Leasing & Property Management Series – Money Matters

Money matters.  Before preparing a lease for signature, you’ll want to have a conversation with your client about money.  You want to have clear communication in the written lease about when, where and in what form payments should be made and what fees will be charged for late or returned payments.

First, determine what forms of payment your client will accept.  Accepting cash payments for rent and providing a receipt is required, unless the lease specifically states that rent must be paid in another form.  If the tenant’s payment is returned, will your client pass on to their tenant the bank’s fee?  Fees for returned payments must be addressed in the written lease.

Security deposits and pet deposits must be held in a separate bank account for your client’s tenant.  Deposits are refundable at the end of a lease with an accounting made of any damages deposit funds were used to mitigate with receipts provided.  Your client must not comingle tenant deposits with personal funds under any circumstance.

Your client may choose to charge a cleaning fee or pet fee instead of a pet deposit.  Fees are not refundable and no accounting is required at move out, but they must be specifically stated in the written lease.

Decide when rent becomes late.  Texas Property Code says you must give 1 full day after the due date before you can begin charging late fees.  Many Landlords allow their tenants to be late with rent for a few days.  Late fees cannot be charged at all if they are not specifically addressed in a written lease.

State in the lease where the tenant should pay rent.  Some Landlords visit their properties each month to collect rent in person.  Others prefer their tenant mail the rent payment to their home or a P.O. Box.  Either way is acceptable, but must be addressed in the written lease.

A Professional Property Manager can handle money matters for your client.  The Property Manager collects all funds, protecting your client’s income and their privacy.  Property Managers have the training to prepare a lease that protects your client’s income through adherence to Property Code and best practices regarding the money matters of the lease.

Guest contributor Marye Davenport, Property Management Director 3G Properties