment portal entirely. But beware of blocked residents who find sneaky ways to submit payments. Make sure you patch up these common loopholes.

Loophole 1: Fake Accounts

If your payment solution is not integrated with your accounting software, keep an eye out for blocked residents creating new accounts under slightly misspelled versions of their name, or different email addresses.

Solution: This is hard to control if your residents aren’t assigned a specific account number. The only way to attempt to block this, is to ask your payment facilitator to block multiple spellings of the resident’s name, i.e. John Smith, Jon Smith, John Smiith, etc. Most importantly, stay on the lookout for suspicious new accounts.

Loophole 2: Integration Lag Time

Some accounting software integrations do not sync in real-time. Resident data might only be sent over to your payment system every few hours, or in some cases only once per day. So if you block a resident in your accounting software, but your payment system doesn’t receive that data for a few hours, the resident could realistically sneak into the payment portal and submit a payment even though they are blocked in your software.

Solution: Double check that your web-integration is in real time. If it’s not, you’ll need to block residents in your accounting software and payment portal separately to avoid giving your blocked residents that window of lag time to submit a payment.

Loophole 3: Unlocked Balances

This might be the most obvious loophole, but if your residents are allowed to edit their payment amount, it is easy for them to make a partial payment.

Solution: If your accounting software and payment solution integrate, make sure you are inputting the correct balance for each resident. Lock those balances so that partial payments cannot be made.

Loophole 4: Secondary Accounts

Sometimes blocked residents will create another account under their spouse’s or child’s name who is also on the lease.

Solution: Make sure you block every account on the lease, not just the one who historically made the payments.

Closing loopholes can be tricky depending on your software. Team up with your payment solution to block partial payments. Your residents will either pay their rent in full, or you’ll have the option to legally evict them. There’s a delicate balance between working towards a 100% occupancy rate, and evicting tenants when necessary. But engaging your residents and staying competitive in the market can help your property reach its highest occupancy rate and max ROI.

Keep Reading! We’ve handpicked a few more articles you might be interested in:

5 Ways You Can Prep For Next Tax Season Now

4 Ways to Protect Resident Satisfaction When It’s Time to Pay Rent

Case Study: Adding Utility Recoupment Solution Increases Online Rent Payment Utilization by 94% for Wehner Multifamily

Sign up for our newsletter

Get content delivered to your email and read at your own pace.

Related Articles