Solution to the Problem of Accepting Payment of Investment Proceeds in Cash

Summary of the problem

Let us assume that you are a landlord (owner of apartments and villas for example) and you want to invest in leasing this real estate, and due to your multiple financial obligations, you need to have relatively big amounts in your account from time to time. In accordance with your practical experience in this field, you know that there are many methods of paying the investment proceeds generated from leasing the premises (the monthly rental) but there also many financial risks associated therewith which may cause serious damages to you such as the tenant’s failure to pay the rental or the tenant’s delay in paying the rental , for instance you can sign a lease contract with the tenant under which you accept (1) payment of the monthly rental in cash or (2) payment the monthly rental by standing order (monthly bank transfer from the tenant’s account to the landlord’s account) or (3) payment of the monthly rental via cheques.

The most important question which should be asked is as follows: which is the best method of payment for the landlord which enjoys the strongest and fastest legal protection to the extent that it enables the landlord to avoid the payment problems and obtain the investments proceeds (rentals) easily and in the shortest possible period?

Summary of the solution

The best legal solution for the landlord is not to accept payment of rental in cash or via standing order and accept rental cheques instead , the legal reason can be explained as follows: in case of non-payment in cash or non-payment via standing order , the non-payment will be deemed a civil breach and the civil court , which has slow and lengthy procedures, will have jurisdiction to settle it and the resulting civil judgments will just request the tenant to pay the rentals possibly in comfortable instalments, such lengthy procedures may cause unwanted and undesirable damages to the landlord . The best practical solution to this problem is that the landlord can bind the tenant , in accordance with a signed contract, to provide him\her with cheques covering the entire lease period (one-year lease contract for example) in addition to one-month additional cheque in order to use its value for repairing any essential damages that may be caused to the property by the tenant and the legal reason can be explained as follows: if the cheque bounces , this will be deemed a serious crime and the criminal court , which has quick and short procedures and serious criminal penalties such as imprisonment and fine, will have jurisdiction to settle it , this legal threat will definitely put pressure on the tenant and forces the tenant at the end of the day to pay all the amounts due to the landlord as fast as possible in order to avoid being exposed to such serious penalties.

Faisal Ali Addabi\Advocate

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