Automated way to meet Washington's renter payment plan laws

In 2020, Washington State passed code RCW 59.18.610, giving tenants the right to pay certain move-in costs in installments. The additional payment flexibility can be helpful for renters and reflects a growing consumer trend of Buy Now Pay Later (BNPL) services, but few properties are well-suited to manage and comply with Washington renter payment plan laws.

Security deposit automation can help by managing renter payment plans on behalf of the property and providing renters with modern payment methods they now expect.

How Washington renter payment plan laws impact the rental market

Properties that charge deposits and fees totaling less than 25% of the first month's rent are not required to offer a Washington renter payment plan.

To avoid the overhead costs and compliance risk associated with RCW 59.18.610, some landlords have decided to reduce their deposit requirements to remain under the 25% threshold. 

The obvious downside of this approach is that the deposit is no longer enough to cover typical damage costs, and properties no longer have sufficient asset protection. Some markets may compensate for the additional costs by increasing rent, further exacerbating affordability challenges for low- and middle-income renters. 

How security deposit automation provides installment plans

To comply with Washington renter payment plan law and maintain adequate asset protection, some properties may choose to manage installments on their own. A less time-intensive approach is to partner with a security deposit automation provider that already offers renter payment plans as part of their platform.

Roost’s deposit automation platform integrates with your property management system to offer, request, and collect installment payments from Washington renters. It also helps you avoid some common deposit management mistakes. 

Here’s how deposit automation automatically meets Washington’s installment plan requirements.

1. Add Roost to your property management system, and select the payment plan installment duration you want to offer.
2. Upon lease approval, the resident automatically receives a security deposit payment request. If they choose the renter payment plan option, they agree to the repayment schedule and auto-ACH payments.
3. The resident receives reminders ahead of payments due and receipts for each payment.
4. Your team receives an email confirmation for each payment made, and each payment gets automatically posted in the resident ledger. 
5. If your resident pays late or missed a payment, your team is notified immediately. 

Pros of using deposit automation to offer renter payment plans

• Configurable. Roost’s platform can be configured by installment type and requirement, i.e. three months for most Washington State jurisdictions (per RCW 59.18.610) and six months for King County (Ordinance 19311).

• Transparent. If the deposit automation platform offers a resident app, residents can see how much deposit they still owe, view their installment plan payment schedule, and receive receipts for their payments. 

• Hands-off & automated. Deposit automation is hands-off for property managers. Residents get auto-reminders to pay, property managers receive confirmation of receipt, and each payment posts automatically to the resident ledger to ensure proper tracking and accounting. 

• Fewer late or missed payments. Each resident payment plan agreement includes auto ACH withdrawal. Some deposit automation platforms have built-in reminders and nudges to help residents budget in advance and successfully make their payments.  

Cons of using deposit automation to offer renter payment plans

• Escalations still happen. If a resident fails to pay after repeated attempts, your team may still need to get involved to work out an alternative arrangement or provide formal notice and potentially even evict. 

• Potentially more use. The installment payment option is automatically offered to all move-ins (versus only those who request it in writing) and could result in more residents selecting the payment plan option. However, by enabling residents to spread out the upfront move-in costs, they’re less likely to pay late and more likely to remain in good standing. 

• You may pay a small service fee. Washington's renter payment plan code prohibits properties from charging renters for the service. You may incur a small fee to offer the service. (Conversely, you’ll avoid additional overhead while maintaining full asset protection!)  

Growing consumer demand for payment installment options

Property owners and managers must comply with the Washington renter payment plan requirements, but they also must contend with shifting renter expectations.

Offering installment plans—often called Buy Now Pay Later (BNPL)—is becoming more widespread among merchants and expected among the emerging renter base.

In 2022, sixty-five percent of merchants plan to add BNPL as a payment method, and forty-four percent of Gen Z and thirty-seven percent of millennials expected to make a purchase using one. Even major financial service providers, including Apple and Paypal, have recently begun offering installment plans.

Why the rise in popularity? The emergence of the gig economy, record-high inflation, and rising housing costs mean more people are struggling to sync their variable cash flow with their expenses.

An increasing number of renters also use modern payment methods—according to a recent Roost renter survey, 93% of respondents reported using digital payment apps, and 28% were already using BNPL services to make purchases.

How deposit installment plans help your residents

Renters who opt for a deposit payment plan are no less likely to be good residents— sixty-one percent of Americans live paycheck to paycheck, and paying in installments is a proactive way to smooth out cash flow. 

By offering a renter payment plan, your property also helps residents spend less on fees, reduce financial stress, and improve their long-term financial health. 

• Less interest and fees. The security deposit payment plans cost significantly less than the interest and fees renters would pay to cover moving costs using a credit card. 

• Reduce stress. By spreading out the security deposit payment over a more extended period, renters don’t have to worry about putting a full deposit down when they haven’t yet received a refund from their prior landlord.

• Minimal costs. Unlike security deposit alternative products (which typically require ongoing, non-refundable fees instead of a security deposit), the fee renters pay for installment plans is temporary and goes away as soon as they’ve fulfilled their security deposit requirement.

Depending on what deposit automation provider you choose, the platform may offer additional renter benefits that can increase resident retention. Roost, for example, provides financial guidance, interest rewards, and credit building benefits. 

Frequently asked questions for Washington renter payment plan laws

1. Which costs can be included in Washington renter payment plan laws?

Renters can pay their deposits, non-refundable fees, and last month’s rent in installments. 

2. How quickly can I get an installment plan in place?

It depends on the provider, but Roost’s deposit automation platform syncs with your existing property management system and can be quickly implemented. 

3. Can I charge the renter a fee for the installment plan? 

Not in Washington State. Charging the renter is prohibited by RCW 59.18.610.

4. What other property benefits come with offering a deposit payment plan?

It depends on the provider. Roost’s platform automates all deposit payment types and issues refunds so you can hand off the hassle of all deposit payment processing and compliance. 

5. When are deposit payments due under the law? 

Installment payments are due the same day as rent.

6. How do Washington renters request an installment plan?

According to RCW 59.18.610, renters must request a payment plan in writing. In Washington, Roost’s platform automatically offers payment plans as one of three payment choices.

7. Can I charge a late fee if my resident pays their deposit payment late? 

No. You cannot charge late fees or interest on payment plan installments. Making sure your Washington renter payment plan includes automatic withdrawals or payments can help reduce your exposure here.

8. What happens if a resident misses their deposit plan payment?

You can start an eviction lawsuit (called an unlawful detainer action) by serving the resident a 14-day Pay or Vacate Notice. The unpaid deposit installment balance is treated as if the resident didn’t pay rent.

9. Can I still charge some move-in costs upfront?

Yes. You can still require renters to pay holding fees, holding deposits, screening fees, or background check fees. However, there are additional rules you must follow to do so. 

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