Mr. Bouchard, owner of three buildings in Montreal, has always wanted to manage his assets himself.
It has to be said that this takes up a lot of his time and energy. Thanks to conventional IT applications, he has been able to rationalize and modernize part of his building management, but one aspect of it continues to occupy a large part of his time.
Indeed, rent collection still takes up a lot of time, not to mention late payments and unpaid rent, as well as managing bank accounts and trips to banks.
Like Mr. Bouchard, many property owners find that this complicates their daily lives. The current Covid-19 situation only makes this problem more acute.
As a landlord, you expect your tenant to pay rent on time, every month. Payments can be made by cheque, cash, Interac transfer or direct deposit.
However, you can't impose a particular method of payment with a clause in the lease, and you're not allowed to demand postal cheques. However, you can suggest direct debits, and the tenant is free to accept or reject them.
How do I deduct rent from a tenant?
There are several ways to collect rent from a tenant. The first and most common is payment by check or bank transfer.
It's important to set a payment deadline and remind the tenant of this date before it's reached.
If the tenant fails to pay the rent on time, it is advisable to send a written warning, and then consider legal action if payment is not made within a reasonable time.
It is also possible to collect rent by direct debit from the tenant's bank account. This method is practical, as it avoids late payments, but it is important to ensure that the tenant has agreed to this type of direct debit.
Finally, it is possible to collect the rent by cash payment, but this method is not recommended as it presents a risk of theft and it is difficult to prove that payment has been made.
According to Corpiq, the two most widely used payment methods today are Interac transfers (80%) and mailed cheques (75%). However, these two methods are not strongly recommended for the following reasons.
Postal cheques
A considerable waste of time
Post-dated cheques are still used by 90 % of homeowners with 50 or more units*. While cashing these cheques by the homeowner is a real waste of time, whether it's going to the bank or trying to cash them on the phone.
If the owner manages a large number of doors and wishes to choose this method of payment, consider a cheque imaging machine that can cash up to 100 cheques/minute from your home or office.
The complexity of managing cheque errors
If a cheque contains an error, you can request that payment be stopped so that the cheque is not cashed, but not all financial institutions offer a "stop payment" service. You'll also have to pay a fee for this service.
If the tenant makes a mistake in the name of the recipient, your check will automatically be rejected. If you use the check imaging machine, you won't have this problem. "No cheque will be rejected if there's a typo in the recipient's name, that's one of the advantages of our cheque imaging machines," says Jean Salvador, President of Otonom Solution.
Risks of contamination
In the current Covid-19 context, we strongly recommend avoiding cheque handling and trips to the bank.
An increasingly obsolete and ecologically irresponsible means of payment
The generation of millennials (18-34 years old) and the next generations to come, hardly use checks as a means of payment anymore. We're moving towards using less and less paper to reduce waste and protect our planet. We all need to be increasingly eco-responsible.
Interac e-Transfer
The risk of late payment
This is the payment method most popular with tenants, especially younger ones. In fact, making an Interac transfer guarantees a certain freedom for the tenant, without the need for a long-term commitment.
But this method of payment has one drawback for property owners. Since the tenant has to make a payment each month, the risk of late payment can be very high, and so begins the endless reminders from the landlord.
What is the legal deadline for paying rent?
In Quebec, the legal deadline for paying rent is generally set by the terms of the lease signed between landlord and tenant.
Under the Residential Tenancies Act, rent must be paid on the date agreed between the parties, which is usually the first day of each month. If no date is specified in the lease, the rent must be paid each month on the date it was originally paid.
It's important to note that if the tenant doesn't pay the rent on time, the landlord can initiate eviction proceedings.
However, before taking such action, the landlord must first send a formal notice to the tenant asking him to pay the overdue rent and giving him a deadline for doing so. This deadline is generally 3 working days.
If the tenant fails to pay the rent on time, the landlord can file an eviction action with the Régie du logement.
It is important to note that tenants who are having difficulty paying their rent can contact the Régie du logement to request an out-of-court settlement or a rent review.
It's also important to note that there are financial assistance programs for needy tenants in Quebec.
Can a landlord ask for rent in advance?
In Quebec, the rules governing advance rents are specific and governed by the Residential Tenancies Act.
Under this law, a landlord can ask for a security deposit to cover any damage caused by the tenant during the term of the lease, but cannot ask for rent in advance.
The security deposit cannot exceed one month's rent and must be returned to the tenant at the end of the lease, unless damage has been caused and repair costs have been deducted.
It is important to note that the landlord cannot ask for a security deposit from a tenant who has signed an open-ended lease; it can only be requested from the tenant of a fixed-term lease.
It's important to note that landlords must respect these rules and not ask for rent in advance, as this could be considered a violation of the law.
Tenants who feel aggrieved by illegal demands for advance rent can turn to the Régie du logement, the body responsible for regulating rental relations in Quebec.
What to do in the event of non-payment of rent?
As a rental property owner, it's important to know what to do in the event of non-payment of rent by your tenants. First of all, you need to send a formal notice to pay the unpaid rent, with a reasonable payment deadline.
If the tenant fails to pay within this period, you can take legal action to obtain an eviction order.
It is important to follow legal procedures before carrying out an eviction, including informing the relevant authorities.
You can also try to reach an agreement with the tenant, or consult a lawyer about your rights and obligations as a landlord.
It's important to remember that the eviction procedure is a long and costly process, and it's best to try to resolve unpaid rent problems before resorting to this measure.
Why not opt for direct deposits as a means of payment?
More and more owners and real estate players are opting to automate their condo rents and fees and simplify their daily lives.
When you sign leases, you can now offer your tenants the option of making direct deposits, or have a new payment arrangement with your existing tenants. Tenants benefit too: they don't have to do anything, they won't have to worry about making payments every month, and they'll save on cheque fees.
No more late payments
For homeowners, the first of the month becomes so much easier, and you save time and peace of mind.
Direct deposits are more reliable than cash or cheque payments. They are made automatically each month, which means there is less risk of late payment or cashier errors.
"On the first of the month, all your payments arrive on your account at the same time, leaving you with absolutely nothing to do. In the event of a shortage of funds in the tenant's account, the landlord is usually notified within 48 working hours. So he doesn't have to keep an eye on his bank account," says Jean Salvador, President of Otonom Solution.
So what are you waiting for to switch to direct deposits?
Practicality
They can also be more convenient for owners, as they don't have to worry about managing cash payments or cheques. It can also reduce the risk of money or identity theft.
Direct deposits can also be easier for owners to track, as they can be linked to an online account where they can track payments and balances in real time. This can also make it easier to manage accounts and prepare tax returns.
The safety aspect
Finally, direct deposits can also be more secure for tenants, as they can be linked to their bank account and they can therefore be sure that their payments will be made on time, without the risk of losing money or making a cashier error.
It's important to note that direct deposits are not a legal requirement in Quebec, so it's important for landlords and tenants to agree on payment terms before signing a lease. It's also important to ensure that payment terms comply with local laws and regulations.
