The world of leasing services, while undeniably alluring, can quickly become challenging due to compliance demands. Federal regulations intertwined with multiple state and local variations can leave even seasoned professionals feeling lost. Regulations continuously evolve from one jurisdiction to another, leaving leasing service providers with complex legal obligations.
From tenant screening and lease agreements to property maintenance and eviction procedures, every aspect of the leasing process is subject to various rules and regulations.
Data by IBISWorld shows that the commercial leasing industry revenue grew at a CAGR of 1.0% to reach $262 billion in 2023. This expansion means that property managers, leasing agents, and real estate investors have to invest in the right systems that align with today's regulatory environment.
How can you start complying with this sea of regulations?
Partnering with reliable payment gateway providers like iCG Pay, formerly iCheckGateway.com, can provide the right technologies to keep you compliant.
This article takes a closer look at the challenges leasing service providers face as they strive to stay afloat in the ever-changing regulations.
Understanding Leasing Compliance
Compliance is essential in leasing to ensure fair and lawful practices. Leasing service providers must navigate key regulations that cover fair housing laws, landlord-tenant statutes, and consumer protection regulations.
Regulations governing leasing services can vary significantly from one jurisdiction to another. Differences may arise between states, cities, and even neighborhoods within the same city. Given the complexity of regulatory variations, leasing service providers must stay informed about the specific requirements applicable to their operating locations and adjust their practices.
Here’s how they differ:
- Federal Regulations: These laws establish baseline standards for leasing services compliance, which states and localities may supplement with their own regulations. For example, the Fair Housing Act prohibits discrimination in housing nationwide, but individual states may have additional protected classes or stricter enforcement mechanisms.
- State regulations: These laws often address specific leasing issues not covered by federal laws, such as security deposit limits, habitability standards, and lease termination procedures. Leasing service providers must familiarize themselves with state laws to avoid legal pitfalls.
Common Leasing Services Compliance Pitfalls and How to Avoid Them
While most leasing service companies invest in efficient payment methods like eChecks, they still encounter payment challenges that affect their compliance. Here are some common areas where leasing companies encounter challenges and how to navigate them effectively:
Poor Data Security Measures
Protecting sensitive customer information, such as financial data, is crucial. When your leasing companies fail to implement adequate data encryption, access controls, and firewalls, this can leave customer information vulnerable. Additionally, in case of a data breach, you can lose customer information, leading to huge losses and a damaged reputation.
You can easily avoid this common pitfall by:
- Implementing robust data security measures, including regular employee training on best practices.
- Conducting regular security audits to identify and deal with vulnerabilities.
- Developing a data disposal policy that ensures secure and compliant destruction of outdated customer information.
Inefficient Lease Termination Procedures
House leases are projected to dominate the market in 2024, with an expected market volume of $0.89 trillion. As more people turn to leasing, your lease agreements should be comprehensive, clearly outlining the process for early termination, associated fees, and any required notices. Failing to follow proper lease termination procedures can lead to customer disputes.
Issues happen when you don’t inform customers about their options for resolving disputes regarding lease termination.
You can avoid this by providing clear information about dispute resolution options, including internal channels or external arbitration services.
Fair Collection Practices
The Fair Debt Collection Practices Act (FDCPA) regulates how overdue payments are collected. Therefore, as a landlord or rental property agent, you need to use proper communication to collect rent, indicate the amount owed, and provide the right payment plans according to the FDCPA regulations.
For instance, if you use lease management software to collect rent, you must communicate this with your tenants to avoid problems. To avoid such issues, you need a clear rent collection policy. Consider outsourcing payment collections to reputable third-party agencies like iCG Pay that provide efficient online payment options.
How Can Payment Gateway Providers Boost Compliance for Leasing Service Providers?
The burden of compliance doesn't solely lie on the shoulders of leasing companies. Payment gateway providers can be crucial in streamlining compliance practices and mitigating risk. Here are four key ways they can support leasing service providers:
Providing Multiple Payment Options
Leasing companies often deal with diverse customer preferences and contract terms. A payment gateway like iCG Pay offers a range of options, including mobile credit card processing, ACH transfers, direct debits, hosted payment portals, and electronic check payments. These options empower leasing companies to cater to these different preferences.
This flexibility ensures timely and convenient customer payments, minimizing the risk of late fees and potential defaults.
Reduced PCI Scope
The Payment Card Industry Data Security Standard (PCI DSS) mandates strict security measures for protecting cardholder data. By handling sensitive credit card information themselves, payment gateways significantly reduce the PCI scope for leasing companies.
Thanks to fraud prevention features, leasing companies can securely accept online payments. Therefore, you don’t have to do all the work when it comes to managing security protocols and audits, easing your compliance burden.
Facilitating Recurrent Payment Plans
The recurring payments market is expected to grow by 17% by 2027. Many leasing agreements involve recurring payments. Payment gateway providers with automated recurring billing features can streamline this process, ensuring timely and consistent collections.
This reduces the risk of missed payments, minimizing errors and associated lease compliance issues.
Real-Time Account Monitoring
Payment gateways like iCG Pay leverage sophisticated fraud detection tools to monitor transactions in real-time. This can help identify and flag suspicious activity, potentially safeguarding leasing companies from fraudulent transactions.
Additionally, if you have lease management software, iCG Pay plugin tools will seamlessly integrate for live tracking of payments and account activities. This real-time visibility ensures that the payment process is smooth, timely, and up-to-date, enhancing customer service.
Partnering with a reputable provider that prioritizes security and compliance can significantly minimize risks and foster a smoother leasing experience.
What Strategies Should You Use to Maintain Compliance for Your Leasing Services Company?
Navigating these leasing service regulations requires a proactive and multi-faceted approach. Here, we explore key strategies for establishing and maintaining a culture of compliance within your leasing company:
- Developing strong internal processes: Develop standardized procedures for handling lease applications and collections. These procedures should be documented in a central location readily accessible to all relevant staff. This ensures consistency in lease agreement processing and avoids errors due to individual interpretations.
- Employee training: Educate your staff on compliance regulations relevant to your leasing services. This includes training on interpreting lease agreements, completing disclosures accurately, and handling customer inquiries concerning their rights and obligations. Train your staff on identifying red flags that may signal potential compliance risks.
- Staying updated on regulations: Compliance standards keep changing; therefore, you need to stay updated by subscribing to industry newsletters or checking government websites for the latest news.
How to Stay Compliant - The iCG Pay Way!
iCG Pay empowers leasing service providers and customers by making transactions easy through innovative payment solutions. We provide multiple ways to collect rent online, especially with the shift to digital payments.
Whether you use credit card machines or lease management software, we offer various custom robust technologies in one platform. Thanks to our rent collection portals, accepting credit card payments and ACH processing is now easy.
Stay compliant with iCG Pay's online solutions. Schedule a call to learn more about how we can secure your payments.
