When exactly in law is a payment by bank standing order considered to have been made? Is it on the day it leaves the payee's bank, or on the day it reaches the recipient's account (3/5 days later)?
The matter in question relates to a rental payment. The agreement states that the rent is payable on say 10th of every month. Must it therefore leave the tenant's bank on 10th or reach the landlord's bank on 10th?
The same question applies with a cheque. Is payment "made" on the date a cheque is put in the post, when it is received, or when payment has cleared in the recipient's bank?
In that case, it's when the recipient receives the cheque.
The general principle is that a payment is "made" at the point at which the recipient and/or his bank or payment agent has control of or responsibility for it. So, for a variety of common options:
Standing order: The point at which the payment is deposited into the recipient's account.
Direct debit: The point at which the payment is debited from the customer's account.
Credit/debit card payment initiated by the customer (eg, by filling in an online form, or using a chip and pin machine): The point at which the card company makes the funds available to the recipient's account (even if the actual transfer of funds does not take place until later).
Credit/debit card payment initiated by the recipient (eg, on a CCA): The point at which the card company allocates funds from the customer's account to make available to the recipient (even if the funds do not actually become available, or are not actually transferred, until later).
Cheque: The point at which the recipient has possession of the cheque.
Cash: The point at which the recipient has possession of the cash.
The difference between a standing order and a direct debit (and between a normal card payment and a CCA payment) is that the former is a "push" transaction and the latter is a "pull" transaction. With a push transaction, the recipient isn't in control of the money until it has been completed, but with a pull transaction the recipient is in control from the start.
Agreed for SO vs DD, but surely in the case of a credit card payment it is *always* a "pull". In both the CCA and "normal" cases the cardholder merely gives the payee the authority (be it one-off or continuous) and the means (the card details) with which to initiate the pull, and the timing of the pull is in both cases under the payee's control.
Typically it would use a wording such as "the tenant agrees to pay the rent on the date of entry and monthly thereafter".
If instead it were to say "the rent is payable on ..." this seems to me to be a slightly sloppy wording, which may have been intended to mean the same as that it "should be paid on ..." but it's ambiguous and can mean that it may be, can be, or must be paid.
In any event, it doesn't really matter unless the agreement also explicitly states the consequences of what happens when rent is paid late, and defines exactly what "late" means. Furthermore, if the consequences are severe (e.g. eviction), it is unlikely that any court would enforce them where the lateness is only a matter of a few days, even if habitual. Lateness in eviction cases is normally found only when rent remains unpaid for a whole month or two. Let's not forget that the tenant's account with the landlord does not actually go overdrawn where rent is only a few days late, given that the landlord would generally be holding a deposit at least equal to a month's rent.
That's not entirely correct. A deposit is indeed held for a whole number of different reasons. Although usually used to cover costs of minor repairs for things the tenants have broken, or cleaning costs if they left the property looking like tip, it can generally be used towards any debt owed by the tenant to the landlord for any reason,
Sort of, yes, but it's a tad more complex than that as a card transaction has multiple stages that can involve multiple companies. Some of those stages involve things like fraud checks, and the recipient isn't fully in control of the process until those checks have been carried out. Normally, that's pretty much instantaneous since it's an automated process, but it's theoretically possible for a customer to make a one-off payment by card that, to them, appears to have been made but, to the recipient, has not yet been made as the process has stalled on a security check. It shouldn't happen, and if the programmers have done their job properly then it won't happen, but an unforeseen failure mode and/or a bug in the code can mean it does happen. With a CCA, on the other hand, it can't happen, as the security checks are performed at authorisation time (when the CCA is set up) and hence always precede the actual transaction instead of being a part of the transaction process.
In practice, the delay between the customer pressing the enter key on a web form or a CnP device and the recipient having control of the payment is usually a matter of seconds, at most, so the distinction between a customer-initiated and vendor-initiated transaction has little practical significance in the vast majority of cases. But the theoretical distinction still exists and can be significant in the rare event of something going wrong with the payment system.
Well, I wouldn't exactly call it "ok", no, but the deposit does not belong to the landlord but to the tenant, it is merely held in trust (or in mistrust, more like) by the landlord on behalf of the tenant as a security against the tenant failing to settle any indebtedness due.
Technically, therefore, if the rent is a little late, the landlord can tap into the deposit to make it up, and then later, when the rent does eventually get paid, to re-stock the deposit account.
Sadly this reduces the value of having a deposit if it is mainly intended to cover damages, but there again, to compensate, in some quarters the customary deposit (equal to one month's rent) has gone up to 1.5 or even 2 times the monthly rent.
Also sadly, there has arisen mistrust of unscrupulous landlords who are tardy or difficult about returning deposits when due following expiry of a tenancy. This has led to the widespread practice of in all other respects model tenants simply not paying the last month or two's rent, expecting the landlord to use the deposit towards that. Of course since the tenant is about to leave anyway, there's nothing the landlord can do about it in practice.
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