Does your lease mandate direct debit? Find out why it should.
What is direct debit?
In the context of a lease, this is the right to debit a tenant’s bank account. It can apply to any money. This includes rent, outgoings and costs. For money that the tenant must pay monthly, the debit should be automatic.
There are many leases that still fail to mandate it. And for those that do, it is not as simple as saying “you must pay by debit”. Below are 3 good reasons why a lease should mandate it.
3 reasons to mandate direct debit
When a tenant is struggling, the last person the tenant tells is you, the landlord. You are the last to know. Yet, knowing and knowing early is crucial for you to reduce your loss. For example, if you know early, you can start searches to see if the tenant is solvent. You can inspect the premises to see if the tenant is looking after them. And you can take steps to protect yourself. The goal is to put you in a position where you can act and act quickly if you need to. Reducing your loss is the first reason.
There is less scope for a tenant to withhold payment or ‘forget’ to pay. As with any business, the sooner the tenant pays the money the better. You do not have to wait for the tenant to pay by EFT or for a cheque to bounce. You have the control. This is the second reason.
It is also much easier for you or your agent to manage the property. You and the agent do not have to monitor payments after the due date or chase payment. And it helps avoid complaints and reduces the risk of claims against the agent. This is the third reason.
Who do I speak to about direct debit in a lease?
Us, of course. All our leases mandate direct debit. Contact us here or below if you want to know more.
This article is not legal advice. You should get independent legal advice to deal with your situation.
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