My tenant keeps giving me too much money.

March 10, 2016 11:42 AM

Landlord in Texas here. I can't get my tenant to stop giving me extra rent in two different ways. What, if anything, should I do?

For whatever this background is worth, this tenant has a well-paying, high stress job in the medical field. When I talk to them about any kind of problem they are clearly stressed out, highly apologetic, and not at all blaming or confrontational. I know lacking the money isn't the issue, and I suspect strongly that the lateness is down to how busy they seem to be.

This tenant is 2-4 days late to pay rent every month and insists on paying by PayPal. I see no problem with PayPal. It's a recorded transaction, and I can see when it's sent, etc., and being consistently late is not ideal, obviously, but as I said, I know this tenant is good for the money, and since I'm confident I'll get it, a few bucks extra every month isn't the end of the world in exchange for a reminder text or two.

The problems (?):

I asked them to send the PayPal amount as a payment (since it is) and not as a personal transaction (since it is not) and if they want to pay by PayPal, they'll have to pay the transaction fee. Tenant was fine with that and did that for one month. Last month sent the rent payment, plus the transaction fee... as a personal transfer. I reminded them to send it next time as a business transaction and they said they would and not to worry about the ~30$. Fine, I guess. Same thing this month.

Also, since rent is a little late every month, there's a late fee, which the tenant always pays. Except they always round up, so if the calculated late fee is $36, they'll send $40. I tell the tenant they sent $4 extra, they say don't worry about it. Fine, I guess.

As you may guess I'm getting a little tired of asking my tenant to send less money. I think they see this as payment for me having to chase rent a little every month, and I think this because I'm pretty sure I remember them saying something to that effect. They are clean, respectful, and responsive tenants in all other respects.

I guess my main concern is running afoul of PayPal with a "personal" transaction of hundreds of dollars coming through at the beginning of every month. Would that happen, how would that happen, and what would the consequences be?

As for the rent, I'm not aware of any Texas law addressing this, and I'm not having any luck searching for it. I guess this doesn't come up that much. As near as I can tell if a person wants to give extra money to another person, then they can. Am I missing something as a Landlord in Texas?

If I need to do anything at all, how the heck do I get this Person to stop paying me extra?

posted by anonymous to Law & Government (17 answers total)

Paypal will allow you to invoice the person. If you send them an invoice 7 days prior to rent being due, perhaps they'll pay the invoiced amount on the date due? Might be a little more work for you, but less work than you're doing now.
posted by anastasiav at 11:45 AM on March 10, 2016 [41 favorites]

Add the extra to their deposit. When they move out, apply it to any damages and/or send it back to them as usual.
posted by kindall at 11:46 AM on March 10, 2016 [26 favorites]

I'm not sure anything you say to the tenant is going to change their ways. I like that idea of an invoice. And if they keep insisting on paying extra, can you just turn around and submit the remainder in a payment back to them?

Also, before anyone else says it, yes, eponysterical or eponywhatever.
posted by three easy payments and one complicated payment at 11:47 AM on March 10, 2016 [8 favorites]

Can't you set up a paypal link that includes all the settings, such as personal or business transaction, like when I use paypal to pay at a store? Could you set up a 'pay rent' link for them that automatically filled in the amount due and type of transaction?
posted by Canageek at 11:51 AM on March 10, 2016

I am basically your tenant. I mean, probably not actually, but I do this kind of thing all the time. What it is is that I am deeply, deeply ashamed of making enough money to pay the rent but still being too hectic/mentally overwhelmed/whatever to do it. So my adding the little extra is sometimes to cover in case I've gotten the precise dollar number wrong, but also a way of saying, "I'm sorry I fucked up! I'm still a good person! Don't start hating me as a tenant!"

My landlords have handled this in a variety of ways, but the most common is counting the extra as partial payment to the next month's rent. Is that something you would be comfortable with?
posted by corb at 11:51 AM on March 10, 2016 [11 favorites]

To me this is more of a tax issue than anything else. Do you have an accountant or tax preparer you could consult with?
posted by Hermione Granger at 11:51 AM on March 10, 2016 [1 favorite]

You need a consultation with an attorney to ensure that you treat the extra funds correctly. My guess would be that you'd have to place the surplus payment in a trust account that is separate from the deposit... but I'm not a Texas landlord/tenant attorney. From my experience in real estate transactions, I know that in general, co-mingling funds is not good practice because no matter how innocent it is, it can seem inappropriate.

Also, you likely have the ability to state how and when rent is to be received. I agree that you are placing your Paypal account in jeopardy with the personal transactions. You could wake up one day to find your Paypal account is suspended or frozen or otherwise inaccessible to you, while Paypal does its investigations. You have no idea what kind of history your tenant has with Paypal... you could do everything right, but if you are connected on Paypal with someone who is marginal, you lose. Unless your lease states otherwise, again, you can state to your tenant something like, "I will only accept rent via money order or certified check, payable no later than the 5th of the month." This is completely normal. Again, check with an attorney to ensure this is OK. An attorney consultation should be seen as a cost of doing business as a landlord.
posted by FergieBelle at 11:56 AM on March 10, 2016 [7 favorites]

Actually, I'm wondering a bit about this. Passive aggressive people subconsciously definitely set you up to join in their dramas like this...

