Legal Considerations for Automatic Rent Payments

Automatic rent collection seems like a win-win for landlords and tenants everywhere. Tenants don’t have to remember to pay their rent each month, and landlords are more likely to get their money on time because of this. However, there are a few things that you as a landlord should be aware of when collecting rent online and allowing tenants to opt into autopay. Below are the most important considerations for you to keep in mind. 

Eviction Considerations

When evicting a tenant, one of the most important things to remember is that you should not take any payment from that tenant, even if it is the incorrect amount. Any amount of payment is enough to stall and complicate evictions proceedings, as in some states, accepting partial payments could initiate an additional legal lease term. When thinking about automated rent collection, it’s possible that a renter you are attempting to evict could send you payment without you authorizing it. If you choose to set up autopay, make sure you know how to stop and reverse payments, so you avoid any issues. 

Also, when updating procedures with your current tenants, it may be helpful to consult an attorney. It’s possible that a currently housed tenant could claim that you are using changes in your new lease procedures to try and evict them. As always, one of your chief considerations as a landlord should be to provide the same treatment to each tenant. Not only is it the law, but doing so will benefit your reputation as a landlord. Hiring an attorney can help you double-check that you aren’t putting yourself at risk for any legal problems. 

Data Security

As a landlord, it’s your responsibility to keep your tenants’ personal information safe. When landlords kept paper records, they would need to keep those records stored in a locked cabinet. When accepting rent online, there are similar ways that you are expected to keep that delicate data secure. 

First of all, make sure that whatever processor you use to process payment is NACHA compliant. NACHA is the association for electronic payments, and this organization has many rules that will help you protect your renters’ information and maintain compliance. One of NACHA’s rules is that when storing payment information on the computer, you need to have those files encrypted and also encrypt information that is sent through electronic channels. 

If these stipulations seem overwhelming, don’t worry. Use rental management software and these responsibilities will not be a concern. Tenants have control over their preferences regarding data storage and autopay settings with property management software, so you don’t need to handle any of their personal information. 

Other Things to Keep in Mind

If your tenant is coming to the end of their lease, you should start to think about how you are going to end the automated rent payments when they are no longer living in that property. Usually, tenants will have to notify their banks at least three days prior to a transfer to stop it. Make sure you tell your tenants this information with enough time for them to do so. 

Also, keep in mind that even if your tenants are signed up for autopay, there is still a possibility that they won’t pay their rent on time. They may not have enough funds at the time of their automatic rent payment, and you could end up with only a partial payment. Some states have regulations regarding what amounts you can charge for NSF/bounced ACH checks, so make sure you check your local laws. Usually, landlords can charge a service fee of around $25-35 to cover any fees incurred by cashing a bounced check or having non-sufficient funds. 


The benefits of automatic rent collection far outweigh any cons. Automatic payments lessen the burden of remembering to pay rent and increase the likelihood that you get all your payments on time, in the correct amounts. Of course, in order to get the most of your autopay collection, you have to be responsible. Consider all the things listed above and do your research into which payment processor you will utilize. 

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