California - Rent "paid" when electronic transfer initiated vs Landlord gets $$ ?

Question

Hello BP folks!

My California tenant has initiated his monthly rent payment ($2100) to pull from his Chase account on March 14 through my Avail PM system, but I will not be receiving it until March 19. This is 2 days past the end of the grace period. Can I charge him my late charge which is currently $100 after I get the rent on the 19th?

The lease says "rent is due on or before the 14th day of each month in advance notice or demand." Later if says if it is not paid by the 17th of the month, you'll pay a late charge of $100. The tenant chose the option to pay through Avail instead of mailing me a cashier's check. He chose a payment date of the 14th of every month on automatic withdrawal .

I called the office of Avail.co earlier today, and they said some states consider the "paid" date to be whatever date the tenant's money leaves the tenant's bank account, not the date the landlord receives the money. Other states consider the "paid" date to be when the landlord receives the money for electronic payments. The people at Avail consider the payment timely if it leaves the tenant's account on or before the due date, so I think their reminder emails to tenants revolve around that date :(

Any California landlords have experience with this situation?

I have the nolo press book, "California Landlord's Law Book: Rights and Responsibilities " but it doesn't address this specific scenario.

He moved in March 14, 2023 so this will be his first payment after initial rent and security deposit were paid by cashier's check.

Thanks in advance!

Jeremy H. · Answer

This is a quick way to make a tenant think you're an as*hole. We're making the assumption the payment will go through - if it doesn't that's another story. Sounds to me the tenant did pay on time, right? He actually "paid" before the due date - the money left their account before the due date. The system, whatever it may be, is not the fault of the tenant. Not only that, but the Avail system is yours - and you probably like to use it because it's easier to you. So you're asking a tenant to use a system you have put in place, then when it takes a couple extra days you want to charge the tenant - regardless of the tenant's intent and the fact that they are following the rules you put in place. Does the tenant get charged if their rent is proven to have been lost in the mail? I mean c'mon this is actually more and more ridiculous the more I think about it. Not only that - but this is is his first payment. At least give the person a chance to do it right before going full as*hole. People work, they are in the middle or organizing after a move, they have utilities to set up - it's a relatively hectic time period for a lot of people. Start out on the right foot and don't create a problem when there isn't one yet. Going forward I would revise your lease - knowing now that it may take a couple extra days to process payment, you should revise your rent due date by several days so that there is a better chance for you to receive it by the time you want.

Tricia O'Brien · Answer

@Theresa Harris @Nathan Gesner @Jeremy H.Thanks everyone for your replies! It all worked out well. I told the tenant I'd consider the current payment on time (as long as it doesn't bounce) since the money was deducted from his account on the 14th, the rent due date on the lease. I said I'd appreciate it if they could pay a few days early, but I wasn't requiring that. He said he would set it up the recurring payments so the money would deduct every month on the 9th or 10th so it would get to my account by the 15th at the latest.

Nathan Gesner · Answer

This is a common problem. ACH or Direct Deposit payments typically take three banking days to process. Nobody can explain why an electronic payment takes so long, but that's the reality of our banking system.I consider it paid on the day the payment is initiated, which in this case would be the 14th. Yes, there is a chance the payment could be rejected for non-sufficient funds on the 19th, but I'm managing 400 rentals and it's pretty rare and the Tenants make good on it 99.9% of the time. Very low threat.A check is no different. If they hand you a check on the 14th and you put it in the bank the same day, you would consider rent paid, right? But you could find out five days (sometimes longer) that the check bounced! The process is the same. When the transaction is initiated, you consider it paid. If the payment bounces, you apply the late fee (if any) and require payment of the full amount in certified funds (cashiers check or money order).

Theresa Harris · Answer

What is the reason why it isn't available to you until the 19th? Is that because your bank puts a hold in it once it is deposited? Talk to the tenant and let them know; however, from what I heard in BP, in the US the rent needs to be sent on or before the due date and isn't considered late until 5 days after that allowing time for it to get to you in the mail (even if it isn't mailed to you).

Eliza Pelham Randall · Answer

Does anyone know how this is defined legally in CA? I have a tenant who often doesn’t even initiate the payment until the grace period, which results in frequent payments arriving well beyond the grace period.She owe back rent as well plus other late fees, but I’m interested in submitting a comprehensive tally for the eviction process, so I’m looking for the legal definition in CA.

Bill B. · Answer

Seems a lot like the postage date on an envelope for mailing a payment. I’m not sure if it’s still true, but that used to count as the payment date. Even with days in transit and even more days until the money was available.

Richard F. · Answer

Aloha,Given that this is the first month using the Avail system, unless you specifically provided the tenant in advance with information on the lag time from first hand experience, I would let it go and simply inform them of how the timing did not work out, and have them adjust their "pay" date accordingly, reminding them of the "late" date and penalty for future payments. Typically with these systems the tenant will have a "confirmation" notification that payment was paid on 14th. The tenants have no control over how long the actual processing takes between the banks.