They seem to be overly generous in a weird way, and then bam - there's some major problem you're supposed to be chill about because they pre-compensated (if you will) for whatever disaster they inevitably caused with their flakiness. Plus in this particular case, having to keep track of an extra $3 to $10 per month is a lot of work! And might make you accidentally do something illegal!! Not to mention having to track them down for the rent. Ugh.

If they are this flakey, NO, I would not assume they were always good for the rent money. Being late and flakey tells me there's a lot of shenanigans and you should be wary.

ISSUE THEM A CREDIT (for all past overpayments) AND INVOICE FOR APRIL'S RENT VIA PAYPAL.

After you are square with them, issue invoices every month one week prior to the due date. Be UTTERLY professional with them from here on out and allow them to sin no more against you.

Just shift the power in this relationship back to the contract.

No more texts. No more personal reminders. Start issuing notices to pay or quit if they are late post sending them the invoice. I don't know what the ultimate goal or set-up is here, but you want zero part of it. Just go back to following the contract and being business-like, only. Good luck.
posted by jbenben at 11:58 AM on March 10, 2016 [18 favorites]

The risk in using PayPal is that PayPal may decide to freeze your account and not allow you access to the money for some undefined period of time. If there's even a chance that you could urgently need that rent money, I wouldn't use PayPal for it.

I agree with the suggestion above to send an invoice in advance. I'd also consider setting up a regular text message reminder or similar for a couple days before the rent is due. (Should that be your responsibility? No. But it might ease things a bit.)
posted by pie ninja at 11:59 AM on March 10, 2016

Have you clearly expressed to them that they are creating a lot of extra headache and work through these overpayments? If they think they are being cool and generous, learning that they're actually being a pain might help.
posted by stray at 12:00 PM on March 10, 2016 [17 favorites]

If they insist on paying via PayPal, setup a recurring payment in the amount of rent plus service charge and have them subscribe to it. Boom, automatic rent payments in the correct amount.
posted by annathea at 12:16 PM on March 10, 2016 [15 favorites]

I wouldn't accept rent via PayPal. It's clearly more trouble than it's worth, and the chance that they freeze your account as pie ninja points out is a disturbing possibility.

He can setup his online banking from most banks to automatically (or manually) pay you every month through the Bill Pay feature. The bank will guarantee a delivery date for the payment. Many banks will guarantee that delivery date to the extent they'll pay his late fee if he doesn't meet it. Once it's setup, he doesn't have to think about it. All problems solved, and you're not dealing with PayPal.

I'd make it clear what reasonable payment method you're willing to accept and insist on that. You shouldn't have to his desires to use a particular service. I presume your lease doesn't require you to accept PayPal.
posted by zachlipton at 12:20 PM on March 10, 2016 [6 favorites]

Hmm. We used to pay our landlord via paypal and did it as a personal transaction to have them avoid the transaction fee. Not sure what benefit there is in you or the tenant doing it as a business transaction? After all, you'll be paying all the appropriate taxes outside of this situation, and if he gave you cash or a check, the bank doesn't take a fee for that. I personally think that forcing it to be a business transaction on Paypal is a benefit to Paypal, not to you or the tenant.

Our landlord never ran afoul over doing it as a personal transaction, but ymmv as it's true, Paypal can be dicks and freeze your money.

Regarding extra payment: you'd need to log it and put it into the same interest bearing savings account you have for his security deposit and return it to him when he leaves.

That said, if you don't want to deal with Paypal, just tell him that you will no longer be accepting Paypal starting on [insert the next month] and ask him if he could instead set up an automatic billpay via his bank if he doesn't want to send a check the old fashioned way. This way, he doesn't have to worry about late fees, and he can just "set it and forget it." Send this in a certified letter and that's it.
posted by vivzan at 12:23 PM on March 10, 2016 [2 favorites]

I would also suggest an automatic recurring payment, either through PayPal or the tenant's bank account. I was on the board of a non-profit housing co-op and that's what we did for chronic late and non-payers. We thought it was a waste of our limited resources to have to chase people down for their housing charges every month--it's a waste of yours, too. And if your tenant is as harried as you say, the automatic part might actually be a relief.
posted by looli at 12:27 PM on March 10, 2016 [3 favorites]

In an alternate universe, I could be your tenant— and to avoid this exact situation, I set up an automatic check sent by my bank to my landlord each month.

Many credit unions and banks offer an automatic bill-pay service; you might want to recommend this to your tenant in lieu of manually paying by PayPal. Unless the rent amount changes each month there's really no reason to manually approve each transaction.
posted by a halcyon day at 1:33 PM on March 10, 2016 [2 favorites]

I'm like your tenant. I'm sort of busy and often stressed and generally slightly overpay my landlord because for some reason I just cannot remember the exact amount of my rent and don't want to underpay.

I think your best bet is to invoice your tenant. I personally would love a monthly notice that said "pay exactly x exactly now" and all I'd have to do is press a few buttons and have it be done.

I think that's your best strategy for getting paid what you want, how you want, when you want.
posted by pocketfullofrye at 8:37 AM on March 11, 2016 [1 favorite]

This sidesteps your problem, but if your tenant really wants to use an online payment system, try Venmo. My landlord prefers this method, and you don't get hit with fees as a sender if you pay with checking and no fees as the receiver either. You can request money in a simpler version of PayPal invoicing. Venmo is dead simple and when your tenant overpays, you can issue that money right back to them and have a record of it.
posted by the thorn bushes have roses at 12:04 PM on March 13, 2016 [1 favorite]